Danny Meyer Admits Large Portion of Staff Left Over No-Tipping Changes

Not everything was ideal after Danny Meyer got rid of tipping at his restaurants — as much as 40 percent of longtime front-of-house staffers left the company after the change.

Meyer mentioned the statistic while accepting a Workplace Legacy Award at a recent conference in Plano, Texas, according to Nation’s Restaurant News. The award is given to an industry leader “who demonstrates success in people practices and operations, in addition to benefiting employees, organizations and communities,” NRN writes.

The head honcho of Union Square Hospitality Group (Union Square Cafe, Gramercy Tavern) says that back-of-house employees now make 20 percent more than they did before the company started phasing out tipping. But a significant portion of “legacy front-of-the-house staff” — 30 to 40 percent — left “over a period of time” in response, too, Meyer says. A USHG spokesperson categorizes “legacy” staff as those with five to eight years of experience at the company.

Still, he’s spinning the turnover as a positive: “The great thing is that the people who came in to take those jobs understand ‘Hospitality Included’ and are thrilled about it. They are doing the job because it is a profession,” Meyer said at the conference.

USHG announced that it would start nixing tipping at its more than 13 restaurants back in October 2015, saying that it would help with minimum wage increases and decrease the pay disparity from front-of-house and back-of-house staff. Shortly after, Meyer said that the policy was already increasing applications to The Modern’s kitchen, critical in a time of a cook shortage.

But it hasn’t been without controversy. Servers claim that that they’re paid a lot less even though Meyer has said their compensation shouldn’t change significantly. It’s been the most high profile elimination of tipping in the restaurant industry — prompting an over-the-top lawsuit that paints Meyer as a ringleader in a no-tipping conspiracy.

Not all of the USHG restaurants are gratuity-included yet, but eventually, the cost of food at all of them will include tip.

• Danny Meyer talks tipping, leadership and trust [NRN]