Feedback from smaller restaurants on eliminating tips has been mixed. Most of those restaurants are upscale restaurants that pride themselves on fine dining and a top notch level of customer service. But how would eliminating tips work for a casual chain of restaurants? Joe's Crab Shack which has more than 130 restaurants tested the no-tipping policy in 18 restaurants by raising prices and sharing the proceeds with staff.
Company research had found that 60 percent of the restaurants’ customers disliked the change in tipping, Mr. Merritt said. They wanted to inspire good service with their tips and they didn’t trust management to pass on the money to its employees.
Sometimes perception is reality. Customers enjoy being in the driver's seat and feel they can positively or negatively impact service by owning the power of the tip.
“The system has to change at some point, but our customers and staff spoke very loudly,” Mr. Merritt said. “And a lot of them voted with their feet.”
The number of customers at the no-tip locations dropped 8 percent to 10 percent on average, he said.
The results were significant enough for Joe's to pull back the number of locations from 18 to 4. Until there is a city wide regulation or a major chain adopting a no-tipping policy, I believe we will continue to be a tipping society. With minimum wages on the rise, the service industry should come out in a better position regardless.