This is a time of reckoning within the restaurant industry, which has been decimated by the coronavirus pandemic and left owners and workers alike to wonder where things go from here. It’s also a time to reexamine the fundamentals of the business, and to rethink what it’s possible for restaurants to be. For proponents of the no-tipping movement — widely seen to be a system that is more equitable for workers and simpler for customers, but which remains unpopular — this would seem to be an ideal time to bolster their case for fair salaries. Instead, one of no-tipping’s highest-profile advocates just announced he would reinstate gratuities at his restaurants. So, where does this leave the operators who still believe in tip-free dining? To find out, Grub Street spoke with Amanda Cohen, the chef and owner of Dirt Candy in New York City and a staunch champion of no-tip models.
I know you’ve made the case for no tipping a lot, but the entire industry has changed so much since March. What’s your current pitch?
The idea behind no tipping is that it really allows you to pay your workers, both front of house and back of house, a fair wage. Tipping is inherently a really sexist, racist system. To have your customer base paying half your employees’ wages — it doesn’t work for anybody. It doesn’t allow your front-of-house staff to be treated like professionals. They never know what they’re going to make from day to day; they can’t bank on it. If there’s a storm, or like a hurricane, or there’s been really bad weather the last couple of weeks, you’re not going to make enough in tips, right? Every once in a while, you might have a really great Friday, but there’s no guarantee. Whereas, in every other industry, you go to work and you make your salary.
And then the flip side of that is: Yeah, servers do tend to make more money than the back of house. But everybody’s working for the restaurant. Servers aren’t freelancers — they actually do work for the restaurant. Everybody’s helping to make the best possible meal for the customer. So everybody should share in everybody’s wages, and those wages should be equitable.
When people push back against no tipping, one thing you hear a lot is that servers don’t like it because they make less. You laid out the math for Eater a couple years ago, hourly pay with tips versus hourly pay with a built-in service charge, and it’s true: With the service charge, the wage gap between front of house and back of house narrows drastically, but servers do make less.
It’s true. Servers might, in the long run, make less money. But they don’t have to make that much less money, and the back of house can make that much more money. To get to a more equitable workplace, some people are going to have to give up something so other people can gain something. That doesn’t mean a server has to give up all their earnings. I know it’s going to be a hardship, but take away $5 an hour from a server and give that to your line cook, and that’s actually a huge, huge difference. And we’re talking about servers at Dirty Candy, who can make $60,000 or $70,000 a year here if they want — and very few of my servers work five days a week. But to my cooks, an extra couple of dollars an hour is huge. It’s actually the difference between a not-decent standard of living and a decent standard of living.
I’m not saying servers need to make $15 an hour. I’m saying maybe servers can make $30 an hour and line cooks can also make $30 an hour, or $25 an hour. We don’t have to close the gap overnight, but we can start to really work on closing it: a little bit of money taken here, a little money given there.
And if they leave? When Danny Meyer first transitioned his restaurants to no tipping, that was a big complaint from staff: They had a job, and then overnight, their jobs got worse, at least financially. So a lot of people left.
Without being cruel — okay. In my experience, he still had servers in his restaurants. I genuinely feel bad for those people who felt like they were cut out of a job that they probably really loved. At the same time, Danny Meyer — and I’ve had this choice, and other people who’ve had this opportunity — we hire people whose values are in line with ours. I think that’s a really important thing to remember here. People who go work for a no-tipping restaurant want to work for a no-tipping restaurant, which means that you and your employees — you’re all aligned. Nobody should ever feel like they’re pushed out of a job. But you know, sometimes you have to feel aligned with your boss.
And there are some pretty clear nonmonetary advantages to no tipping. Stability is obviously one. And it means servers are actually working for the restaurant. Tipping makes the customer your boss. No tipping means your boss is your boss.
Exactly. There are all these studies that show that sexual harassment goes way down in states that have higher minimum wages and in restaurants that don’t have tipping. That’s huge.
But then it keeps not taking off. One restaurateur after another tries it and then jumps ship, and they end up saying, “Well, we just couldn’t make it work financially. Customers don’t order as much, they’re freaked out by the prices.”
Of course. They look at the price and they don’t understand what they’re paying for. Why is my Korean fried broccoli at Dirt Candy $9, but it’s only $7 across the street? Why would I order two orders? It’s going to be too expensive. I’ll just order one. But if every restaurant had no tipping, then prices wouldn’t look so expensive. All we’re doing is also tricking the customer, right? We’re saying your meal is only $100 but slip me $20 on the back end, and we won’t talk about it. It’s still $120 at the end, no matter how you cut it.
