Navigating the tumultuous world of tipping proved a challenge for restaurants in 2017. The practice is deeply ingrained in American dining culture, but this year more and more restaurants have begun to move away from it, and the industry has been forced to address the ethics of tipping and how it can or should be regulated.
The push for no-tipping came on strong in 2015, with restaurateur Danny Meyer leading the charge. Meyer, the head of NYC’s Union Square Hospitality Group, implemented “hospitality included” policies at the group’s restaurants, building momentum that grew as other restaurants opted for similar measures.
The goal, at the outset: to raise wages for back-of-house employees and level the income gap with the front-of-house, while raising menu prices to compensate. But the wake left by Meyer’s push to abolish tipping has been bumpy to say the least. There have been reports of pay cuts and discontent among servers, and in some cases, only minimal pay increases for back-of-house employees.
Meyer and several other leading restaurateurs have come under fire for their policies, even facing lawsuits. As restaurants around the country continue testing their own versions of all-inclusive pricing — with varied results — somerestaurateurs have opted to return to tipping, while others (like Atelier Crenn in SF and TKO in Nashville) are moving forward with no-tipping restaurant concepts.
And a major change to federal labor law regulations might change the game yet again. Here now, a look at what happened in the world of tipping in 2017:
January 6: Jungsik, a two-Michelin-starred Korean restaurant in NYC, and its chef, Jung Sik Yim, are sued for unpaid wages and skimming tips, with the complaint alleging that management pooled tips and did not properly distribute them to service staff. Under regulations set by the Department of Labor in 2011, tips are considered the property of the employee; a tip pool is only “valid” if the sharing arrangement distributes tips to other customer-facing employees like bussers and bartenders.
January 19: Danny Meyer, whose no-tipping policies across his restaurant group were a benchmark for the industry, calls tipping a “hoax,” saying the practice “created a completely false economy” in restaurants where the bill reflects everything but the service.
January 24: The National Restaurant Association petitions the Supreme Court to change the DOL policy that prohibits tip-sharing: The NRA advocates for allowing restaurant employers to collect and redistribute tips as they see fit, arguing that tip-pooling helps close an income gap between front-of-house and kitchen employees.
March 2: Babu Ji, an Australian-Indian restaurant in New York City’s East Village, closes as a result of a second labor lawsuit that addresses illegal wage practices and alleges the restaurant owner threatened to retaliate against employees suing over wages.
March 14: A data analysis by FiveThirtyEight breaks down the inequalities of tipping, not just within single restaurants, but across fine dining and casual establishments: According to the data breakdown, servers at casual restaurants have to serve nine times as many tables as fine-dining servers to make a comparable amount.
March 27: Danny Meyer has to pay out almost $700k over a tipping based lawsuit, mostly due to Gramercy Tavern’s management of its tip pool prior to the implementation of the no-tipping policy.
March 31: NPR reports on the growing trend of restaurants implementing a revenue-sharing model, where a percentage of sales are funneled to kitchen staff who do not normally receive tips.
May 22: Two of Portland, Oregon’s most acclaimed restaurants, Le Pigeon and Little Bird Bistro, chose to reverse a no-tipping policy instituted last year. Co-owner Andrew Fortgang tells Eater, "While we are proud to have experimented with this format, it unfortunately did not work as well as we would have hoped."
May 31: Dan Barber’s Blue Hill at Stone Barns, recognized in 2016 as America’s best restaurant by Eater, has to pay out $2 million to settle a class-action wage theft lawsuit. The complaint alleged the restaurant mismanaged its tip pool, didn’t share private event service charges with its service employees, and did not dispense the requisite extra hour of pay required by the state for working more than 10 hours in a row.
June 26: Blue Hill at Stone Barns decides to eliminate tipping, but adds a 20 percent “administrative fee” to the $258 price tag for a multi-hour tasting.
June 30: Minneapolis raises the minimum wage to $15, without a lower allowance for tipped employees, meaning even servers who are eligible for tips will be paid $15 per hour. Minnesota law requires employers to pay minimum wage before tips.
July 19:Minnesota rules that forced tip pooling is illegal, as one restaurant, Surly, stands accused of "making employees subsidize wages of non-direct service employees."
July 27: The acclaimed Zahav in Philadelphia settles a $230,000 tipping lawsuit that alleged the restaurant violated DOL regulations and Philadelphia’s own Gratuity Protection Bill, which prohibits employers from taking credit card fees out of employees’ tips.
August 21: Big-name Toronto chef Susur Lee came under fire after employees accused management of docking their tips for making mistakes, issuing server-to-restaurant “IOUs” that effectively stole workers’ tips.
September 27: Brooklyn restaurants Marlow & Sons and Diner make the switch to a service-included format, eliminating tipping and increasing menu prices by approximately 20 percent. Cooks and waiters saw increases in hourly wage, as well.
October 10: Servers at the Union Square Hospitality Group claim Danny Meyer’s no-tipping policy has left them with lower salaries overall, and lower morale across the company has lead to a higher staff turnover. Servers at Maialino and Gramercy Tavern reported pay dropsof about $100 per week after the switch to hospitality-included, while a former cook reported only a slight increase in overall pay.
October 11: A lawsuit filed in New York City and San Francisco targets the push for no-tipping policies, pegging Danny Meyer as the conspiratorial ringleader in a scheme designed to raise restaurant prices across the board. “Restaurant owners are engaged in a sophisticated unlawful conspiracy to put that money into their own pockets,” the suit claims. It also calls out David Chang of Momofuku and Tom Colicchio of Craft.
October 16: Pittsburgh’s Casellula @ Alphabet City ends its no-tipping policy, even as other restaurants in the area make the switch to inclusive pricing. “I still believe that a system where servers are paid fair wages and food and drink prices reflect the actual cost of getting the product to the table is best for employers, servers, and guests,” owner Brian Keyser writes in an investor email. “Unfortunately, the unique quirks of Casellula @ Alphabet City make us the wrong test case.”
November 10: Three months into operating Jeju Noodle Bar in New York City’s West Village, chef Douglas Kim reflects on the tipping processes at the restaurant, where chefs and cooks receive full tips and take on the role of servers, similar to the setup of a sushi restaurant. He explains the process on the checks: “Your server tonight is also one of the cooks who prepares the menu dishes. Please note all gratuity is distributed amongst everyone who took part in your service experience.”
December 5: The practice of tip-pooling officially catches the attention of Trump’s Department of Labor, which is making moves to make it legal again. On one hand, doing so could narrow the disparity between front- and back-of-house — but it could also mean employers keeping tips for the business (or for themselves).
December 11: Cornell University professor/consumer behavior and marketing expert Michael Lynn unpacks the effects of eliminating tipping, assessing the impact it has on customers. Analyzing studies and gauging customer satisfaction at restaurants before and after they did away with tipping, Lynn concludes that the practice of “tipping enhances restaurant customers’ overall satisfaction.”