Shake Shack Founder Blasts Tipping for To-Go Orders

Famed restauranteur and Shack Shack founder Danny Meyer believes customers shouldn’t have to tip for to-go orders.

“If you’re just taking out food, and it was just a transaction — I give you money, you give me a cup of coffee — I don’t think there’s any obligation to tip whatsoever,” Meyer said in an interview on CNBC’s “Squawk Box.”

Meyer was responding to a question about the proliferation of point-of-sale devices from companies such as Square and Toast, which allow customers to tip staff anywhere from 15% to 25%. In many instances, the devices have replaced the omnipresent tip jar.

But these public displays of satisfaction have caused many people to feel social pressure to tip — even if they don’t want to.

A June 2023 survey by software company Capterra found that roughly half of consumers feel manipulated into tipping on a point-of-sale tablet during checkout.

In fact, when Starbucks implemented digital tipping earlier this year, many customers took to social media to complain.

Related: More Businesses Are Asking Customers For Tips — Should You? Don’t Make These 5 ‘Guilt-Tipping’ Mistakes.

Meyer’s has changed his stance on tipping

Meyer is the founder and CEO of the Union Square Hospitality Group (USHG), which runs high-end restaurants such as the Union Square Cafe and Gramercy Tavern, and the fast-casual chains Daily Provisions and Shake Shack.

In 2015, he eliminated tipping in his restaurants by adding a “hospitality” fee to all bills. The idea was to raise the pay for junior dining room managers, cooks, dishwashers, and other kitchen workers.

But Covid changed everything, he said on Squawk Box. When customers started to return to restaurants, they wanted to express their thanks by tipping.

“It was inhumane to tell our servers, you may not accept that expression of gratitude,” Meyer explained. “So we scrapped it [the no-gratuities policy].”

In 2020, USHG allowed customers to tip again and began to use point-of-service systems to collect the money. Meyer added that his restaurants still provide a percentage of their revenue each night to kitchen workers so that they do as well as the servers on busy nights.

When asked what the proper amount to tip is, Meyer said 20%.

“I think people appreciate warm hospitality. They appreciate a sense that you’re on their side, and they like to reward that. They don’t like to be forced into it.”