Tipping is very important in America’s dining culture, since waiters rely on these tips to earn a living. In most countries, waiters earn much higher wages and tipping is often deemed unnecessary, if not frowned upon. Some restaurants in the U.S. have taken these customs as inspiration of their own brands.
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Joe’s Crab Shack, a Houston based seafood chain that was criticized for their table decor that illustrated graphic depictions of lynching, is back in the public eye after experimenting a “no-tipping policy.” This policy was introduced last summer in Indianapolis and moved to all eighteen of their Midwest locations.
The shack raised their menu prices and refused tips so that their employees did not have to rely so heavily on them to get a minimum wage. However, their customers did not respond favorably. Since this experiment started, Joe’s Crab Shack has seen a decline in customers by 10 percent and the chain has decided to cut all but four restaurants working under this method.
There were two main reasons this policy failed with customers. For one, the customers did not want to lose their ability to incentivize good service, and they didn’t trust the management at Joe’s Crab Shack to actually raise the wages of its staff.
Photo courtesy of @officialjoescrabshack on Instagram
Joe’s Crab Shack’s chief executive, Bob Merritt, claimed that the system will need to change in the future, but it’s clear from the numbers that this is not the right time to make such drastic changes. Being owned by parent company Ignite Restaurant Group, and backed by several investors, a loss of 10 percent of their customers is just too risky.
There are more and more restaurants adopting a similar policy and seem to be getting better results. Nora O’Malley, co-owner of Lois, a New York City wine bar, says that a tip-free establishment “eliminated an element of confusion.”
It’s too soon for a policy so drastic to become mainstream, but this could be the future of dining in America. Joe’s Crab Shack still has four locations under this program and its publicity may inspire other restaurants to be just as bold.