During the recent Weber Symposium, Al Filreis, the Kelly Professor and faculty director of the Kelly Writers House, conducted a public interview with financial journalist Felix Salmon, an editor at Fusion and podcaster for SlateMoney . One of Filreis’ first questions concerned a potentially pivotal event for America’s restaurant sector: the October announcement that all 13 restaurants in Danny Meyer’s Union Square Hospitality Group would eliminate tipping. Here is an edited version of their conversation.
Isn’t tipping emblematic of a basic problem?
There’s a huge number of issues tied up with tipping culture. A vocal minority of diners really like to be able to leave tips—it gives them this illusion of control. It makes them think that they get to be in charge of these people somehow. But the people who matter, really, are the waiters, who love tips, because it’s what they’ve grown up on. What they wind up doing, however, is stabbing each other in the backs to get the Friday and Saturday night crowds, because that’s when they can make the most money—and it makes the wait staff in general much less collegial and much more competitive. But yes, you’re absolutely right that the really big economic effect is to over-privilege wait staff at the expense of the people actually cooking the meal. As Danny Meyer said, he’s been in the restaurant industry for about 30 years, and the pay of waiters has come up about 200 percent in that time; the pay of the kitchen staff has gone up by about 25 percent. Good waiters can earn six figures annually—which is great, we’re all in favor of that—but at the same time as the people who are actually cooking the meal are making $12 or $13 an hour? That’s not cool.
So this is a way of helping to even things out. And also, frankly, of making waiting more of a profession. I’m English—so I will never say anything nice about France. But what you don’t have in France is a deeply racist system of tipping, which is what we have in the United States, where it’s shown that black waiters make significantly lower tips than white waiters. Or one that is ageist—the younger waiters make significantly higher tips than the older waiters. The overwhelming majority of people will just leave a standard tip no matter what the service is like. But insofar as it does vary, it varies according to factors which are bad, like race and age, rather than factors that you think may be healthier, like the quality of the service.
So tipping is just a really crappy way of incentivizing waiters to maximize the check.
Mostly what it is is a tax dodge. It’s a very efficient way for restaurateurs to not have to pay their wait staff very much, and therefore not have to pay higher payroll taxes.
Will Danny Meyer’s ploy succeed?
It has been tried by quite a few restaurants over the years. Every six months or so you see a new headline: Such-and-such a restaurant has moved to a no-tipping, service-included model, because it’s fair. And a lot of the time when they do try it, the waiters all leave for some more lucrative tip operation somewhere else, and then [the restaurants] change their minds and bring it back.
The good thing about Danny Meyer is that he is now a gazillionaire—which is the technical term. So if this change causes his restaurants to make less money than they were making before, or even possibly to lose money for a while, he is rich enough that he can sort of see that through to the other side if he sticks to his guns.
So it might be seen as a progressive move, or a social move, or a redistribution of wealth move within the restaurant field.
Absolutely. And he’s raising restaurant prices by a non-negligible amount—by 25 to 30 percent. And that may or may not reduce the amount of people coming into the restaurant.
The other reason why restaurateurs love the tipping system is because you get to take a $30 dish and call it a $23 dish. People think, “Oh, it’s only $23.” At the end of the day you wind up paying $30 for it. There’s this kind of bait-and-switch going on. And so, people, when they see the headline— Thirty bucks!—they’re gonna be less likely to want to eat there. So that might hurt him. But the biggest redistribution is to the kitchen staff, and this is clearly needed, because he’s finding it hard to find kitchen staff willing to work for $12 an hour. As he should! —S.H.