Money & Business

Associations Weigh In on Tipping Debate

By / Oct 27, 2015 (Creatas/Thinkstock)

The restaurant industry is in the midst of a major debate about whether tipping should be abolished. For the most part, associations support businesses that choose to do so, but they say it shouldn’t be mandatory.

Does the practice of tipping your server seem passé today? Some prominent voices in the restaurant industry are starting to say yes, but key associations in the restaurant space seem a bit more skeptical.

The most recent advocate of moving away from tips is perhaps the most famous restaurateur in New York City. Danny Meyer, a key figure behind numerous restaurant concepts in the city—most famously Shake Shack, which has grown into a national chain in recent years—announced that he would end the practice of tipping at his company’s eateries, factoring hospitality costs into the bill and making it impossible to add a tip to a receipt.

“Once these changes are implemented, the total cost you pay to dine with us won’t differ much from what you pay now,” the Union Square Hospitality Group founder stated in an open letter on the company’s website. “But for our teams, the change will be significant. We will now have the ability to compensate all of our employees equitably, competitively, and professionally. And by eliminating tipping, our employees who want to grow financially and professionally will be able to earn those opportunities based on the merit of their work.”

Everyone Has an Opinion

Is Meyer’s move—which led to a slew of op-eds on the topic, including a New York Times piece titled “Why Tipping Is Wrong”—a sign of a larger trend away from tipping? The National Restaurant Association and other trade groups aren’t so sure. In a recent response letter to The New York Times that criticized the op-ed, NRA President and CEO Dawn Sweeney argued that restaurateurs like Meyer should choose what’s best for their business—but she underlined that dropping tips isn’t for everyone.

“The restaurant industry offers opportunity for men and women of all backgrounds, and Americans overwhelmingly support a system that rewards good service,” Sweeney wrote in her letter to the editor, which the Times published last week. “We should be celebrating a restaurateur’s right to do what’s best for his or her individual business and employees, not using this as an opportunity to demonize the industry.”

The author of the Times op-ed, Restaurant Opportunities Centers United Co-Director Saru Jayaraman, has previously made waves within the industry as an advocate of unionizing food-industry workers. She says the nature of tipped work raises some serious questions about inequality.

“The subminimum wage for tipped workers also enshrines pay inequity for a predominantly female work force, perpetuating the gender pay gap,” she writes.

But NRA’s Sweeney argues that this description of server pay unfairly characterizes the way the minimum-wage-plus-tips system works.

“If an employee’s tips plus cash wages do not add up to at least the federal minimum wage in most states, the employer is responsible for making the employee whole under the law,” Sweeney explains. “Tips are wages that employers and employees pay taxes on.”

Trend or Sea Change?

The idea of removing tips from restaurants is relatively untested, but some establishments have been around long enough to prove the concept’s merit. Bar Marco, a Pittsburgh wine bar, abolished tipping last April, only to see a jump in business as a result.

“We have people coming in consistently who partially come in because of what we’re doing, not just because of the service and food,” manager Joslynn Manges told The Huffington Post. “They respect the general idea of what we’re doing and they support it.”

The Colorado Restaurant Association, in recent comments on the matter, has suggested that the phenomenon is less the introduction of an ethical quandary and more “a competitive tactic” to stand out—something it deems other recent trends in the industry, such as the introduction of technology and the reduction of food waste.

“We don’t expect tipping to go away anytime soon because it is ingrained in our culture,” the association said back in July.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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