How will “service included” affect wine?

What is the average tip at Danny Meyer’s Union Square Hospitality Group? It is 21%.

This figure comes from John Ragan, who is the group’s Wine Director. It’s also the same amount that wine prices will be rising under the group’s “hospitality included” initiative, which eliminates tipping at the group’s 12 restaurants starting next month with The Modern. The impetus in moving to a “revenue sharing” model is that kitchen staff, in particular, will see a pay increase since they are often legally forbidden to share in tips.

john_raganRagan says that a diner today who buys a $60 bottle of wine actually pays $72, assuming an average tip. “It’s like paying in two installments,” he says. Under the “hospitality included” pricing, the bottle will simply be $72, service included.

“It’s so much cleaner and easier,” he says. “It’s like a European model for restaurant pricing.” He also compares it to Uber, which has service included, as opposed to a cab.

With total pre-tip bills expected go up about 23%, wine will have a slightly lower increase.

“We realized early on, that it would be easy

to add 25% across the board for all the wines,” Ragan says. “But for many people, wine is an added part of a meal. I’d rather sell two $60 bottles rather than one $100. So the full increase didn’t sit well with us.”

“We need to challenge ourselves to get five percent smarter with wine. How we choose our wines, buy our wines, cellar our wines will all improve.”

Diners sometimes fear that a tips drive sommeliers to recommend higher priced wines. Will this change the diner’s interaction with sommeliers? “No, it won’t,” he says. “We’re looking to make long-term relationships. If someone who is looking to have a $60 bottle of wine gets cornered into a $100 it won’t taste good to them because its not what they wanted. That’s something we’ve understood for a long time. We’re more inclined toward “tomorrow dollars” when a diner comes back and spends $60 again rather than $100 once and never comes back. It really starts with hiring the right people, people who get pleasure out of seeing diners enjoy what they like.”

Sommeliers could take home more pay since some foreign diners, alien to our culture of tipping, currently leave no tip after a large meal. The revenue share model would benefit them in such cases. But, it would also potentially eliminate windfall tips after big Bacchanals.

Diners often think of leaving a low tip as a feedback mechanism about the service. But Ragan says that feedback doesn’t always reach the management. The group is considering how to make that feedback heard more effectively than a 1980s-era comment card.

As I mentioned in a previous post, this new system will affect people, such as Marvin Shanken, who suggested leaving lower tips for the wine portion of the bill after a wine-heavy meal.

But maybe they will move toward BYOB? Ragan says the group is not planning any change in the corkage policies.

Related: “Danny Meyer To Banish Tipping And Raise Prices At His N.Y. Restaurants” [NPR]
“A letter from Danny Meyer” [USHG]

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7 Responses to “How will “service included” affect wine?”

  1. To refer to the uber model of tips included is only one part of the model. The other very important part of the model is the instant rating process, 1 to 5 stars. Will such a rating process be added in your new system? I have never liked the Euro system because of the lack of ability to give feedback.

  2. Hurrah for no tipping, but I will be drinking more wine at home.

  3. This is a troubling trend. First off if the cooks are not making enough money raise their pay. If need be raise food prices. to wrap it around tips is nonsense. Then do not have to be paid from tips to earn more money. Second the real reason for this change is probably because Europeans do not tip at all. In Europe tips are discouraged on restaurant bills. I like rewarding the server who pays attention to my needs. Certainly the high end restaurants in New York understand the importance of good service. But that is not true of every restaurant.

  4. Seattle restaurant pricing is driving customers away. Comparable quality just outside Seattle in any direction without the gouging and overcharging.

  5. I disagree that tipping is discouraged in Europe. There is plenty of subtle encouragement to give your server a small tip. However, in London many restaurants add 12% to your bill as a service fee — you can ask to have it removed, but then you’re essentially telling your server he or she isn’t worth the 12%.

  6. “I’d rather sell two $60 bottles rather than one $100. So the full increase didn’t sit well with us.”

    Am I missing something here? I bet they’d even more rather sell three $60 bottles than one $100 bottle.

  7. The new policy will have to consider people trying to avoid tip and corkage fees:


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