U.S. national seafood restaurant chain Joe’s Crab Shack is joining the slowly but surely increasing ‘no tipping’ movement. The chain will be eliminating tipping and offering what restaurant workers activists call the hopeful start of a true living wage structure that will also lead to restaurants offering benefits like paid time off and health insurance.
Joe's Crab Shacks will be offering servers a starting wage of $14 an hour with the bumped up wages being offset from price increases of 12 to 15 percent.
The decision follows the example of the Danny Meyer's Union Square Hospitality Group and other trailblazing restaurants in the U.S. which have already eliminated tipping. By introducing price increases or simply adding a service charge to each bill, owners are able to offset the costs.
Joe's Crab Shack is the first major restaurant chain to officially implement a no tipping policy.
CEO of Joe's parent company Ignite Restaurant Group says that the move should reduce staff turnover, improve service quality and actually lower prices for customers who usually tip much more than 12 percent. Typical tips in the U.S. range from 15 to 25 percent of the bill.
Joe’s began testing the new policy in August in Omaha, Pittsburgh, Indianapolis and will begin to roll it out across the country within the next few weeks.
Several restaurants in New York City, which is considered by many as the tipping capital of the world, have introduced a no tipping policy. Although there is no official word on how that has gone, many non-union and non full time restaurant servers are against the policy. These workers make more in tips and often do not report earnings to the IRS as there is no way the profit can be recorded, other than self accounting.
Meanwhile in Fairbanks, Alaska, Lunch Cafe & Eatery, the first restaurant in the state to drop tips in July, has reported it a success, despite having to to balance out wage increases "upward of 30 percent" from the then $8.75 per hour. Alaska is one of eight U.S. states where tipped workers are paid the full minimum wage and are taxed on tips.
Time will tell if this trend is picked up nationally.