What to Consider Before Going Tip-Free in Your Restaurant

Few topics these days seem to raise as much controversy in the restaurant industry than tipping. A couple years ago, the celebrated restaurateur Danny Meyer announced that the full-service restaurants in his Union Square Hospitality Group would do away with tipping.

Other operators followed suit, and Meyer's proclamation attracted the attention of the restaurant trade and general media, which underscored how deeply embedded restaurant tipping is in American culture.

The story recently took an unexpected turn. As you might have read, in October, a lawsuit was filed against Union Square Hospitality Group and other New York and California restaurant companies claiming that behind these operators' plan to eliminate tipping was a price-fixing scheme to raise their menu prices. As a startup operator independently deciding whether to eliminate tipping at your restaurant, you likely don't have to be concerned with being a defendant in an anti-trust lawsuit.

No-tipping is not a new phenomenon, certainly for fast-casual concepts. Many full-service concepts eliminate tipping in favor of service charges, particularly for large parties and Banquets. No tipping across the board for full-service restaurants is a much bigger deal, as illustrated in this article.

As a startup operator, you can forgo tipping from the time you open your doors. This is an advantage over the established independent operator who might want to change from a tipping to a no-tipping model. This article is for both the new and established operators, both of which can benefit from considering the problems created by tipping and the challenges of going tipless.