US restaurants experiment with ‘no-tipping' policy

25 August 2015 by
US restaurants experiment with ‘no-tipping' policy

US restaurants are experimenting with no-tipping policies, as the sector seeks to manage rising labour costs.

It's one of the measures businesses are considering as they prepare to see the introduction of minimum wage proposals in several major cities, according to">" target="_blank" rel="noreferrer">The New York Times.

The changes come at an interesting time for UK restaurants - despite the fact that the way in which US and UK restaurants approach tipping, and the method by which tips and service charges are taxed, are very different.

UK restaurants are bracing themselves for the introduction of the National Living Wage, at the same time as some restaurant groups including Côte and Las Iguanas have been forced to weather a storm of negative publicity regarding the way in which they handle the service charge and tips for their staff.

The New York Times cited the example of Ivar's seafood restaurants in Seattle as one of the restaurant groups that is experimenting with a no-tipping policy. The group has hiked prices by 21% and ended tipping, in response to the first stage of a $15-an-hour minimum wage law, which took effect in April.

The owner, Bob C Donegan, told the paper that he had calculated he could increase everyone's wages as a result of the switch.

"We saw there was a fundamental inequity in our restaurants where the people who worked in the kitchen were paid about half as much as the people who worked with customers in front of the house," Donegan said.

Meanwhile, Dirt Candy, an upscale eaterie on the Lower East Side of Manhattan, has started to add a 20% administrative fee.

"I think that restaurants will have to do this," said owner Amanda Cohen, who pays servers at Dirt Candy $25 an hour, well above the $7.50 for tipped workers that will go into effect in New York at the end of the year. "How else do you compensate for this extra money you'll have to pay?"

Despite the changes, the number of restaurants in the US offering a no-tipping policy is still small, in a country where tipping is ingrained in the national psyche. Where it does happen, it tends to be among higher-priced restaurants.

Côte accused of ‘misleading' customers by taking service charge >>

Tipping: compulsory or discretionary service charge? >>

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