Tipping in restaurants has always been a strange experience for me, being an Australian who has spent the last decade in the US. In Australia it is optional while in the US it is mandatory.
So it came as a huge surprise to learn that a very successful restaurant owner, Danny Meyer, in New York was going to change things in a big way by introducing a “no tipping” policy at his restaurants. Now these are not just run of the mill restaurants, they are some of the most successful in the hyper competitive Manhattan dining scene. Take the Modern for example, which was just elevated to 2 Stars by Michelin for 2016.
What can we learn about this significant policy move by Danny Meyer? Well in his words:
“We believe hospitality is a team sport, and that it takes an entire team to provide you with the experiences you have come to expect from us.”
Danny goes on to describe the crucial role all members of the team have in executing a brilliant customer experience. However, due to regulations on how tips are distributed not all members of the team are able to share in the generosity of guests. The bottom line was the way the rewards of success were being distributed had become unfair and had to change.
Now Danny did not arrive at this decision on his own, he solicited feedback from people across his organization. They discussed and debated it internally and once they gained alignment decided they would make it happen.
Think about your own experiences at a restaurant. How you feel about your experience is impacted not only by the server, but by whether the dishes and glasses are clean, whether the food is prepared just right, how you are greeted when you enter. Everything matters as each element can make or break your experience.
By raising the wages of employees that are behind the scenes and providing consistent wages to the front line servers (who often have customers that short change them on their tip), Danny aims to create a higher level of engagement and team orientation.
What will happen to the prices at their restaurants? They will go up to cover the existing tip percentage, so customers will effectively not pay more and will not have the pressure to decide how much to tip. Instead they can relax and just enjoy the experience.
Time will tell if this bold decision works for Danny and his Union Square Hospitality Group. I for one am betting it will and look forward to visiting the Modern next time I am in New York!
For more ideas on how to create a customer centric culture check out our award winning book, The Customer Culture Imperative.
