Last year, Joe’s Crab Shack made the decision to be the only chain restaurant to test out a no-tipping policy. Other restaurants that don’t serve their food in metal buckets tried it out, so maybe it could work for them. Servers at Joe’s received a starting hourly wage of $14 sans tips instead of their usual $2.14 an hour plus tips. Sounds great right? Employees seem to get a pay increase, and you wouldn’t have to fool around with your tip calculator app. After all, there’s been crazier concepts in the restaurant industry. However, food prices had to go up to recoup the pay increase, and after ten months of trial and error, Joe’s will be rolling back their no-tipping policy after both staff and customer disapproval.
In an interview with Nation’s Restaurant News, Ignite Restaurant Group’s CEO Bob Merritt spoke about the experiment that was implemented at 18 Midwestern Joe’s Crab Shacks:
“The system has to change at some point but our customers and staff spoke very loudly and a lot of them voted with their feet.”
Joe’s Crab Shack lost quite a bit of clams on this 10 month test. Labor expenses increased, operating margins went up, and Ignite Restaurant Group (which also owns Brick House Tavern + Taps) saw a 3.5 percent revenue drop. It’s nothing compared to what other chain restaurants saw the first quarter, but Joe’s Crab Shack didn’t have a health scare. However, the brand wasn’t totally in the clear when it comes to controversy.
The “No tips for you!” experiment has affected the chain in a way that it will be only continuing with the policy in four restaurants that saw a high success rate. With car share services now getting on the tip wagon, it looks like tips for the most part will continue to be non compris in the United States.
(Via: Nation’s Restaurant News)
