Joe’s Crab Shack Defects from Gratuity-Free

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Several months after going the no-tipping route, Joe’s Crab Shack has now rolled back the model from 18 restaurants to just 4. CEO Bob Merritt tells investors that customers simply don’t like it, and foot count is down 8 to 10% on average among the locations.

The chain was originally praised for their efforts, which followed on the heels of higher-end restaurateurs like Danny Meyer, Gabriel Stulman and Andrew Tarlow. Overall they raised server wages to $14 an hour and menu prices by 12 to 15%. “We tried it for quite a while, tried communicating it different ways,” Merritt explained, but a large portion of guests were unswayed. Research indicates that about 60% of guests disliked the model, either because they didn’t trust management to pay the higher wages or they preferred being able to incentivize good service.

Joe’s will revert 14 locations back to their former tipped model, but the remaining 4 have apparently been working much better. Merritt says they plan to treat those stores as a rich source of research, and figure out what distinguishes them from locations where it doesn’t work.

To read more, click here.

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