Shake Shack founder and restauranteur Danny Meyer, who famously eliminated tipping from his restaurants in 2015, says the practice of tipping is a “hoax” that promotes inequality.
Mr. Meyer, CEO of the Union Square Hospitality Group (USHG), gave his thoughts on tipping during WNYC’s “The Sporkful” podcast this month, Yahoo Finance first reported.
“Tipping is actually one of the biggest hoaxes ever pulled on an entire culture, the American culture,” Mr. Meyer told host Dan Pashman. “Tipping started in our country right after the Civil War. And the restaurant industry, as well as the Pullman train car industry, successfully petitioned the United States government to make a dispensation for our industries that we would not pay our servers. But it wasn’t considered slavery because we would ask our customers to pay tips and therefore no one could say that they were being enslaved.
“And no surprise, but most of the people who were working in service professional jobs and restaurants and in Pullman train cars were African American,” he added.
Mr. Meyer said the expectation of tipping is unique to the U.S. and isn’t a common practice in other countries.
“It created a completely false economy so that when you see a menu price at a restaurant, you know and I know that it includes the cost of the food, the cost of the linen, the rent, but it doesn’t include the service,” he said.
“What is a tip? It’s a multiplier of menu pricing and as menu prices have gone up, so too has the multiplier over the course of my career which is now 30, 31 years,” he continued. “Tipped employees, happily for them, are making about 300 percent of what they were making 31 years ago. During that same 31-year period, everyone in the kitchen — the dishwasher, non-tip eligible employees — have seen their hourly income go up about 20 percent.”
Mr. Pashman noted the “racial dynamic at play” in the demographic makeup of tipped front-of-house workers and back-of-house employees.
Mr. Meyer announced in October 2015 that USHG would eliminate tipping at its restaurants and start raising menu prices by 30 to 35 percent. He said the move would allow the company to “compensate all of our employees equitably, competitively, and professionally,” Yahoo reported.