Joe's Crab Shack has officially announced that its restaurants will no longer allow its workers to accept tips, but will compensate for it by increasing server wages.
The seafood restaurant chain has already eliminated tipping servers for good service in 18 of its restaurants and is looking to eventually expanding this restriction in its more than 130 branches in the country.
This makes Joe's Crab Shack the first restaurant to adhere to the recommendation of a no-tipping system that was first implemented in the fine dining world a few months back.
"We picked a broad range of locations with different nuances to see how it responds in each different area," explained Raymond Blanchette, CEO and president of Ignite Restaurant Group where Joe's Crab Shack is part of. He said that the restaurant chain is trying to see whether the model is effective for the establishments and how the national rollout will be like.
To implement this, the tip line has been eliminated from the restaurants' receipts and signs have been posted informing customers of the new policy. Basic wages for servers will also be increased by around $14 an hour, though servers with better performance and experience can expect to be paid more.
Blanchette also said that menu prices will increase by at least 12 percent but, ultimately, the restaurant chains hopes that people will be getting more out of their money's worth.
"It's one of the reasons we are testing," Blanchette elaborated. "To make sure people are judging the total experience and not just menu price."
Blanchette added that he hopes the new compensation rates will help reduce labor costs. Considering that the turnover at Joe's can sometimes exceed 100 percent, he hoped that the higher wages will increase employee retention and can help establish a better and more experienced workforce.
The company has made plans to see that the policy can be implemented in all of the restaurants nationwide, but so far has not established a timeline of events on how to get to that point yet. Blanchette admitted that the change will be difficult to facilitate, but also believes in the no-tipping policy.
In the meantime, the other restaurants under the Ignite Restaurant group such as Brick House Tavern + Tap don't have plans to get rid of tipping at their establishments yet.
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