Restaurateur Danny Meyer explains why he ended his restaurant's no-tipping policy

Restaurateur Danny Meyer doesn’t think customers should tip when they pick up takeout or buy coffee.

“If you’re just going out to eat and it’s just a transaction — I give you money, you give me a cup of coffee — I don’t think there’s any obligation to tip,” Meyer said on CNBC’s “Squawk Box.” Thursday .

meyer founded shake house and serves as Chairman of its Board of Directors. The burger chain added tipping to its restaurants last year. He also founded the Union Square Hospitality Group, which primarily operates full-service restaurants. The company’s restaurants include Union Square Cafe, Gramercy Tavern and Daily Provisions, a fast-casual restaurant chain.

As more businesses adopt Square and Toast’s point-of-sale systems, customers are becoming more accustomed to being prompted to tip when they pay. But some people leave feeling overcharged or confused about how much to tip.

Shake Shack CEO Randy Garutti, left, and founder and chairman Danny Meyer on the floor of the New York Stock Exchange (NYSE) on Jan. 30, 2015.

Spencer Pratt | Getty Images

At full-service restaurants, some advocacy groups, such as One Fair Wage, are pushing to eliminate tip wages. Opponents of tipping say the practice leads to erratic pay for waiters and could encourage sexual harassment and racial discrimination.

President Joe Biden has pledged to eliminate tip wages during the 2020 campaign. A handful of states, including California, have banned such wages.

Meyer has a complicated history with tipping. In 2015, he announced that his restaurants would no longer accept tips in an effort to close the income gap between waiters and chefs. Five years later, with many of Meyer’s restaurants reopening amid the coronavirus pandemic, he reversed that decision.

“It’s inhumane to tell our waiters you can’t accept that kind of gratitude,” he said.

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