Strategy & Leadership

Famed NYC Restaurateur Tells Customers to Hold the Tip, Not the Service Expectation

Editor’s note: A version of this article appeared on Shep Hyken’s blog and is adapted here with permission.

You’re out to dinner and the service is great. So, you give a generous 20 percent tip. How would you feel if the server refused your tip? The server delivered an amazing customer experience because it’s part of his job — not because he’s motivated by the hope of a larger tip.

This concept of not tipping for service at a restaurant isn’t new. Not tipping is common in many countries around the world, but not in the U.S. But there is a disruption to the status quo.

Danny Meyer, the successful businessman and restaurateur, is going public in a big way with the no-tipping policy that is being rolled out in his Union Square Hospitality Group restaurants over the next year. In a public letter he wrote, “We believe hospitality is a team sport, and that it takes an entire team to provide you with the experiences you have come to expect from us. Unfortunately, many of our colleagues — our cooks, reservationists, and dishwashers to name a few — aren’t able to share in our guests’ generosity, even though their contributions are just as vital to the outcome of your experience at one of our restaurants.”

Great Service Is A Team Sport

Danny Meyer’s philosophy recognizes all the people behind the scenes: the dishwashers, cooks and others who add to the customer experience. If a cook doesn’t make a dish appealing to the guest, regardless of service, the guest will probably not come back. If a dishwasher doesn’t get the dishes fully clean, the guest in unlikely to return because even the best service won’t make up for the tainted reputation of being dirty, or potentially unhealthy.

Something I’ve stressed for years is that when it comes to great service, everyone is involved. Not just the front line. Every department, and every person in every department, has some impact on the customer. USHG’s new “no tipping” policy is an acknowledgement of this very point.

Something I’ve stressed for years is that when it comes to great service, everyone is involved. Not just the front line. Every department, and every person in every department, has some impact on the customer.

Danny understands the full picture of what goes into a guest’s experience, his solution is to ensure that every employee is compensated fairly. Raising wages for behind-the-scenes employees will result in more pride in their work, which means they are more engaged, will work harder, and, ultimately, do what’s right for the customer.

So, how will this impact the menu prices at Danny’s restaurants? Simple. They will go up. But without having to tip, the final bill will be about the same. I think guests will enjoy Danny’s decision. There’s no pressure to tip. Just come in and enjoy the experience. Isn’t that what any business owner whats for its customers? And there’s no surprise with what happens next. The customers come back!

A version of this article by Shep Hyken appeared on his Customer Service Blog. You can read the full version here.

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