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Joe’s Crab Shack Drops Tipping In Favor Of Just Paying Servers A Fair Wage

The Houston-based company is the first national restaurant chain to end the practice of tipping—will more follow suit?

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Fred Miller, Flickr // via Creative Commons

If you think about it, tipping in restaurants is a weird practice. Rather than just giving servers a guaranteed wage, it’s up to the customer if the waitstaff gets fair pay. Sometimes that leads to heartwarming viral stories about people whose week was transformed by a kindhearted patron, and sometimes it leads to people quoting the Reservoir Dogs monologue as an explanation for why they opt out entirely. But either way, it’s one of the only professions where a person’s pay is almost entirely determined by the customer rather than the employer.

Joe’s Crab Shack has opted to be the first national restaurant chain to recognize the weirdness of that system. Restaurant Business Online reports that the chain’s parent company, the Houston-based Ignite Restaurant Group, will switch to paying its servers $14 an hour, a move it’ll pay for by raising menu prices 12 to 15 perfect.

Ignite CEO Ray Blanchette told investors late last week […] that the test began in August but was still being rolled into some restaurants as recently as last Tuesday.

Ignite expects the switch to a wage to reduce server turnover. A $14 hourly wage sounds much better than $2.13, which is the wage they’d get, sans tips, at competing restaurants, noted Blanchette. It’s also a yellow light to servers who know they’ll likely start with the least-lucrative shifts if they move to another restaurant.

He also noted a wage model solves some service problems for Joe’s. Waiters and waitresses usually balk at having someone help them with a big table because then they have to split the tip. Joe’s, which has a number of large parties, won’t have to deal with that at the 18 test cites, said Blanchette.

That’s generally a good move for the parties outside of the company itself, too—servers who can make a guaranteed $14 an hour even if they’re working a mid-afternoon shift on a weekday are likely to be happier with their jobs than those who are jockeying for shifts, and the sort of experienced servers who’d scoff at $14 an hour aren’t likely to be working at Joe’s Crab Shack. Customers, meanwhile, will actually save money with the price increase if they’d normally tip in the 20 percent region, and they won’t have to deal with as many up-sell efforts or fake smiles from servers who’ve been taught that their tip is dependent on sucking up to customers. It’s a move toward dignity, in other words, which is a funny thing coming from a company where the servers are expected to take random dance breaks.

But though Joe’s is the first national chain to move away from a tip-supported model, it’s not the only restaurant in the country interested in finding more efficient ways to pay their servers. The New York Times reported on the trend in single-store restaurants around the country back in August:

[I]n Seattle, where the first stage of a $15-an-hour minimum wage law took effect in April, Ivar’s seafood restaurants switched to an all-inclusive menu. By raising prices 21 percent and ending tipping, Bob C. Donegan, the president and co-owner, calculated he could increase everyone’s wages.

“We saw there was a fundamental inequity in our restaurants where the people who worked in the kitchen were paid about half as much as the people who worked with customers in front of the house,” Mr. Donegan said.

Nearby, the Walrus and the Carpenter instituted a compulsory 20 percent service charge. At Manos Nouveau and Sous Beurre, both in San Francisco, the menu prices include tips and taxes. Dirt Candy, an upscale eatery on the Lower East Side of Manhattan, tacks on a 20 percent administrative fee.

All of this makes a lot of sense. The federal minimum wage in the U.S. has gone from $4.25 to $7.25 since 1991, but the minimum wage for tipped worker stayed at a flat $2.13 in the same time. Now, of course, the minimum wage is climbing dramatically in some areas, with state and local laws challenging the $7.25 minimum. With so much uncertainty surrounding wages, and employees in other industries finding themselves with the potential to earn much more than tipped workers, it seems like now is a good time to move in favor of something more consistent—and, ultimately, more dignified for everyone involved.

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