More restaurants opting for no-tip policies: Survey

More restaurants adopting no-tip policy
More restaurants adopting no-tip policy

More restaurants are taking a closer look at no tipping, according to new data. Seems Danny Meyer won't be the only restaurateur eliminating gratuities and raising prices.

"I think that's just a reflection of where the industry is moving," said Patrick Connolly, owner and chef of Rider, a restaurant in the Williamsburg section of Brooklyn, New York City. "Service, uniforms, how they present themselves, the language, the tables — all of those things, it's part of the product," he said.

I think tipping is based on an antiquated notion that if one particular person waits on us while we're there eating and the food is really good, we'll take care of them.
Patrick Connolly
Rider chef and owner

About 18 percent of surveyed restaurant professionals said they've already adopted a no-tip model, according to an American Express Restaurant Trade Survey that was released in mid-May.

The survey was conducted among a random sample of 503 U.S. restaurateurs, excluding Connolly.

Some 29 percent said they plan to adopt a no-tip policy, according to the survey.

Additionally, 27 percent said they would not jump on the no-tip trend, 17 percent said they may do so if other competitors follow suit and 10 percent said they were undecided.

Beyond tipping changes, the survey also noted diners' changing diets and the growth of a cashless restaurant experience.

Bigger picture, the old-school, almost cinematic version of a veteran waiter, taking care of his favorite diners in exchange for a nice 20 or two may not be the standard of the future.

"I think tipping is based on an antiquated notion that if one particular person waits on us while we're there eating and the food is really good, we'll take care of them," Connolly said. "In a certain type of restaurant, the service is part of the product now."

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More broadly, tipping, wages and restaurant trends are closely watched as the service industry has been a major driver of job growth since the recession.

In a separate report released Thursday, ADP and Moody's Analytics said U.S. job gains at private companies in May got a major boost from the service industry.

But no tipping can often mean higher menu prices to cover service costs.

And tipping can be a very personal dining choice. At least one national restaurant chain has retreated on its no-tip policy after complaints.

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A James Beard Award winner while at Radius in Boston, Connolly transitioned to New York City and opened Rider in early 2016 in the Brooklyn performance space National Sawdust.

As the construction of the restaurant took shape, Connolly and the team scanned the landscape for options such as service-included business models that have caught on among some U.S. restaurants.

Meyer announced last year he would do away with gratuities at his Union Square Hospitality Group restaurants including Gramercy Tavern and Union Square Cafe. Meyer also founded the popular fast-casual Shake Shack chain. Brooklyn restaurant owner Andrew Tarlow also announced he would go gratuity free.

Meanwhile, restaurateurs are juggling new overtime regulations and rising minimum wages, as labor laws shift.

Connolly said his team decided to open with no tipping, rather than change their strategy midstream. Menu prices, in turn, are roughly 15 percent to 20 percent higher, he said.

"We decided it was the best decision to open up that way rather than start the traditional way of tipping for six months and then change course," he said. "Nobody really likes change, especially when you're dealing with their money."

Added Connolly, "People have been very receptive to it."

Joe's Crab Shack ditches no-tip policy

But tip or no tip can trigger strong opinions, and some customers have complained.

National chain Joe's Crab Shack last month said they rolled back its no-tip policy after customers and workers complained.

Beyond tipping, the survey found more restaurants are eyeing mobile, cashless transactions and paperless receipts.

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The survey also found a key restaurant challenge is customers' desire for certain foods and diet restrictions.

Popular consumer food trends being reflected on menus include a demand for breakfast or brunch, plant-based dishes, organic ingredients and gluten-free items. And customers want to pay for all this with a smartphone swipe, not with messy bills.

On the other hand, old money habits can be hard to break.

At Rider, some customers can't resist slipping the bartender a buck or two. Guests will lean into their servers and ask, "Are they taking are of you? Are you sure? You did a great job," Connolly said. "There's a little bit of that."