Why the CEO of Shake Shack Wants You to Stop Tipping
Business + Economy

Why the CEO of Shake Shack Wants You to Stop Tipping


Danny Meyer, the famous restaurateur, is famously anti-tipping. In October 2015, he abolished tipping at his restaurants and raised menu prices to so he could pay his workers better. And other restaurateurs have followed suit.

But why is Meyer, who also owns Shake Shack, so opposed to the practice of leaving waiters some cash in exchange for their service?

"Tipping is one of the biggest hoaxes pulled on an entire culture," Meyer said in an interview for the Sporkful podcast, which we first saw on Yahoo Finance.

Meyer went on to explain that tipping was established as a way to get away with not paying workers after slavery was abolished.

"Tipping started in our country right after the Civil War," Meyer explained. "The restaurant industry as well as the Pullman train car industry successfully petitioned the United States government to make a dispensation for our industries that we would not pay our servers, but it wasn't considered slavery because we would ask our customers to pay tips. And therefore no one could say they that were being enslaved."

Related: Smart Reasons to Eliminate Tipping So Everyone Wins

"And, no surprise but most of the people who were working in service professional jobs and restaurants and in Pullman train cars were African American," Meyer continued. "That's the history of how it started in this country. You don't see it Asia. You don't see it primarily in most European countries. But that's what it was, and it created a completely false economy."

While restaurants in the U.S. can no longer get away with paying workers nothing, they still benefit greatly from labor laws that keep wages for tipped workers incredibly low. The federal minimum wage for tipped workers in the U.S. is $2.13 per hour before tips, while the minimum for non-tipped workers is $7.25 per hour. Only a handful of states require tipped workers to be paid the state's full minimum wage before tips.

But a movement is sweeping the restaurant industry, thanks in part to Meyer.

A number of restaurants have eliminated tipping altogether in order to pay workers higher wages. But the experiment has been challenging, according to a recent report from The New York Times.

In order to offset the cost of higher wages, many restaurants have raised menu prices. Others have cut costs by shrinking their staff or buying cheaper ingredients. According to The Times, a handful of restaurateurs including David Chang and Tom Colicchio have already walked back on their no-tip policies.

This article originally appeared on Business Insider. Read more from Business Insider:

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