It’s been two years since Danny Meyer announced he would eliminate tipping at all of his company’s restaurants. At the time, it was hailed as a move that could “save the hospitality industry,” and restaurateurs around the country followed suit. Though some other American operators had already moved to eliminate tips at their restaurants, Meyer’s company, Union Square Hospitality Group, was by far the most ambitious in its implementation of what it calls “Hospitality Included” pricing. It would — Meyer said at the time — reduce the pay discrepancy between workers in his kitchens and dining rooms, and allow paychecks to keep pace with the increased cost of living and rising minimum wage in New York. However, in a series of interviews with both current and former USHG employees, it’s clear that the rollout has been far rockier than anticipated, people have left the company in droves, staff morale has dropped considerably, and the company has been forced to slow down its rollout plan to deal with the fallout.
“The majority of our strongest people have left,” says one former manager at Union Square Cafe who, like many people interviewed for this story, asked to remain anonymous to avoid burning bridges in the industry. At two of USHG’s other restaurants, Maialino and Gramercy Tavern, current and former servers say their pay dropped by about $100 per week after H.I. was implemented. Another Union Square Cafe front-of-house employee says her annual pay dropped from $60,000 per year before H.I. to $50,000 after tips were eliminated.
When H.I. was first announced, Meyer said that menu prices would rise by about 21 percent, which, as the restaurateur told Eater at the time, would account for the lost gratuity and “right what has been a labor of wrong.” Erin Moran, USHG’s chief culture officer, acknowledges that, after a restaurant moves to the H.I. system, some servers and bartenders may see a dip in pay, but that take-home pay is about the same “on a macro level.” The affected workers say that the changes created a sense of turmoil that has resulted in higher-than-usual staff departures. USHG declined to share exact personnel figures, but the interviewed employees all offer similar stories.
After Hospitality Included was introduced at Maialino in 2016, the entire front-of-house staff turned over twice with the exception of a few people. At North End Grill, a significant group of workers from both the front-of-house and back-of-house quit. At Gramercy Tavern, though many veteran servers have stayed, a good number recently decided that they couldn’t bear the pay cut anymore and that the situation was not going to improve. Union Square Cafe (where I worked as a server in 2014 and 2015) is essentially a new restaurant that opened with the same leadership from the first USC. Managers and seasoned servers have both bolted, and the company concedes that turnover at both Union Square Cafe and Gramercy Tavern was up in the third quarter this year.
