Joe's Crab Shack Just Monumentally Changed the Game for Servers

November 11th 2015

Alex Mierjeski

Seafood restaurant Joe's Crab Shack will become the first national full-service chain to eliminate tipping, opting instead for paying its employees higher wages, CNBC reported.

The announcement in an investor call last week came after more than a dozen stores began testing the policy in August, according to the Huffington Post. The change will roll out in 18 of the company's stores.

"Servers, hosts, bartenders are paid now higher, fixed, hourly wages," Ray Blanchette said in the call, explaining that the "forward-thinking policy" would replace "antiquated" tipping methods that fostered an unhealthy atmosphere of competition in the workplace. The raise, he said, is "expected to result in an improved team atmosphere, a significant reduction in turnover and greater financial security for the employees.

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Employees were paid a tipped minimum wage of about $2.13 will now make at least $14 an hour, but will vary depending on the employee. The chain's parent company, Ignite Restaurant Group, said it would raise prices by around 12 to 15 percent to cover the costs.

Several other higher-profile restaurants have been experimenting with ditching tipping in lieu of hiking prices and paying employees higher wages, but Joe's marks the first full-service chain to do so.

Other full-service mainstays like Olive Garden have been criticized for underpaying employees and contributing to a staggering bill for taxpayers, whose dollars end up supporting public programs for low-wage workers. The news also comes amid a national climate of wage shake-ups, with low-wage workers turning out in the nation's largest-ever demonstrations in hundreds of cities Tuesday.

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"We're really leading in our industry with regards to national brand[s] going out and testing this thing in a meaningful way," Blanchette said, adding that "we want to be somewhat cautious."

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The no-tipping experiment will run for about a year, the company said.