Industry Shake-up: Union Square Hospitality Group Eliminates Tipping

Union Square Hospitality Group, Danny Meyer’s NYC restaurant group, announced yesterday that beginning in November they will be eliminating tipping at their restaurants. Several other restaurants that have made the move over the past two years have switched to a blanket “service fee” that is usually around 18%, but what USHG is doing is pretty radical. They have decided to raise their wages across the board to decrease the FOH and BOH pay divide, and raise menu prices by about 30 percent to pay for the increase in remuneration. Since most people usually tip around 20 percent, they are really only raising prices about 10 percent, and feel that this will be ok for their customers once they get used to it. This is a pretty bold move for a restaurant group that employs about 1800 people. 

So why is this important to us? Black Star has worked with ROC United and RAISE for a few years now, and much of what we discuss when we meet has to do with eliminating the two tier wage system that is prevalent in the industry. Although many states have recently moved to increase the tipped minimum wage from $2.13 an hour, there is still a lot of room for improvement in industry wages for both the front and back of house workers. Black Star’s structure as a member owned business is conducive to the non-gratuity based remuneration, but for restaurants that are privately owned or owned by restaurant groups, it’s been challenging to find a way to move away from the dominant paradigm without going out of business. This is why many businesses have gone to the flat fee, which is the current band-aid, but not the solution. What Meyer is proposing is far more radical. As we know, even with our structure, it is not easy to remunerate fairly and operate a business. There could be some potential to increase our visibility in town as a vanguard for where the industry IS going, not just as some socialist experiment. I’ve said it before, we decided to this nine and half years ago because it’s the right thing to do. It’s not the easy thing to do, but I still believe it’s the right thing to do, and since when has been doing the easy thing been rewarding or inspired real growth? 

There are a few links to some articles here, but I think this is interesting, and very timely. It's especially encouraging to see a major restaurant group make this sort of sea change while working in conjunction with ROC and the RAISE Steering Committee. It’s already pretty divisive, and if you are a comment reader, each of these articles have some seriously opinionated comments going on. If your are interested in knowing more about tipped wages, wage gap, or anything else about what ROC or RAISE is doing, feel free to reach out to me: johnnyl@blackstar.coop.

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