When to tip according to Shake Shack founder Danny Meyer

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

“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 on CNBC’s “Squawk Box” on Thursday.

Meyer founded Shake Shack and serves as chair of its board. The burger chain added tipping to its restaurants last year. He also founded Union Square Hospitality Group, which mostly operates full-service restaurants. The company’s eateries include Union Square Cafe, Gramercy Tavern and fast-casual chain Daily Provisions.

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

At full-service restaurants, some advocacy groups like One Fair Wage are pushing to eliminate the tipped wage. Tipping opponents say that the practice results in unstable income for servers and can fuel sexual harassment and racial discrimination.

President Joe Biden pledged to end the tipped wage on the campaign trail in 2020. A handful of states, including California, have already banned the pay system.

Meyer has a complicated history with tipping. In 2015, he announced his restaurants would no longer accept tips in an effort to narrow the income gap between servers and cooks. Five years later, as many of Meyer’s restaurants reopened their doors during the Covid pandemic, he reversed the decision.

“It was inhumane to tell our servers that you can’t accept that expression of gratitude,” he said.