Last year, Danny Meyer's decision to go service-included at all of his New York establishments helped spark a movement to raise wages and eliminate tipping across the larger hospitality industry. Eleven Madison Park and Huertas quickly followed suit, and Andrew Tarlow said he'd do the same at all of his Brooklyn venues. But today, the gratuity-free ranks lost a high profile member. After a four month experiment, West Village restaurateur Gabe Stulman will revert back to a traditional tipping system at Fedora.
"While we made the determination that a gratuity free system does not work for our business at this time, we continue to believe that it has the potential to change hospitality for the better," Stulman said in a statement. "We hope it’s the future for more restaurants, including our own, and we’re thankful for the support of our colleagues who remain committed." Or as Stulman clarified in a phone interview this afternoon, making the system work would have required him to either raise prices even further or cut wages, neither of which he "felt comfortable" doing.
Starting tonight, appetizers will now cost $16 to $19, while mains will run $24 to $36, before tax and gratuity; that's still higher than Fedora's prices last from December, before the changeover to no-tipping. Here's why: first, New York's State's tipped-minimum wage rose by 50 percent to $7.50 at the start of 2016; second, Stulman is keeping cooks at the higher wages he started paying them in January, a rate of $12 to $15/hour. "Nobody in the kitchen will see a penny of pay reduction," Stulman said.
One of the benefits of gratuity-free dining is that it allows restaurateurs to chip away at the historical wage gap between waiters who often earn more because they can collect tips, and cooks, who often earn less because they cannot. But one of the fears of gratuity-free dining is that it can come at the expense of servers. Stulman said his wait staff earned "about the same" as they did previously, adding that he "didn't lose a single person" over tip-free dining.
The diner side of the equation was a different story. While many guests "appreciated the clarity" of not having to add 20 percent at the end of the meal, he said patrons didn't necessarily adjust their spending accordingly, ordering less food and requesting bottles of wine at the same prices as under tipping – scenarios that can result in the restaurant taking in less revenue. When Stulman "tweaked" prices down in an experiment, he said guests "started ordering complete again."
Stulman remains cautiously optimistic about the prospect of a tip-free future, both in New York and across his small restaurant group, which also includes Perla Cafe, Jeffrey's Grocery, Bar Sardine and Joseph Leonard. The more restaurants that change over to service-included pricing, he argues, the easier prices comparisons will becoming among restaurants.
"I hope our choice to try it gives some people some courage to try it," Stulman said of tip-free dining. "I hope our choice to go away from it doesn't discourage anyone. I hope that not only Fedora but all our restaurants at one point in the future can go back to the system, because I think it's the right system."