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It’s reasonable to assume the brain behind Union Square Hospitality Group has an opinion about tipping workers. His answer and reasoning, however, might surprise some.

“I don’t think you ever need to tip anywhere,” Meyer told Yahoo Finance executive editor Brian Sozzi on his Opening Bid podcast on Yahoo Finance (see video above or listen below).

Meyer has decades of experience running hospitality establishments. Alongside founding Shake Shack (SHAK), his portfolio boasts Union Square Cafe, The Modern, and a Shake Shack cafe at Citi Field.

“The word gratuity comes from the word ‘gratitude,’” he said. “And if you genuinely feel grateful for anything at that level, I think tipping is a wonderful thing to do.”

“If you feel that someone did something that made you not want to say thank you, I don’t think you have to leave a tip,” he said.

Present-day tipping has had its share of critics thanks in part to a phenomenon known as “guilt tipping.” 

Guilt tips get tacked on to routine things, such as take out coffee. Where the old school tip jar once sufficed, it's been replaced by tablets that often make customers go through a tipping screen before signing.

Meyer did away with tipping altogether in 2015, the same year he took Shake Shack public. At that time, he said the company would adopt a “hospitality included” model that eliminated the need to tip. Meyer said the move enabled them to “compensate all of our employees equitably, competitively, and professionally.”

Meyer views kitchen staff to be as invaluable and hardworking as wait staff, and in the tipping environment, “it didn’t seem fair that you’re paying the offense [dining room staff] but the defense [kitchen staff] has to go hungry,” he told Sozzi. 

Surviving the food service industry tests plenty of mettle. 

In May 2023, the Bureau of Labor Statistics reported that the two million plus workers in wait staff positions earned an hourly mean wage of $17.56, totaling $36,530 per year. Top earners made $28.89 per hour while the bottom tier pulled $8.94 an hour. 

Meanwhile, turnover is high. Toast, a takeout and delivery service provider, recently reported that restaurant staff turnover was about 80.2% since 2013. In the days of Covid, it reached 132%.

During Covid-19, like many others in his position, Meyer pivoted to keep operations afloat and reinstated tips.

Although kitchen staff can’t be tipped, they can receive other perks, which equates to a percentage of the restaurant’s revenue for his kitchen workers. “Even on a busy night, anyone in the kitchen has an incentive to also work hard because they’re going to get rewarded,” he said.

No matter the establishment, Meyer is resolute about tipping. A tip is a thank you and “I don’t always feel like saying thank you to that person,” he said. “I don’t necessarily think that person did anything thank worthy.”

Shake Shack recently traded to a 52-week high of $139.58. The stock is up 83% year to date, out-performing burger rivals McDonald's (MCD) and Wendy's (WEN).

Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.

Grace Williams is a writer for Yahoo Finance.

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