Before Danny Meyer Banned Tipping, Zoe Ma Ma Was Trying a Variation

Authors like Michael Pollan (The Omnivore’s Dilemma) and Eric Schlosser (Fast Food Nation) changed the way we think about food. How were the animals treated? How were the vegetables grown? How much corn is hidden in that meal? Now Danny Meyer is changing the conversation about who makes and serves food. Last month Meyer issued a seismic announcement: tipping would be eliminated at all restaurants in his Union Square Hospitality Group, which includes some of New York’s highest-end and most beloved eateries, from Gramercy Tavern to Union Square Cafe. While Meyer certainly wasn’t the first to take on wage inequity in the food industry, he brought the conversation out of the realm of fast-food workers and into the world of fine dining.

Since then, questions, speculations and pontifications have swirled. What would this mean for servers accustomed to taking home big tips? Would the best servers quit and look for work elsewhere, at places where the old rules still apply? Would higher prices – raised in order to generate the pool of money to better compensate both front- and back-of-the-house staff — scare off diners?

It’s too soon to know. Meyer’s “Hospitality Included” plan will roll out in phases, starting later this month at The Modern. But here in Denver, we don’t have to wait. A couple of restaurants, including Zoe Ma Ma, a fast-casual near Union Station, have already tackled the issue of living wage. Unlike Meyer, Edwin Zoe, CEO of Zoe Ma Ma, chose to address the issue with a 15 percent “sustainability initiative fee” added to all bills unless a diner opts out. (Originally the fee was 20 percent, but it was quickly lowered.) The fee, which Zoe says goes toward living wages as well as more organics, recycling, renewables and cage-free products, is applied only in Denver. This past summer, when I reviewed Zoe Ma Ma, I asked Zoe why the fee wasn’t also assessed at the original location in Boulder. His answer then underscores just how complex the issue is, even if the motivation behind it is clear. He was waiting, he said, to see if the “SI fee proves not harmful to our business.”

This week, in the wake of Meyer's announcement, I connected with Zoe again to ask about what affect the policy has had. Again, he needed more time "to be sure this is viable,” he said. Here's more of our conversation:

Westword:  How does it make you feel as a businessperson to know that Danny Meyer is phasing out tipping (and significantly raising prices) at all of his full-service restaurants?

Edwin Zoe: To be clear, “no tipping” is really about addressing the greater issues of fair wage and living wage. As you know, I am an advocate for fair and living wage. Therefore, it’s no surprise that I feel it is very positive for other businesses to do the same. However, I do not believe we, as individual businesses leading the charge, can get us there on a societal level. We can highlight the issue, not resolve it. To resolve the issue will need legislative mandate. Without legislative mandate, advocate businesses (especially price-sensitive ones such as quick-service) will compete on an uneven field.

Please help us understand the impact of the Sustainability Initiative fee. Can you help quantify the impact on compensation? Is it evenly distributed to cooks and people who work the counter? Have you been able to increase the amount of organic foods you buy because of increased revenue from the SI fee?

Quick-service and fast-casual jobs are generally minimum-wage jobs. Living wage in Denver ranges between $10.79/hour (according to livingwage.mit.edu) to $13.88/hour (according to Economic Policy Institute). Our goal is to get our full-time employees to $11 to $12/hour after three months of training. The impact is a 33 to 45 percent increase. This increase applies to both front-of-house and back-of-house employees. We have been able to absorb the substantial increase in the cost of organic flour (35 percent increase this year and 350 percent premium over conventional flour), and we are looking to incorporate organic pork in the coming months.
How has customer reaction to the fee changed over time? Is there more acceptance with the 15 percent fee than the original 20 percent?

The reactions are substantially positive. However, the few negative responses tend to be quite vocal. Difficult to quantify, but I think so.

Have you seen a correlation to the fee in Denver and your volume and/or bottom line?

Difficult to quantify correlation between fee to volume and/or bottom line. My sense is that it may have had a slightly negative bias due to the feedback from the negatives that they will not patronize our business because of the policy.

Next week we'll check in with Nancy Program, owner of Abrusci’s Italian Restaurant in Wheat Ridge, which also instituted a no-tipping rule this year.