One of the goals when the no-tipping movement really started was that more restaurants would join, and with the power of numbers, we would be able to change government — to take on some of the laws that make it really hard to go to no tipping.
So, on a regulatory level, what needs to happen?
We need a payroll-tax credit. I think we need to get something back. Most restaurants already complained about their payroll taxes, right? Tips aren’t considered part of payroll, but because I don’t have tipping, my payroll taxes are for my actual payroll. They’re really high. I’ve been paying a lot into the state- and federal-government coffers.
And then on top of that, insurance is much, much higher, because your limited liability insurance and your workers’ comp are based on your payroll and your revenue. Again, if you’re a business that has tipping, your revenue doesn’t include those tips. So my insurance is much higher. This is one of the reasons that people backtrack after they start doing no tipping. They’re like, “Whoa, everything has gone up a lot more than I thought.” It’s not a direct 20 percent increase, so you have to start playing around with the numbers and really figure out where you can cut costs, where you can add costs. Things go up.
I don’t think I can fix the insurance industry. But I do think I’m offering something to the city and to the state, which is giving them more money. So give me a little something so that we can pay everybody one fair wage, because the reality is, the subminimum wage, it doesn’t work.
When everybody went on unemployment during the shutdown, before we had the federal stimulus, the fact that we’d been paying higher wages actually allowed them to get more benefits right away.
Has the pandemic made you think about any of this differently?
Yeah, I’m angrier and angrier that more people aren’t switching to a no-tipping model. I think we see that it gives a much more stable and secure financial life to our employees. And I don’t understand why other restaurateurs don’t want to do that — why these big corporations, which are obviously smart enough to expand and make millions and open multiple restaurants — can’t figure out how to pay their employees properly. Because we need those corporations. We need those bigger companies to start doing this.
And then on top of that, in the middle of this pandemic, we had this moment with Black Lives Matter, and one of the things that keeps coming up is how much less BIPOC servers are paid than their white counterparts. Why would people want to participate in that system? I just don’t understand how that is not so fundamentally offensive to people. “Oh, I’m doing all the research. I’m doing diversity training, but I’m gonna keep tipping.” It doesn’t make any sense. I don’t think you can have one without the other. It’s one step forward, one step back.
If you say you want to change this industry, you have to start from zero. And the nice thing is, the pandemic has put us there. We have this cataclysmic event; every single restaurant is basically back at the beginning. So let’s change it right now. Yes, it’s awful, your servers are going to come back and they’re not going to make as much money; your cooks are probably going to come back and not have as many hours. You, as the restaurant, for sure aren’t making enough money right now. But at least you could start off with a really good system, so as we move forward, and as the future comes toward us, we’re ready. We’re ready to walk into that future as a better industry than the one that we shut down. For years, everybody has been talking about the industry as being broken. We’ve been given this sort of gift of being able to fix it.
So that brings us to the elephant in the room: Danny Meyer and his decision to abandon the “hospitality included” charge and bring back tipping at his restaurants. As I understand it, he’s still philosophically against tipping for all the reasons you talked about, but given the circumstances, he doesn’t feel like he can deny anyone on staff the chance to make more money. There’s an unending national crisis; people are tipping generously right now — why not let servers get while the getting’s good?
I don’t want to deny anybody money. I understand his argument. But I think to regress to a system that you know has so many inequalities in it does more harm than it does good. Right now, yeah, maybe a couple people, the first time they come in, they want to tip really generously. But what happens a month from now, or two months from now, or three months from now? You’ve taken away your servers’ guaranteed paycheck for a couple of bonuses over the next couple of weeks? And what happens in the back of house? How much profit are you making that you’re going to be able to really do 20, 25 percent?
For a company that’s been really trying to make one house — not a front of house and a back of house, but equality between everybody — why would you add that division again? You just left a whole portion of your employees out to dry, basically. I find it a very confusing decision by somebody who has posited themselves as a leader in our community. To me, it feels like you don’t want to lead anymore.
Bottom lines are important. I get that. Staying open for the long run is really important. I understand that. I think treating your employees like actual human beings and professionals all the time is more important. That’s my nice answer.
