National seafood chain Joe's Crab Shack late last week told investors that the Houston-based company would abandon tipping at all of its hundred plus locations. The move, announced by parent company Ignite Restaurant Group, includes a corresponding wage increase for all Joe's waitstaff and follows on the heels of similar moves by fine dining establishments in San Francisco and New York.
In jumping on the no-tip bandwagon, the company hopes to gain a competitive staffing advantage over its casual dining competitors who may offer starting wages as low as $2.13 per hour, notes restaurant trade publication Restaurant Business Magazine. The wage increase means that food prices will increase 12 to 15 percent, said Ignite CEO Ray Blanchette.
Joe's began testing out the no-tip policy on a limited basis this past August, notes Eater.
While Blanchette believes this move will be a boon to his business, it is not without risk. Several San Francisco restaurants, including Bar Agricole and Trou Normand, went tipless back in 2014, only to recently announce they would return to the standard tip model.
Owner Thad Vogler explained to Eater that getting rid of tips had an unexpected impact: He began to lose waitstaff.
"We haven’t been able to keep servers," said Vogler. "We were hoping more restaurants would switch but, for now, it’s been impossible to compete with more traditional places in keeping front of the house staff who prefer the control and upside of the tip system."
National chain Joe's Crab Shack doesn't have much in common with restaurants like Bar Agricole, and as such they may find success where Bar Agricole could not. Regardless, the move to abandon tips by Joe's Crab Shack is sure to be felt in the casual dinning industry. We'll just have to wait and see if it sticks.
