No-Tipping Policies and Impact of Minimum Wages Rise

Jacked up prices in NY restaurants may be too much for eaters to swallow.

I reach down my pocket for a quarter. There we are — exactly $18,25, and not a nickel extra. I feel awkward as I hand over the cash. I’m considering adding a few dollars anyways, but maybe they’ll refuse, which would make it even more awkward. But the waitress — who’s probably accustomed to confused eaters — gives me a reassuring “you’ve-done-nothing-wrong” smile and wishes me a good night.

Bruno Pizza in the East Village is one of several New York City restaurants that has done away with tips to counter increased minimum wages. New York Governor Andrew M. Cuomo’s decision to gradually pump up salaries to $15 by the end of 2018 will mean an unprecedented wage spike in the Empire State.

Just moving the extra 18 or 20% to the other side of the equation

“It’s inevitable that everyone’s gonna go to no-tipping because of the legislation,” says Demian Repucci, co-founder of Bruno Pizza. “The numbers just don’t work.” When minimum wage goes up, owners will have to increase prices and many customers will simply not be ok with paying more and tipping on top. “They way around this is to eliminate tipping,” he says. “I’m just moving the extra 18 or 20% to the other side of the equation. The price remains the same.”

For Repucci, it really does seem to work. The place is crowded, the Margherita tastes great, and the outgoing chefs compensate for the uncomfortable wooden pallet bar stools that I suppose are meant to give an edgy, no-nonsense, vibe.

Bruno is however not your average pizza joint. The interactive open kitchen, the in-house flour mill and organic ingredients add up to a high-end feeling for which eaters may be willing to pay a little extra dough. But although the no-gratuity policy seems to be catching fire in the industry, it’s mostly more exclusive establishments that have tried it and made it work.

The real slap is given to smaller businesses like pizza places

The food sector is one of the biggest employers of low-wage workers. As restaurants operate with very tight marginals and a big chunk of their expenses go towards labor, they are likely to be most acutely affected when the new wage regulations kick in. The real slap is given to smaller businesses selling items at the lower end of the price point — like pizza places without their own flour mills. They also have the option of doing away with tips, but will customers really be ready to pay the extra 20-25% for a slice of pizza that may have been lying around a bit too long?

A study by the New York City Comptroller shows that 180,000 workers in New York will get a raise and the average paycheck gain will be $139 a week. But it’s likely that the costs for owners don’t stop there as the wage increase will affect higher paid workers too. If the rookie dishwasher without education or skills is paid 15 bucks, the cook who’s been on the line for four or five years will probably want a similar percentage in increase. The risk is then that employers will have to make cuts in staff or increase automatization.

What will happen to the service?

But let’s say that New Yorkers with time get used to the heightened prices and stops tipping. What will happen to the service? Everyone who’s ever been to countries where tipping is not custom can testify to service being overall, well, crappier. Ever had a Parisian waiter serve your espresso by just dropping it from a foot above the table, and then slamming the tab on the coffee stained marble? He’s not expecting any tip, so why wouldn’t he make his 12-hour shift a bit more endurable by messing up your white sweater.

Maybe I’m jumping to conclusions here. There may be more than one reason to the unparalleled shitty service of Paris, but no doubt there is some correlation between tips and service. Some states in the U.S. are still following the federal wage minimum, which is currently $7. While this is definitely not favorable, it has contributed to the development of the general high service level in the U.S.

The employer would have to give an enormous wage increase to motivate the staff

Another issue will definitely be alcohol. While many may be willing to bay the extra bucks for the food, alcohol is seen as a mere compliment to a course and many will be reluctant to pay 20% more for a glass of wine. And what about compensating bartenders if getting rid of tip? Even a bartender working at the neighborhood dive will make at least $100 in tip on a bad night. The employer would have to give an enormous wage increase to motivate the staff.

It remains to be seen if New York will be the poster child in the fight for minimum wage raises, or just a deterring example. Meanwhile, here’s some no-tipping places to check out:

Riki

Riki Restaurant, East 45th Street, New York, État de New York, États-Unis

learn more

Dirt Candy

Dirt Candy, Allen Street, New York, État de New York, États-Unis

learn more

Aska

Aska, South 5th Street, NYC, État de New York, États-Unis

learn more

Aska — This critically acclaimed Scandinavian-inspired restaurant in Williamsburg, Brooklyn, is a good alternative for less price sensitive culinary enthusiasts.
 

Une photo publiée par Aska (@askanyc) le


 
Dirt Candy —This innovative veggie joint in Lower Manhattan is one of the most prominent vegan establishments in the city. Don’t forget to try the cocktails.
 


 
Riki Restaurant — casual Midtown izakaya for the less pretentious diner. This somewhat worn-down pub serves small dishes, beer and sake to an almost exclusively Japanese clientele.
 

Carl-Johan Karlsson is a freelancer writer based in New York but made in Stockholm. He is also a decent bartender and an excellent chess player.
  • galleymac

    There are many places where tipping is not a practice that have lovely service. A
    Even in France (and they don’t try to rush you out the door, either). The Scandinavians are delightful, for example.

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