The reason why this chain is getting rid of tipping
Ignite Restaurant Group, which owns Joe’s Crab Shack, has announced that it’s experimenting with phasing out tipping at its casual seafood restaurants, and it’s the first major chain in the US to do so. For now, it’s happening at only 18 Joe’s Crab Shack locations, but if all goes according to plan, it will become a chain-wide policy — and more restaurants may follow suit.
Ray Blanchette, President and CEO of Ignite, told CNNMoney, “We picked a broad range of locations with different nuances to see how it responds in each different area.” He added, “We wanted a random sampling that would be indicative of how a national rollout would be.”
The changes being made are for good reason. Instead of receiving $2.13 per hour plus tips, waitstaff will receive a flat rate of $14 per hour. To cover the additional cost of paying the waitstaff, the restaurant’s prices will increase between 12-15%. Which means, technically, people eating at Joe’s Crab Shack will end up paying less than they have been paying — assuming they’ve been adding a 20% tip to their check.
Blanchette made the announcement during an investor phone call. He called the practice a “forward-thinking policy”. He said, “Servers, hosts, bartenders are paid now higher, fixed, hourly wages, and it’s expected to result in an improved team atmosphere, a significant reduction in turnover and greater financial security for the employees.”
We imagine waitstaff everywhere might be a bit weary of how these changes will affect them, understandably. Waitstaff have always relied on tips as the majority of their take-home money, so we can totally understand their concerns. But for the most part, people seem to be on board.
While Joe’s Crab Shack is the first major chain to do away with tipping, other companies are looking into a similar business model as well. Union Square Hospitality Group, based in New York, plans to “eliminate tips at its 13 New York-based restaurants, including Gramercy Tavern, The Modern, Blue Smoke and Union Square Café,” according to ABC News.
Tipping has proven to be unfair in many restaurants, with some waitstaff receiving way more than others —or sometimes, not at all. Sometimes it has to do with the level of service provided or the connection made with customers, but other times it’s just the luck of the draw. Hopefully, this shift toward a higher hourly pay alleviates the often-times unpredictable wages servers make.
(Featured image via Shutterstock)