Joe's Crab Shack No-Tipping Policy Was No Success
Lost up to 10% of its customers at test sites that dumped gratuities
By Jenn Gidman,  Newser Staff
Posted May 13, 2016 7:13 AM CDT
Back to the old way.   (Shutterstock)

(Newser) – The first full-service national chain to get rid of tipping is, for the most part, reinstating the practice that its former CEO once called "antiquated." Joe's Crab Shack, which had tried out the gratuity-included model in 18 of its 130 or so restaurants across the country, is going back to the old way of doing things in 14 of those restaurants, CNNMoney reports. The reason for the backtracking was made clear in the company's first-quarter earnings call last week: "Our customers and staff spoke very loudly [about the policy], and a lot of them voted with their feet," said Bob Merritt, the CEO of parent company Ignite Restaurant Group. Test eateries—which had compensated for the lack of gratuities by raising menu prices and giving increased, fixed wages to staff—lost between 8% and 10% of their customer base, per the New York Times.

Reuters reports that some workers at the test sites got a $12-an-hour minimum, and that menu prices were boosted less than 20%; advocates of the no-tipping model say it allows servers to count on a fixed income and eliminates patrons' need to do math. But about 60% of the chain's customers didn't take to the new model, company research revealed: Patrons apparently didn't think the waitstaff would be as motivated to provide decent service if they couldn't count on a tip, and they were also wary that management might not share the extra money being pulled in through higher menu prices with staff. So why is Joe's keeping four of the test restaurants on the no-tipping system? Merritt says the model actually worked in those locations, though they're trying to figure out why. (Tipping is un-American, says this no-tipping advocate.)