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Months after national seafood chain Joe’s Crab Shack announced that it would use select locations to test a no-tipping policy, the company’s leadership has decided to reverse the policy in all but four restaurants.
During a call with analysts, Bob Merrit, the CEO of Ignite Restaurant Group, parent company of Joe’s Crab Shack, admitted that the tip-less strategy appeared to be disliked by the majority of customers as well as staff.
“The system has to change at some point but our customers and staff spoke very loudly,” Merritt said. “And a lot of them voted with their feet.”
According to customer research conducted by Joe’s Crab Shack, an estimated 60 percent of customers disapproved of the no-tipping policy, partly because it took away the customer’s ability to reward good service, and partly because they did not trust management to pass the profits onto the staff.
“We got negative customer counts between eight percent to ten percent on average among the 18 restaurants, and we tried it for quite a while, tried communicating it different ways,” Merritt said. “So in those 14 restaurants, we are going back to the more traditional structure.”
The remaining four locations, which the company did not identify, will continue to operate without tipping for the time being. “We are going to try to figure out why it worked in some places and why not in others,” Merritt said. “The way we look at it is: We are really continuing the tests in place with where it works.”