David Chang Gets Feisty With Momofuku Nishi

January 8, 2016 by Leave a Comment

Momofuku Nishi – David Chang’s latest project in Chelsea – has finally opened, and Chang made the announcement today through his magazine Lucky Peach along with an interview. The restaurant was rumored to be an Italian-Korean fusion, but Chang balks at that description. Instead, he asks “what food isn’t fusion?” and says,

“There are Italian words on the menu but we’re not trying to make Italian food. We’re not trying to make a Korean restaurant. We’re trying to do something that we’ve never done at Momofuku. We’re inspired by Italy but we’re not using any Italian ingredients. Things are moving at light speed here.”

Momofuku Nishi will also add to the list of major New York restaurants operating with a no-tipping policy. Chang cited the greater parity between front of house and back of house wages as the primary factor in this decision, and made no apologies for charging more.

The real cost of selling food is not accurately reflecting the labor that’s going into it. In 2000, I got paid maybe $10 an hour. Inflation has definitely risen, but cooks’ wages haven’t. That’s one of our biggest issues. We want to be able to grow as a company so we can provide for more people. This is a way we might be able to do that. And if it doesn’t work, we can always go back to the old way.

The menu is not yet available online, but Nishi is now open Tuesday – Saturday from 6:00pm-11:00pm.

To read the full interview, click here.

Filed Under: Local Market Buzz, Openings, Trending Now Tagged With: , ,

Raising Restaurant Wages is Good for Everyone, According to Cornell

December 24, 2015 by

As fast food workers fight for $15 an hour and New York restaurateurs experiment with new pay models (mostly by eliminating tipping), there is more and more focus on the way we pay the people who feed us every day. The National Restaurant Association has consistently fought back against minimum wage increases, arguing that they will lead to price hikes and fewer new jobs in an industry with small profit margins for new comers. But a new study out of the Center for Hospitality Research at Cornell’s School of Hotel Administration argues otherwise.

The study looked at federal and state minimum wage increases from the past two decades to see if there was any connection with job loss or the number of new restaurants opening. As far as they could tell, the increases had no such effect, although they did improve employee retention and productivity. While one study may not be enough to predict the future of restaurant industry salaries, it is good news for owners, employees and patrons in the 20 states which will be raising their minimum wages in 2016.

To read more, click here.

Filed Under: Global Market Buzz, Operations Tagged With:

Move to End Tipping Gains More Momentum

December 18, 2015 by Leave a Comment

yI1Ya0x8QbiTi7potxLc_022.jpgDanny Meyer’s decision to end tipping at all his restaurants has already become the sort of high profile case that’s likely to spark conversation and debate in circles reaching far beyond the industry. As two more restaurateurs move to join him, it now seems like his announcement represents a major tipping point (pun intended) in what is considered standard.

This week both Gabriel Stulman and Andrew Tarlow announced that they would eliminate tipping at some or all of their restaurants. Stulman is the owner of six casual restaurants in downtown Manhattan, including Fedora on West 4th where he plans to eliminate gratuities in January. Stulman calls this a test drive of the new system, but ultimately he hopes to implement it at more of his restaurants as well. Tarlow, who is responsible for Diner and Marlow & Sons, said he plans to completely eliminate gratuities at all of his restaurants in 2016.

Although Meyer seems to have set off a domino effect, the trend is likely also due to the $2.50 increase in New York’s tipped minimum wage, which will go into effect in January. For many restaurants, it makes more sense to eliminate tipping altogether and hope that they can communicate the change effectively and avoid sticker-shock at higher prices.

Although the anti-tipping movement cites fairness as a major motivator, with higher wages for back of house workers as well as well as front of house, some employees may balk at the change, which puts more money in the employer’s pockets (at least until it reaches the workers paychecks). Stulman in particular is preparing for this backlash by offering “guaranteed wages for the members of our dining room team to be consistent with what they were averaging before the change.” To meet this requirement he’ll be increasing prices around 25% across the board.

To read more, click here.

