Joe’s Crab Shack Axes Tips, Boosts Worker Wages

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A back-of-the-envelope calculation suggests that the no-tipping policy will actually lead to savings for diners. Find out how.

Joe’s Crab Shack is looking to change the way it pays its workers by eliminating tips and hiking its servers’ hourly wage.

The Houston-based casual seafood chain said it is testing the no-tipping policy at 18 of its 131 restaurants and will consider expanding it if it’s successful.

Many restaurants across the country have eliminated tipping, but Joe’s Crab Shack, which is operated by parent company Ignite Restaurants, is the first national full-service chain to implement a no-tipping policy.

Instead of earning tips, Joe’s servers will be paid a fixed hourly wage of at least $14 an hour based on past performance. To cover the increased wages, menu prices will go up by about 12 to 15 percent, The New York Times reports. For diners that typically pay servers a 20 percent gratuity, the seafood chain’s no-tipping policy could actually reduce their bill.

“It’s simple, really. We believe that consistently great service should always be included in the menu price, so we are taking the responsibility for paying the service staff,” Ray Blanchette, CEO of Ignite Restaurants, said in a statement. “I personally believe tipping is an antiquated model, and you have seen most businesses in America migrate away from it over the last 50 to 100 years.”

Joe’s Crab Shack said paying servers, hosts and bartenders higher, fixed hourly wages should help improve team atmosphere, provide greater financial and employment security and reduce turnover.

“We’re really leading in our industry with regards to [a] national brand going out and testing this thing in a meaningful way,” Blanchette told investors last week. “So we want to be somewhat cautious.”

The no-tipping policy is being tested at these Joe’s Crab Shack locations: Indianapolis and Hobart, Indiana; Columbus, Ohio; Bellevue, Kentucky; Ann Arbor, Auburn Hills and Sterling Heights, Michigan; Omaha, Nebraska; Fairview, Peoria and Schaumburg, Illinois; Robinson and Pittsburgh, Pennsylvania; St. Louis and Independence, Missouri; Olathe, Kansas; and Salt Lake City and West Jordan, Utah.

Do you think restaurants should transition to no-tip dining? Sound off below or on our Facebook page.

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