Nationwide Restaurant Chain Eliminates Tipping

With Danny Meyer’s making recent headlines with restaurants under the Union Square Hospitality Group eliminating tipping, the head of Ignite Restaurant Group has also recently revealed to investors that all Joe’s Crab Shack locations will be testing a gratuity-free model. Joe’s Crab Shack has locations nationwide, and has already implemented no tipping in 18 restaurants with more on the way. Being the first of a casual mid-range chain to implement gratuity-free policies, this proposes options for other restaurants to follow its model.

The policy has increases serves wages to start at a flat $14 an hour, instead of $2.13 and tips. The menu prices will rise by 12 to 15 percent to compensate the extra labor costs. However, noted by generous tippers, implementing such policies while increasing menu prices is still a cost benefit to themselves.

Ray Blanchette, CEO of Ignite, believes Joe’s Crab Shack’s conversion to a gratuity-free policy is sensible because their consumers are mostly big groups and waiters dislike doubling up on tables and splitting tips. The policy test is expected to run through at least the end of the year, and Blanchette says “We’re really leading in our industry with regards to national brand going out and testing this thing in a meaningful way. So we want to be somewhat cautious.”

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