Masa, one of the most expensive restaurants in the country, is copying other restaurants’ model for replacing tips with server wages, but the specifics are what make this a riveting case for all full-service establishments.
Like earlier converts to all-inclusive pricing, the New York City shrine to sushi is aiming to increase its checks to cover what the waiters and waitresses will be paid, a target usually around what they made with tipping. With a price fixe menu of $450 per person, that computes to an increase of $145, for a new base price of $595 a head, excluding beverages, starting in March.
Clearly this will be a trial of how open-minded customers will be to all-inclusive pricing. Early discontinuers of tipping say customers have struggled with the notion of paying 15 or 28 percent more for apps and entrees even if the meal costs less than it would if the tab and tip were separate. The overall outlay may be lower, but there’s still the sticker shock of paying considerably more for an entrée, or $145 more for a meal in the case of Masa.
It’s the dynamic that prompted Gabe Stulman of New York City’s Fedora to cut some of the restaurants’ adjusted prices just a few weeks after the place dropped tipping. It’s also affected Fedora’s sales mix. Customers bought a lot of steak when it was priced at $34, an amount that translated into a tip of $7 or $8 just on that item. Now, with servers’ compensation included, the price is $39, or less than what customers formerly paid. Yet customers balk at the $5 increase in the price of a former favorite, according to Stulman.
Masa doesn’t exactly target impulse buyers. But with a two-person tab likely to fall considerably above $1,000, even its patrons could suffer some sticker shock.
If not, it could be the telling indicator that all-inclusive pricing will work. It just has to be explained effectively to customers so they know they’re not being gouged.