What would happen if you took an essential component of the dining experience completely out of the equation? Many, with an “if it ain’t broken, don’t fix it” mentality, wouldn’t dare ask themselves this question, but Danny Meyer isn’t like most people. And so far, it’s been working for him.
At the helm of ground-breaking concepts, the serial restaurateur and Founder/CEO at Union Square Hospitality Group is doing away with tipping, a notion he’s been eyeing for years. But as any solid entrepreneur knows, timing is everything. So, why now? Why this? And how will Meyer’s “Hospitality Included” program affect not only his restaurants, but all restaurants in general?
In September 2015, New York became the first state to officially raise the minimum wage rate for fast food workers to $15. With most USHG concepts based in NYC, it makes sense in timing that Meyer is now raising employees’ wages. To scale this, pricing on menu items will increase and, as a result, tipping will no longer be allowed. This strategy play may sound ridiculous to some at first but the reasons behind it make sense.
For starters, cook shortages are already becoming prevalent. With fast-food concepts bumping up pay to $15 an hour, what would deter future cooks (and existing ones) to make the shift from fine dine to fast food, especially with an added bonus of having more time for a personal life? Remember, while servers make tips, back-of-house staff do not. Meyer’s “Hospitality Included” will minimize this wage gap between the two sides of a restaurant, evening out the playing field and perhaps even building more camaraderie.
Saving Fine Dining
Is it safe to say Danny Meyer is the catalyst for saving fine dining? While it may be too premature to make such a grand statement, there is no denying that fine dining restaurants have struggled with a myriad of issues in recent history -- shortages and increased industry competition being two of them.
Restaurants are constantly needing to evolve, given that consumers themselves are always changing. With the introduction of fast casual, diners can get quality meals at a lower price point, pushing fine dining establishments further into the “occasions” sector. In recent months, concepts that would normally be considered more “fast food” are gearing up to compete with fast-casual, introducing more healthy, high-quality, and “artisanal” menu items that bode well with consumer demand and habits. These fast-food concepts trying to “upgrade” are known as QSR-Plus.
As lower-price-point segments in the restaurant industry become more chef-driven, the gap between these concepts and fine dining gets smaller, but the side perks — quality of life, for example — could sway Millennials and Gen Z over to “the dark side.” This theory is now intercepted by Meyer’s “Hospitality Included” program, providing more added value to a fine-dine kitchen career with perks beyond pride and network building.
For those serious about the art of culinary, adding value to your team, as Meyer aims to do, could increase morale, decrease turnover, and could ultimately save the restaurant money while building more incentive for quality production, and still providing a hospitable experience for the guest.
When you think about it this way, there’s clearly a lot more at stake for the industry. Raising this awareness may allow for more than a few bullets to be dodged for more upscale restaurants.
While we cannot predict the future, it will be interesting to see how both sides — consumers and restaurant employees — feel about the model shift. To get some insight on sentiment, Foodable brought a production crew to the streets of New York City to find out how everyday consumers feel about this “no tipping” business.
Here’s what they had to say:
As you can see, opinions of this "Hospitality Included" model are varied. As with any new change to an otherwise "regular" system, there is bound to be some initial hesitation of adoption. But will this become the norm in the restaurant industry? Only time will tell.