On the one hand, I get this is a big deal. Danny Meyer is very famous! He’s a no-tipping crusader! But on the other hand, he’s just one guy. If he temporarily backtracks on tipping, what does that mean for the no-tipping future?
Ultimately, it probably doesn’t mean anything. I think restaurants that were going to do it are still going to do it. But you want to feel like there are as many people who have your back as possible. High Rollers, low rollers, big restaurants, small restaurants — the more that we can make this movement varied, the better it is. So I think it’s a disappointment, but I definitely don’t think Danny Meyer killed no tipping. And I think one day, he will go back to hospitality included, hopefully sooner rather than later, and he will be following in everybody else’s footsteps. He won’t be leading the pack.
I mean, it doesn’t seem like the dream is dead. One restaurant gives up on no tipping, another tries it.
I know of at least ten restaurants, if not more, that are moving away from the traditional tipping system. And that’s just the people I’m on calls with during the day.
I’ve had many, many discussions with chefs all around the country and restaurateurs who are trying to undo the systems in their restaurants. Some of it, I don’t totally agree with, but they’re really good steps: sharing tips between front and back of house, making sure everybody gets paid the minimum wage in their state. That’s a good step. People are adding service charges. I think that’s also a good step. And some places are going full-on no tipping — mostly smaller restaurants like mine, but also some bigger places. A couple of people I know that have multiple restaurants. Well, they probably had multiple restaurants. I’m not sure they all still have multiple restaurants.
Okay, so, say we come back from the pandemic. It ends. There are still restaurants. People start going out again. The shutdown was this chance to start over. What does the new industry look like?
I think a couple of actually good things have already happened, and then there are things that still need to happen. I’m a part of the Independent Restaurant Coalition, and I’m part of a bunch of smaller groups like the IRC as well.
It’s the first time in my memory as a restaurant worker that independent restaurants — small independent restaurants, big independent restaurants — have come together and talked about issues in their industry. And the fact that the IRC has a voice in Washington right now is amazing. Independent restaurants have never had such a big voice. Hopefully, coming out of this, independent restaurants will still feel like they’re a coalition, want to belong to the coalition, and want to fight for things that actually might make our restaurant industry a lot better, like payroll-tax credits or health insurance for the industry — there’s so much that we could fight with for. So that’s a hope and a dream, that all these coalitions continue.
I think we’re looking at an industry that realizes that, yes, we are broken, but we also have the ability to start changing it. As a restaurant owner, I ran my restaurant like a restaurant, but the reality is, I should have been running it as a business. If you can’t run it as a business, then it shouldn’t function whatsoever. In the restaurant industry, we’re all like, “Well, I have 2 percent profit, but at least it’s not one percent?” But if I looked at the restaurant more like a business, I’d be like, “Five percent profit? Two percent profit? That’s ridiculous.” How do I figure out how to make this a 10 percent–, 15 percent–, 20 percent–profit business — how it actually used to be 20, 25 years ago — and sure that there’s enough of a buffer for actual disasters? I don’t know if anybody could actually weather the pandemic, but other businesses are like, “Okay, we have enough in savings that we can weather this for a month, six weeks.” Whereas a week in, restaurants were already like, “We’re screwed.” And that’s not okay. We need to start running things like a business.
We need to charge more. That’s just a fact. We’ve kept our prices so low, just to be able to keep our doors open and to attract customers, and that doesn’t work. I don’t pay myself enough money. I don’t pay my employees enough money. Even though I have no tipping, I still think I could pay them a lot more to live in New York City. I want to be able to do that. I’d like to be able to offer every single one of my employees health insurance, or at least help pay into it. I’d like to be able to offer paid vacation. Whatever real businesses offer, that’s what I would like. And we can’t right now because we’ve kept our prices so low.
Have the past few months — not just the pandemic, but the social movements that have come with it — changed us? Are people game for this new world of paying more and going out less?
I’m in a good mood today, so I hope so. I think they are. You know, there does feel like there’s this sort of feeling in the air, for lack of a better word, of consumers actually caring about their food and where they’re going out to eat. Not everybody, but I think people have spent a lot of time thinking about food and restaurants over the past three months. When you’re washing your 10 millionth dish, you’re like, Oh, I just want to go back to a restaurant and not have to do this. I think that’s there. We have to encourage it. We have to keep this dialogue going, or it will disappear. The conversation has started, and we have to keep it going. And the more we keep it going, the more chances we have for success.