Banish Tipping! Does it Damage or Enhance the Customer Experience?

There have been many articles in the news lately about tipping policies at restaurants.  Danny Meyer, who spearheads the Union Square Hospitality Group, a stand out in the business, has decided to implement a no-tip policy at his restaurants.  He cites many reasons, but the primary and underlying motivating factor is that the gap between the kitchen and wait staff is too large and not fair. Some servers can make up to $200,000 a year in an upscale dinning establishment, while line cooks might only earn 10 percent of that.

His decision is groundbreaking in an industry where patrons are used to rewarding servers based on their dining experience and how they feel about the service provided. His no tip plan will begin in the Modern, located in the Museum of Modern Art and then will be rolled out to his remaining group of eateries over time.

Prices on the menu will increase from 30 to 35 percent, a hefty amount. Danny plans to use the additional revenue to redistribute dollars so everyone wins.

Personally, from a customer perspective, I’m not in favor of the change.

Why?

1. Tipping is the ultimate customer satisfaction survey. The diner, a customer, will share their “rating” for service delivered by giving the waiter or waitress a tip commensurate with what that individual delivered. It’s in real-time too.
2. The customer enjoys the feeling of being in charge and having control over his environment. A no-tipping policy removes that element from the experience.
3. Qualified and loyal kitchen staff should be paid a living wage. I would rather Mr. Meyer raise the prices at his restaurants to pay higher wages to all employees. It’s not necessary to eliminate tips to achieve this.
4. In reality, all servers are not the same. Even at Mr. Meyer’s restaurants I have found most of his wait staff to be engaging in an unobtrusive way, but some have been robotic and even indifferent. Why should they all take home the same pay?
5. For years bonuses based on performance have motivated people to achieve certain objectives that benefit the entire organization. Not getting incentives will tend to desensitize wait staff over time.
6. New York is a highly competitive market for servers. I believe the Union Square Hospitality Group will be in danger of losing some of their best staff. When you lose staff who know your business and your customers, you lose the heart and soul of the organization.

Mr. Meyer is one of the most successful restaurateurs. He may have just thrown a monkey wrench into his operation. He is all about the customer experience, but perhaps the customer experience has just been diminished. I’m happy to hear he is only testing the new policy with the Modern before he implements it with others.

To me, raising prices significantly and taking control away from customers by eliminating the tip, is not a winning combination.

What’s your opinion?