Danny Meyer: Tip-free restaurants are "more sustainable"

The restaurant legend plans to bar patrons from tipping his staff, as gratuities are going away for his 13 restaurants
The restaurant legend plans to bar patrons fr... 04:39

One day after top restaurateur Danny Meyer announced plans to eliminate tipping off 13 of his New York restaurants by the end of 2016, he joined "CBS This Morning" to explain his reasoning behind the landmark move.

"I love the hospitality business as much as anyone on earth," said the chief executive of Union Square Hospitality Group. "What I don't love is a situation in which over the 30-year-career that I've had, the disparity between what somebody can make in the dining room with the tipping system and what somebody can make in the kitchen has widened by about 200 percent."

He talks to Norah O'Donnell about the secret ... 05:00

Meyer's proposal aims to tackle current New York state regulations that restrict gratuities to servers only.

"On a Saturday night, the cooks are sweating a little bit more while the waiters are counting a lot more cash," Meyer said.

But doing away with the tipping system comes at the cost of higher menu prices -- an estimated jump of about 21 percent. While Meyer could not guarantee that it wouldn't be more, he promised to "try to make it work the best we can."

"It's true the menu price itself will look higher...but the total at the bottom will look the same," he said. "The benefit is...we don't have to worry about who cannot make tips."

The change also comes ahead of a state-mandated increase in the minimum wage -- to $7.50, effective the end of next year - which Meyer said would inevitably lead to an increase in menu prices.

"We looked at the moment in time and said if we have to raise our prices anyway, why won't we use this opportunity to make the restaurant business a much more sustainable place?" he said.

Ultimately, Meyer said banishing the tipping system would create an "equitable playing field" for everyone. He also expressed hope that the pay boost for employees would also help resolve the current labor shortage resulting from costly culinary tuition costs.