The Tipping Point: Restaurateur Danny Meyer Takes a Stand

Rebekah Frank


For three long years, a union-backed organization called the Fight for 15 worked tirelessly in an effort to secure a mandatory wage increase for workers in fast food chains nationwide.  The group helped organize worker strikes at restaurants across the country to bring attention to the hundreds of thousands of people working the counters and the fryers, bagging the food, running the drive-through and cleaning the floors of restaurants all across the United States for well under a livable wage.


Their efforts have been paying off. In July 2015, New York State announced a wage increase of $15 an hour for fast-food workers who are employed by chains with more than 30 locations nationwide.  This was closely followed by policy changes in Seattle, San Francisco and Los Angeles that brought their cities’ minimum wage up to $15 an hour for all workers. These increases will be put into effect over the next few years and will most certainly improve living conditions and opportunities for those who have grown accustomed, as much as is possible, to living on the federal minimum wage of $7.25, an amount that has not changed since July of 2009.


Predictably, the owners of fast-food chains have been less than pleased by this particular turn of events. This past September, a group called the Employment Policies Institute hung a billboard in Times Square that featured a photograph of a 20-something white male wearing oversized headphones and wondering aloud, “What? I get $30,000 a year with no experience or skills?” Underneath the photograph was the statement, “Who needs an education or hard work when Gov. Cuomo is raising the minimum wage to 15 dollars an hour?”


That billboard, of course, intentionally misrepresents the individuals most likely to hold a job in a fast-food establishment. The reality is actually very different from the commonly held belief that fast-food jobs are positions held by high school students looking to make some pocket money while living at home with their parents. According to a report by the Center for Economic and Policy research, people ages 25-54 hold the largest percentage of fast-food jobs in the United States. On top of that, 11 percent of those making minimum wage and 68 percent of those making between $7.26 and $10.09 are older than 20.  Clearly the majority of people holding these positions are not treating these jobs as a step up the ladder towards the achievement of the American Dream, or what is left of it anyway. These are adults, a third of whom have at least one child, who are trying to make a life for themselves in cities and towns across the country on an impossibly small amount of money. It’s about time something changed and Danny Meyer agrees.


It is strange to see Danny Meyer, well-known New York City restaurateur and CEO of Union Square Hospitality Group, appear in an article about the federal minimum wage and workers in restaurants he likely never sets foot in, and yet there he is. This is because Danny Meyer, the man behind Union Square Café, Shake Shack and Gramercy Tavern, among others, has set out to eliminate tipping at all of his restaurants, beginning with The Modern and followed by the remaining 12, by the end of 2016. This will affect restaurants that serve between 40,000 and 50,000 meals a week and run the gamut from simple museum cafés to some of the most acclaimed restaurants in the country. 


In an effort to explain the reasons for this move, Meyer referenced the pay increase for fast-food workers, saying that his restaurants must continue to be competitive. But can you really compare a McDonald’s to The Modern? According to Mr. Meyer, it seems that you can. In explaining his decision to start this new non-tipping policy at The Modern, Mr. Meyer explained that Abram Bissell, the head chef at the location, had been agitating for a change to the pay structure for quite some time in order to attract skilled cooks for his kitchen. Understandably. The world of fine dining is a very competitive one with many of the cooks –both on the line and in more specialized positions - having trained under famed chefs from London to Paris, and with loans from expensive culinary schools to pay off, not an easy thing to do even with the higher minimum wage – $11.25 – that was being paid to the back of house staff at The Modern. But what does a higher minimum wage for those in the kitchen have to do with the tips earned by those working the floor? Everything, it seems.



One of the reasons that tipping exists, aside from “to ensure proper service,” is to offset the cost of the labor force on restaurant owners.  The minimum wage for tipped workers who make at least $30 per month in tips is $2.13. (In New York, the minimum wage for tipped workers will increase to $7.50 per hour.) What this means is that an employer is only obligated to pay an employee $2.13 per hour, as long as the earned tips bring the hourly wage up to the federally mandated amount. If the worker does not earn the difference, the employer is legally obligated to pay it. For people working the front of the house in high-end restaurants and trendy bars in cities across the country, the hourly wage paid by the employer is a running joke. The servers and bartenders at The Modern, for example, earn far more than minimum wage.


