Joe’s Crab Shack Backs Away From No-Tipping Policy

Image courtesy of SA_Steve

Six months after Joe’s Crab Shack became the first national full-service chain to test a no-tipping policy, the company is ditching the idea. 

Joe’s Crab Shack is scrapping the gratuity-free model at all but four of the 18 locations participating in the tests and bringing back its standard tipping system, CNNMoney reports.

Bob Merrit, new CEO of Ignite Restaurant Group, Joe’s parent company, announced the change of pace during an earnings call last week.

“Our customers and staff spoke very loudly [about the policy], and a lot of them voted with their feet,” he said.

The pilot restaurants lost an average of 8% to 10% of customers during the test run. Research by the company found that about 60% of customers disliked the policy because it took away an incentive for good service and that they didn’t trust management to pass along money to employees.

“We tried it for quite a while and we tried communicating it different ways,” Merritt said.

Under the test — which began at just a few restaurants in August 2015 — the restaurant made up for lost gratuity by implementing a new set wage practice. Servers were to be paid at a rate starting at $14/hour based on their past performance.

To generate the revenue needed for the new wages, the company said at the time that it would execute a 12% to 15% increase to the restaurant’s menu. These increases will now revert back to normal.

Joe’s Crab Shack backs away from no-tipping policy [CNNMoney]