Danny Meyer, an extremely successful restauranteur, has always been a forward thinker. He has never been satisfied with the status quo.
In 1985, when he was 27 years old, Meyer opened his first restaurant. The restaurant, Union Square Café, was an instant hit with the public.
Meyer didn’t have much formal training in business management when he started out in the restaurant world. More than thirty years have passed, however, and his empire has grown to include many award-winning restaurants at various price points. His casual Blue Smoke barbecue spot is as well-loved as his high-end restaurant, the Modern Shake Shack.
Despite his success, Meyer wasn’t happy with one constant in the restaurant business: tipping.
The practice of tipping in the U.S. dates back to the late 1800s. Meyer never liked the practice, but he went along with it until 2015. He announced that his restaurants would begin to include service charges in meal prices.
“Tipping is a drug,” he explained. “And we need to kick the habit.”
Meyer’s believes that tipping is bad for both patrons and employees. During his time in the restaurant industry, Meyer often witnessed relaxing dining experiences ending in stressful finales due to customers calculating and fretting over tipping their servers. The wait staff would be forced to rely on customers’ moods and goodwill. Foreigners, unfamiliar with the U.S.’ tipping culture, would invariably underpay their servers.
Additionally, waiters earned up to 300% more than did the people who prepared the food. It became difficult for Meyer to hire kitchen staff. It also became difficult for Meyer to convince wait staff, used to higher incomes, to move into lower-paid managerial roles.
Meyer launched a public campaign to convince other restaurants to join him in the fight against tipping, but there were few takers. Most restaurants feared that they would lose customers if they raised their prices to include tips.
Meyer explained that he views restaurants as complex intertwined systems made up of customers, suppliers, investors, and the larger community fused into a “virtuous circle.” He strives to create a space in which everyone is treated fairly. He has a vision of providing “attentive, friendly, even athletic service culture that drives repeat business.”
Meyer spends a great deal of time imaging and planning for his ideal future. He views his restaurants as public spaces made up of pseudo families of people who work, dine, sell products, and provide supplies.
According to Meyer, “everyone has a stake in the game.”
After the initial stress and loss of some staff, his restaurants have stabilized and various metrics show overall improvement. While Meyer does not regret following his vision, he remains uncertain if eliminating tips will be “the greatest or the worst” decision he has ever made. We will know in due time!
Feature Image via Flikr/Asrram