Filed Under: Local Market Buzz, Operations, Trending Now Tagged With: , ,

Tipping Lawsuit Against Danny Meyer’s Gramercy Tavern

December 14, 2015 by Leave a Comment

Recently we wrote about the new trend among US restaurants – largely spearheaded by Danny Meyer himself – toward the more European style of removing tipping altogether and increasing wages across the board (paid for by corresponding price increases). Now a new lawsuit has emerged against Danny Meyer’s Union Square Hospitality Group by two former employees, who allege minimum wage and tipping violations by Gramercy Tavern during their time their.

The two plaintiffs claim that they were paid the tipped minimum wage (currently $5/hour in New York) when they should have received the full minimum of $8.75 because their tips were pooled and shared with non-service employees. The suit also claim that Gramercy unlawfully withheld all or part of a 20% service charge from special events. They are seeking class action status to recoup the lost tips for all service employees, which likely brings the number to over 100.

In an emailed statement, a spokesperson for Meyers said that “Union Square Hospitality Group has systems in place to comply with all employment regulations. We have always cared deeply about cultivating a strong employee-first culture, and we will review this matter thoroughly.” By 2016, when all USHG restaurants move to a non-tipping system, they will effectively remove the possibility of these types of lawsuits.

To read more, click here.

Filed Under: Uncategorized Tagged With:

Tipping is Going Extinct

December 7, 2015 by Leave a Comment

Over the past week weeks, a storm of debate has surged over the news that Danny Meyer has opted to eliminate tipping in his fine dining restaurants over the course of the next year. It’s a monumental decision and the change has its advocates and skeptics. In this month’s Enterprise Insight, we’re cutting through the opinion to talk specifically about the benefits and challenges of implementing such a system.

Specifically, we will review what operators need to consider when thinking about this: why, how, and the possible pitfalls.

Why Would You Eliminate Tipping

With our clients, we’ve discussed three key reasons for implementing a more-European system: pay disparity, retention, and rising wages.

The back of house has always been under-compensated in comparison to the dining room. Due to the legal classifications of wages, back of house employees cannot be tipped. Under a tip-included system, the real cost of the meal—menu price plus tip—is built into a single number, and the revenue from that number is accessible to the owner to distribute as he or she sees fit.

This, in turn, can help with retention. Low-wage jobs are historically high-turnover jobs. However, with access to the tip ‘revenue,’ an owner can increase wages accordingly to alleviate this issue.

Lastly, rising wages are driving up labor costs and in some instances, driving away skilled labor. With the minimum wage in New York changing on a industry-by-industry basis, it will only become more difficult to find and retain great team members. Again, a tip-included system allows the operator to offer competitive wage rates.

Additionally, in the front of house, the tipped-minimum is also going up. Come January 1, NYC restaurateurs will be required to pay their servers $7.50 per hour–a 50% increase. However, if the restaurant eliminates tipping, then the team can be paid a salary, or a greater hourly wage plus a bonus drawn from the ‘tipped revenue’, thus alleviating this jump in labor costs.

How Would You Eliminate Tipping

Currently, there are only two viable options: increase prices, or apply an “administrative fee.” Be mindful with an applied “fee:” if you charge a “Service Fee” rather than “administrative,” you cannot disburse that revenue to any one not in a service position.

Neither feels good right now, but we believe that price increases will become the new normal. Here’s why: with an “administrative fee,” tipping isn’t eliminated, it’s removed from the diner’s control. With price increases, it’s truly taken off the table. The diner does not know and cannot argue with the prices because they give no allusion to the portion going to the team.

Pitfalls

Increasing pricing will always cause a certain degree of pushback from guests. Until they’re fully on board with tip-included system, the sticker shock will cause a reaction. However, as more and more of NYC s fine-dining enterprises move to this style, the less resistance operators will face. Whether your establishment plans on keeping or eliminating tipping, it’s important to understand the mechanics, because “tip-included” is bound to become the new normal for a significant portion of the dining scene.

Filed Under: Enterprise Insight, Global Market Buzz Tagged With: , , ,
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