Shake Shack Founder Danny Meyer Just Took a Huge Stance on Tipping

October 14th 2015

Alex Mierjeski

Restaurants operated by restaurateur Danny Meyer's Union Square Hospitality Group in New York City will no longer use tipping, opting instead for higher menu prices to guarantee employees a fair wage.

Meyer, the restaurateur behind many influential New York restaurants, as well as founder of the the popular fast casual mainstay Shake Shack, announced Wednesday that all 13 establishments operated by the group, including the Union Square Cafe, Gramercy Tavern, and the Museum of Modern Art's the Modern would eliminate the practice by the end of next year.

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"We will now have the ability to compensate all of our employees equitably, competitively, and professionally," Meyer wrote in a statement describing how tipping had become "a major obstacle" in providing career advancement opportunities for the group's 1,800 employees. "There are countless laws and regulations that determine which positions in a restaurant may, and may not share in gratuities. 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."

Meyer added that cooks, reservationists, and dishwashers, among others, were unfairly left out of the tipping equation—an inequality the move seeks to rectify.

The announcement comes as restaurants across the country experiment with eliminating tipping and paying employees a higher wage either through mandatory surcharges or simply raising menu prices. According to Meyer, the overall cost to customers will not change drastically—rather, the experience of the staff will.

While the Union Square Hospitality Group represents only a small number of higher-end restaurants—Meyer's Shake Shack franchise is not operated by the group—they join an expanding cadre of influential dining establishments choosing to eschew tipping and instead charge diners slightly higher prices. Dirt Candy, another New York restaurant, pays servers $25 an hour using a 20 percent surcharge fee, just as the Walrus and the Carpenter in Seattle, and Camino in Oakland, California does as well.

A Shake Shack spokesperson declined to comment on the wage increases, noting that the burger chain does not have tipping. The chain is known for paying workers generally higher wages.

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Restaurant worker advocacy groups applauded the move, noting that it adds to a growing movement setting a precedent for restaurants both inside and outside New York. According to Sau Jayaraman, co-director and co-founder of the Restaurant Opportunities Centers United (ROC), the announcement "sets a powerful example[.]"

"ROC applauds efforts by all restaurant employers to explore wage structures that aim to pay employees a fair, stable base wage, helping to mitigate the problematic system that is inherent in the tipping model," Jayaraman told ATTN: in a statement. "Across the country, tipped workers struggle to make ends meet, as they income is made up almost entirely of customers' tips rather than a wage from their employers."

Jayaraman noted that nationally, tipped workers tend to rely on food stamps at double the rate of the rest of workforce, and are three times as likely to live in poverty. But, she added, examples like Meyer's hospitality group's can lead the way in ethical trend-setting.

"These forward-looking employers who are taking the high road to profitability through policies that ensure a living wage for employees will show the nation that dignity and profitability are not mutually-exclusive ideas at America’s restaurants. In fact, eliminating the two-tiered wage system is essential to ensuring a fair and just future for the nation’s 11 million restaurant workers."

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