Did Industry Leader Abolish Tipping to Avoid New Minimum Wage Standards?


Susanne.Posel-Headline.News.Official- meyer.no.tipping.gratuity.policy.shake.shack.new.york_occupycorporatismSusanne Posel ,Chief Editor Occupy Corporatism | Co-Founder, Legacy Bio-Naturals
October 14, 2015

 

Danny Meyer, head of the Union Square Hospitality Group (UHSG) and owner of 2 restaurants in the Museum of Modern Art in New York, announced that his eateries will no longer accept tips for servers, but are hiking up menu prices instead.

In fact, the menu prices are expected to rise by 20 to 30 percent. For example, that $7 burger will now cost you $8.40 or $9.10.

In 2017, Meyer will implement this new no gratuity business model (NGBM) in his fast – food chain, Shake Shack.

Journalist Ryan Sutton pointed out that “by ending tipping right now, and paying everyone more equitable hourly rates or salaries, Meyer can avoid” the problems posed by new minimum – wage standards.

Sutton also explained that “restaurants in New York City are facing all sorts of new margin pressures: new federal regulations make more employees eligible for overtime and a state sick-leave law now requires up to 40 hours of paid leave per employee. Most pressingly, a new state wage ordinance guarantees city fast-food workers a minimum wage of $10.50 as of December, which will climb to $15 in three years; this means that if non-fast-food operators don’t raise their employees’ wages, they’ll face the possibility of an exodus of staff to the greener pastures of McDonald’s and Burger King.”

The no – tipping experiment has worked in favor of employees in other instances.

As of April 1st of this year, Bar Marco in Pittsburgh, Pennsylvania, completely eradicated server tipping and replaced it with

• base salaries of $35,000 (plus profit – based bonuses) for all employees
• health care for all employees as of date of hire
• 500 shares of company stock
• Paid vacations

The result of this change was a 32% drop in overhead costs, and weekly profits of $9,000 after nearly $33,000 in sales. For 2015, employees of Bar Marco can expect bonuses of nearly $51,000.

But it seems that patrons do not like the no – tipping policy.

Michael Lynn, professor of consumer behavior and marketing at Cornell University found that when he compared Miami restaurants with a conventional tipping system with eateries that have a flat service charge, diners considered their service to be better at the tipping establishments.”





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