For people working in diners and chain restaurants such as Olive Garden and IHOP, the story is different. According to a New York Times article by Saru Jayaraman, Danny Meyer’s move is a laudable one. According to Jayaraman, Meyer’s elimination of tipping demonstrates that he understands the impact that tipping really has on the food service industry: “It has created a two-tiered wage system with deep social and economic consequences for millions.” In New York City, median wage for tipped workers, including their tips, stands at $9.43 an hour. (The article is unclear as to how this figure accounts for tips paid in cash that are oftentimes not reported.) Furthermore, “53 percent of tipped workers in New York State are minorities, and 21 percent live at or below the poverty line. And most tipped workers are not fancy steakhouse servers; they are women working at places like IHOP, Applebee’s and Olive Garden. Based on American Community Survey data, the Restaurant Opportunities Centers United estimates that nearly 70 percent of tipped restaurant workers are women, 40 percent of whom are mothers.”


This structure of payment not only reinforces gender inequality within the restaurant industry – female servers earn 60 percent of what male servers do – but it also leads to environments rife with sexual harassment. As a direct result of the fact that servers rely on tips to survive, women are forced to tolerate inappropriate behavior and advances from customers, co-workers and managers in order to keep their jobs and earn their money.


But is gender and racial equality the reason Danny Meyer is eliminating tipping at his establishments? It does not seem to have factored much into his decision at all. More likely is the fact that, facing higher minimum wage requirements for the untipped workers cooking burgers at Shake Shack and seasoning diver scallops at The Modern, Meyer wants to pass this cost of business increase not only onto his clients, but also onto his front of house staff. It is unfair that the kitchen staff earns a pittance in comparison to the tips given to servers, bartenders, bussers and runners on bills that sometimes go into the thousands.



Meyer says that in his 30 years experience in the restaurant industry, kitchen wages have gone up 25 percent while servers have seen a 200 percent  increase. All member of a restaurant staff work hard. They all should get paid fairly. But what is the incentive for servers and bartenders in big cities to work weekends, holidays, and dinner shifts if not for the opportunity to earn more money? And who’s to blame for the wage discrepancy? Is it the servers’ fault that restaurant prices have increased while tipping percentages remained relatively static at 15-20 percent of the bill? Many kitchen workers cook because they love it. And there are certainly those individuals who are career servers and bartenders and cannot imagine doing anything differently. The majority of them, however, are simply in it for the money. And what will happen at high-end restaurants and the bars that stay open until 4 a.m., when the money ceases to exist? Will the quality of service that we have come to expect in places like New York City persist?


It is a tough call. Certainly most of us can agree that an increase in hourly wages for fast-food workers was a long time coming. And it is about time that the servers in diners and chain restaurants receive a living wage and the ability to unionize to hold employers accountable for working conditions and environments. And cooks slaving away in hot kitchens for 12-hour shifts should be given their due.


But should that price increase be passed along to the diners and the people in charge of providing you the best possible dining experience? Or should it be paid by people like Danny Meyer and his restaurant group? I suppose only time will tell whether this new model will work and what sort of impact it will have for the owners of bars and restaurants, as well as their employees. Perhaps it will be better for everyone in the end. But for Danny Meyer to claim that the cooks who work in the majority of his restaurants would be lured to a McDonald’s because it has a higher minimum wage is ridiculous. And for outside commenters to allude to the fact that Meyer is attempting to address a gender wage gap in the restaurant industry is ludicrous. It is not a coincidence that he pushed this through when minimum wage increased in New York. This is a cost-saving move and nothing more.


Author Bio:


Rebekah Frank is a contributing writer at Highbrow Magazine.

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