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The (not) Tipping Point

Sushi Yasuda, an expensive restaurant in New York, recently made the choice to eliminate tips for its waitstaff.

Yes, you read that correctly. It’s true.   No more tips.  Instead of spending 30 seconds after getting your check and pondering how much to write on the tip line, instead you just pay the bill and leave. It’s that simple.

The good thing about it is that there is no confusion.  On every receipt, the restaurant has the following  statement:

“Following the custom in Japan, Sushi Yasuda’s service staff are fully compensated by their salary. Therefore gratuities are not accepted.”

This example is rare because the vast majority of restaurants do not do this … at least not in the U.S.  In the US, tipped employees are paid minimal amounts and customers are accustomed to paying at least 15% extra, even when the service is not great.  But in this case, Shshi Yasuda actually compensates the staff with more money (and with benefits) so the tip is not needed.

Other higher end restaurants are considering as well, but there is no word on whether any will adopt the new model or if less expensive restaurants would consider it.

On one hand, I think it would be great not to have to worry about tipping.  Get your check, swipe your Visa, and head out.  On the other hand, there is the obvious risk that this will make prices appear too high, even if the final bill would be the same once the tip had been added.

I’m sure all the MBAs of the world have opinions about this.