The proposed wage increase set in motion by the Wage Board and Governor Cuomo could spell big changes for city restaurants and the patrons who frequent them. If the so-called tip credit gets increased to $8.50 per hour for tipped laborers, many more restaurants may choose to follow in the footsteps of other city eateries who've ditched the practice of tipping all together. Some city restaurateurs spoke with Crain's about how they'd navigate the new law, including plans for service charges, menu price increases and fewer hours for tipped workers.
Diners at one of Tom Colicchio's restaurants—which include Craft, the 'wichcraft chain and others—may be looking at a 22% increase in menu prices if the plan moves forward. At ESquared Hospitality restaurants—BLT, et al.—diners would see a minimal rise in menu prices plus a separate service charge on the bill. "We are seriously exploring collecting a service charge from our customers and paying our employees a weekly, merit-based salary," explained managing partner Jimmy Haber, who estimates that labor costs would increase by $1 million per year if the legislature is enacted.
Behind the scenes, the increase could have profound effects on not only tipped waitstaff but also kitchen staff, who generally earn less than half of their tipped counterparts. In the past, similar measures enacted by individual restaurants like Per Se and Michael's in Midtown have meant hourly increases for kitchen staff. However, this may also lead to fewer hours given to tipped workers to offset the increased cost for the business owner. "Waiters' hours were never on the cutting floor before," says Blue Ribbon Restaurants co-owner Eric Bromberg. "But once they become more expensive, you put more focus on that line item."