Joe’s Crab Shack Tipping: CEO Drops Tipping Practice In Favor Of More Fair Trade Off?

Joe’s Crab Shack tipping is being dropped in favor of a better trade off for employees. This is the approach that CEO of Ignite Restaurant Group Ray Blanchette is aiming for. Ignite owns Joe’s Crab Shack as well as the sports bar, Brick House.

According to a Fox News report, Blanchette is following in the footsteps of Danny Meyer’s Union Square Hospitality Group. The business was in the news last month when the CEO announced its decision to end tipping. The traditional policy was seen as being unfairly distributed since servers were rewarded for their service, while dishwashers and others behind-the-scenes weren’t as well compensated in terms of tipping.

The new Joe’s Crab Shack tipping policy will have its advantages, according to Restaurant Business. Servers will begin at a wage of $14 an hour, but amounts will vary from server to server based on past performance. In order to offset the wage increase, the company is raising its menu prices by 12 percent to 15 percent.

Joe's Crab Shack no longer allowing tipping (Photo Credit: Heather Tooley).
Joe’s Crab Shack no longer allowing tipping (Photo by Heather Tooley).

Ignite predicts that the changes will reduce server turnover. According to the Blanchette, “a $14 hourly wage sounds much better than $2.13, which is the wage they’d get, sans tips, at competing restaurants.”

In banning the Joe’s Crab Shack tipping policy, it’s also a deterrent for servers who might consider moving to another restaurant since they’d start with the least-lucrative shifts.

Blanchette explains that the wage model solves some service problems for Joe’s since some waiters and waitresses usually hesitate at having someone help them with a large table because in that instance, they have to divide the tip. Joe’s hosts a number of large parties and this alleviates the problem at 18 of Joe’s sites.

The CEO suggests that customers who once tipped generously may find themselves spending less money than before on a meal. This is due in large part to price increases being less than 20 percent.

Although Joe’s Crab Shack tipping is being dropped, the test will probably run through the rest of the year. There are currently no plans to begin a similar test run at Ignite’s other restaurant, Brick House sports bar.

Other high-profile independent restaurants are choosing to do away with tipping and have servers start with a set wage. Joe’s is one of the first to try this new policy.

(Photo Credit: Diadaco via Wikimedia Commons).
(Photo Credit: Diadaco via Wikimedia Commons).

Ignite began testing the idea of eliminating Joe’s Crab Shack tipping back in August. The new policy will now be enforced at all of its 113 locations. Blanchette told investors last week that he’s aware Ignite is a leading national brand and wanted tested conducted in a “meaningful way.” He adds that the organization wants to be “somewhat cautious” about their milestone decisions.

Meyer from Union Square says that that tipping “has lost any value it had” and was dropping the practice. Restaurants included under the Union Square Hospitality Group are Union Square Cafe and Gramercy Tavern.

Meyer told All Things Considered back in October that patrons also used tipping as a means of punishing servers unnecessarily if they didn’t feel service was up to par.

An NPR report had an excerpt of Meyer’s view on tipping and how it had changed over time.

“I think that restaurant patrons have unwittingly believed that they could, if they wanted to, use their tip to punish bad service, and/or to praise great service. What that’s done over the years has actually been quite the opposite, because the average American restaurant-goer leaves the exact same tip, irrespective of the service they receive. And unfortunately, none of those tips that you leave in a restaurant may be shared with the full team, i.e. the cooks, the dishwashers, the prep cooks, the butchers, etc.”

It’ll be interesting to see if Joe’s Crab Shack tipping policy be a win-win for servers and patrons as time progresses.

[Photo Credit: Michael Barera via Wikimedia Commons/Cropped & Resized/BY-SA 4.0]

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