Why This Trendy NYC Restaurant Banned Tips

02/27/2015 03:06 pm ET | Updated Mar 02, 2015
Dirt Candy

NEW YORK -- Amanda Cohen is attempting a radical experiment for Manhattan restaurants: no tipping. And so far, the chef of revered vegetarian eatery Dirt Candy said, she hasn’t received a single complaint from customers.

When Dirt Candy reopened earlier this month on the Lower East Side, Cohen banned tipping. Instead, every bill includes a 20 percent administration fee, which provides an extra revenue stream that's used to pay the servers and kitchen staff steady, livable wages.

“Since this started, especially since the minimum wage is getting increased in this city, I’ve had a lot of chefs in a lot of restaurants call me and ask me how I’ve done,” Cohen, 40, told The Huffington Post. “I do think that tipping is actually on its way out.”

The change has apparently gone over well at Dirt Candy. Since its grand relaunch in a new 60-seat space four weeks ago -- the previous East Village incarnation could accommodate only 18 -- Cohen said she's had no problems.

“I was so worried this was going to be a big deal and people were going to be angry,” she said. “But at the end of every dinner, the customer sees that they don’t have to do any math, and [they] just say, ‘Thank you.’”

In big letters at the bottom of Dirt Candy's menu, it says, "We do not accept tips." That message is also included on credit card receipts.

The surcharge helps the restaurant afford to pay its less-experienced staff -- from novice servers to dishwashers -- a baseline wage of $15 per hour. But most of its servers earn between $20 and $30 per hour, Cohen said.

Her timing appears impeccable. On Tuesday, New York state officials announced plans to raise the state's minimum tipped wage from $5 to $7.50 per hour. The hike will go into effect on Dec. 31.

That’s far above the federal minimum tipped wage, a paltry $2.13 per hour, which 17 states still use. But New York’s tipped wage is notably less than its standard minimum wage of $8.75 per hour. That, too, is slated to rise, to $9 per hour, at the end of the year.

tipped wages

U.S. states and territories in blue require only the federal minimum tipped wage ($2.13) for tipped workers. Those in green require a higher state minimum tipped wage, and those in purple require the full state minimum wage.

Cohen first realized that low tipped wages were strangling the restaurant industry a few years ago when she couldn’t hire any cooks. It’s not that there wasn’t interest; she served a niche cuisine at a posh restaurant at which even movie stars struggled to reserve a table. She just couldn't find cooks living in the city.

“There weren’t enough chefs in the city because it was prohibitively expensive to live in this city as a cook,” Cohen said. “They’re making $10, $12, maybe $15 if they’re lucky -- that’s not a lot to live on in New York City.”

She noted that relying on tips wasn’t fair to servers either: Why should they be punished with lower pay because diners didn’t enjoy their food or were irritated by service problems caused by others]? Why should they lose money if there’s a blizzard and the restaurant empties out? Or, conversely, why should servers rake in all that extra dough while the kitchen staff, just as integral to the restaurant experience, get none of it?

The practice of tipping spread in the U.S. about a century ago, when Prohibition banned alcohol sales and restaurant profits plummeted. Owners encouraged tipping to save money on wages, as the comedy site College Humor outlines in this video:

Low wages and reliance on tipping also leaves servers vulnerable to sexual harassment -- from managers and customers. A survey released last October found that 80 percent of women in the restaurant industry reported being harassed at some point.

The 20 percent administration fee helps resolve these issues without forcing Dirt Candy to raise its menu prices to levels that might deter customers.

“Over the last number of years in restaurant culture, we’ve kept our prices low and outsourced the paying of wages to the front-end staff to the customers,” Cohen said. “That’s how we get away with it.”

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