Fedora, one of the New York City restaurants that decided to replace tipping with a revenue-sharing compensation model for servers, has scrapped the experiment after four months.
Proprietor Gabe Stulman told EaterNY.com that he’s reverted back to tipping last night.
In a statement issued to the website, Stulman said he still believes in the approach of paying servers instead of having them rely on tips for the bulk of their income, but could not make it work at Fedora, a casual restaurant in a trendy area of Manhattan. The particulars of the place required that he either raise prices again or cut wages to make a compensation setup work, Stulman said. He opted instead to reinstate tipping.
Almost from the time he did away with tipping, Stulman had noticed considerable sticker shock on the part of customers, he explained at a “town hall meeting” on tipping in New York City about two weeks after Fedora made the change. Stulman had raised the restaurant’s prices to generate funds for paying servers instead of leaving them dependent on tips.
In some instances, Stulman said, customers were paying less for a dish than they did when a tip was added to the charge. He cited the example of a steak that sold for $34, for which guests typically left a 22.5 percent gratuity, meaning their total outlay was about $41.
With the elimination of tipping, Fedora raised the price of the steak to $39, gratuity included. Yet many diners just did not take to the setup, and sales plummeted, Stulman said at the meeting.
As part of the experiment, Stulman cut some of his post-tipping prices and sales rebounded, he told Eater. He also noted that he didn’t lose a single server because of the discontinuation of tips.
Prices for tonight’s dinner service have been returned to the pre-experiment level, according to Eater.
The change comes a week after the first sizable chain to drop tipping, Joe’s Crab Shack, announced that it was switching back to gratuities at 14 of the 18 restaurants where it tried a revenue-sharing system for compensating servers.