Tom Colicchio, founder of the successful Craft restaurants and Crafted Hospitality empire in New York, is embarking on a bold experiment, adopting a service fee-included, no-tipping policy as he launches lunch service this week at his flagship Craft restaurant in Manhattan.
It’s a move that’s been met with confusion even some skepticism, but the outspoken Top Chef judge is unfazed, and says the policy simplifies matters for guests and is fairer to servers.
"It's something I've been thinking about for 30 years, something Danny (Meyer) and I used to talk about at Gramercy (Tavern)," Colicchio says. "It's risky, but this was finally the right time, I think."
What specifically makes it the right time is that lunch service at Craft is new. "We're not suddenly raising menu prices by 20 or 25 percent" to cover higher servers' wages, Colicchio explains. Although he hasn’t said exactly how much lunch servers will be paid, those wages will come from a premium built into the menu prices.
The lunch menu includes items like roasted octopus ($23), corn agnolotti ($20) and lobster with tomatoes ($35).
Also making this the right time are changing consumer experiences. Colicchio says services such as Uber, which he himself uses, are getting New Yorkers accustomed to paying flat rates for services.
Finally, says Colicchio, set salaries will make staffing easier and fairer. Servers need not worry about how many reservations are on the books for their shift or jockey for the best shifts and tables.
"We didn't make the decision lightly. We looked at what servers have been making over the last three years to come up with what we think is fair," says Colicchio. "There's been buy-in from staff—otherwise we wouldn't be doing it."
The decision comes at a time when New York restaurant operators are facing payroll uncertainties. Full minimum wage rose from $8.00 to $8.75 an hour this year and will rise again to $9.00 next year. The tipped minimum will go from $5.00 to $7.50. Labor costs could go even higher if the state’s governor, Andrew Cuomo, has his way. He’s proposed a new full minimum wage of $15 for all workers and the elimination of the lower minimum for tipped workers.
While media outlets have reported that the move was designed in part to redistribute earnings more evenly between the front- and back-of-house staff, Colicchio emphatically denies this and says menu premiums are being allocated to servers' wages. He does say that the decision was made in part to protect servers from the whims of guests who “might not like they way they look” or penalize them for other non-service-related criteria.
Consumer buy-in is the greater question mark when it comes to long-ingrained tipping habits, Colicchio says.
"People are saying, 'How will I punish a server for bad service?' That's crazy. This is the only business that works this way. To that I say don't punish the waiter, punish the restaurant by taking your business elsewhere. It's my job to punish the waiter," he notes.
Is he worried that service and sales will slip without a tip incentive? No way. "I reject the premise that waiters are mercenaries. It's not true. They care about their jobs." But he acknowledges that the success of the new system requires trust on behalf of both servers and the company.
Colicchio is advocating a more professional approach to the way servers are compensated. Servers will be better trained, have sales goals to meet, and will be given raises based on criteria such as meeting those goals or passing tests on subjects such as wine. "It changes the equation for management, and the bottom line is we have to learn to manage differently. We have to think differently about how to keep people motivated," he says.
Colicchio guesses that some guests may choose to leave an extra tip for excellent service, but it would have to be cash, as no tip line will be included on guest checks.
"It's time for a change. It's time to pay the servers a salary," Colicchio says.
Contact Gina LaVecchia Ragone at [email protected]