Danny Meyer’s “No Tipping” Policy is a Lesson for any Business by Shep Hyken

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No Tipping Restaurant Customer Experience

You’re out to dinner and your server is great. So you give a generous 20% tip. How would you feel if the server refused your tip? In other words, your server delivered an amazing customer experience, but did so because it’s part of their job, not because they are motivated by the hope of a larger tip.

This concept of not tipping for service at a restaurant isn’t new. In many countries around the world, this is common practice. However, in the U.S., tipping is the norm and expected. But there is a disruption to the status quo.

Danny Meyer, the extremely successful businessman and restaurateur, is going public in a big way with the no-tipping policy that is being rolled out in his Union Square Hospitality Group (USHG) restaurants over the next year. In a public letter he wrote, “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. Unfortunately, many of our colleagues — our cooks, reservationists, and dishwashers to name a few — aren’t able to share in our guests’ generosity, even though their contributions are just as vital to the outcome of your experience at one of our restaurants.”

If you have an exceptional experience at a restaurant, you tip the server well and look forward to a repeat experience. If you have an exceptional service experience in a clothing store, you come back, and maybe you seek out the same sales person. If you are a manufacturer and have a good product that you deliver with exceptional service, you gain loyal customers and build market share in your industry. The customer may not leave a tip for the salesperson at a clothing store or the manufacturer, but the result is similar to that of the restaurant; repeat business and ultimately customer loyalty.

In addition, Danny Meyer’s philosophy recognizes all the people behind the scenes; those washing dishes and cooking, who add to the customer experience. If a cook doesn’t make a dish appealing to the guest, regardless of service, the guest will probably not come back. If a dishwasher doesn’t get the dishes fully clean, and a guest ends up with a dirty dish, the guest in unlikely to return, because even the best service won’t make up for the tainted reputation of being dirty, or potentially unhealthy.

Something I’ve stressed for years is that when it comes to great service, or hospitality, everyone is involved. Not just the front line. Every department, and everyone in every department, has some impact on the customer. USHG’s new “no tipping” policy is an acknowledgement of this very point.

Danny understands the full picture of what goes into a guest’s experience, his solution is to ensure that the servers, along with all of the other employees, are compensated fairly and properly. Raising wages for these employees will result in more pride in their work, which means they are more engaged, will work harder, and, ultimately, do what’s right for the customer.

Some of you are probably thinking, how will this impact the menu prices at Danny’s restaurants? Simple. They will go up. But without having to tip, the guest will be spending about the same amount they would normally spend.

I think that the guests will enjoy Danny’s decision as well. No pressure to tip. Just come in and enjoy the experience. Isn’t that what any business wants, for their customer to enjoy the experience? And guess what happens next? They come back!

Republished with author's permission from original post.

Shep Hyken
Shep Hyken, CSP, CPAE is the Chief Amazement Officer of Shepard Presentations. As a customer service speaker and expert, Shep works with companies who want to build loyal relationships with their customers and employees. He is a hall of fame speaker (National Speakers Association) and a New York Times and Wall Street Journal best-selling author.

4 COMMENTS

  1. Might be good in theory, but over the long haul, it won’t work. Sure, it IS a team effort, but consider that the normally un-tipped dishwasher or cook make meager wages in comparison to the tipped food server. Would you propose having dishwashers, cooks and servers all making the same wage? And inevitably, some customer will slip a tip anyway to the food or cocktail server.

  2. I think we’ll have to wait and see. Danny’s strategy is a departure from the norm, so we’ll have to see how it plays out.

  3. Just read your post, Shep. Great stuff. I was at a restaurant in the Florida Keys over the Christmas holidays and got really great service. When I left a large tip the waiter made a point of thanking me for the nice tip and added…”I will be sure and share some of your tip with the people who helped me delight you tonight!” It was his way of reminding me that it is a team effort and he was eager to reward the back of the house for his team’s contribution! Danny is a smart business person. But, my view is…if guests wants to leave a tip, we should defer to their wishes.

  4. Hey Chip – Great to hear from you. Nice comment that server made. Shows he is a team player. Don’t know how the no-tipping transition at Danny’s restaurants are doing. Haven’t read anything about it lately. Thanks for stopping by, and hope to see you sooner than later!

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