Joe's Crab Shack Dropping Tips

[jerrywall]

Hopefully we can keep this from getting political.

Joe's Crab Shack Is the First Major Chain to Drop Tipping | News OK

I think this is a start of an interesting trend. As a consumer, great. I like the idea of not having to feel obligated to tip even with lousy service. However, as a waiter I'd be kind of bummed. Even 20 years ago I was making more than $14 an hour as a waiter.

I'm curious if this trend will continue. I'd especially like to see this implemented at places were people don't consistently tip, yet they still pay waitstaff the tip earner wage (Sonic, etc). I know it's a real problem in cities with large amounts of European tourists, who aren't used to tipping.

[FighttheGoodFight]

I could see a lot of wait staff going to other places. Lots of people like making tips. Should be interesting.

Saying that it doesn't make me all the sudden want to go to Joe's Crab Shack. I do not really enjoy the food.

[kelroy55]

I agree with jerry about how this might get interesting. I'm not sure what they make now but my daughter used to work for Joe's and it was a crap shoot on getting tips and keeping track of them. I'm sure she would have preferred a straight hourly wage. My biggest question is the quality of service since they don't have to rely on tips.

[Teo9969]

I'll be fascinated to see where this, and where restaurant service in general goes over the next 5 to 10 years.

What people make varies widely from restaurant to restaurant, but servers in OKC are generally all making a floor of $10/hour. The median is probably closer to $15/hour with the average a few dollars higher than that. So for some it may represent a pay cut and for some it may not. The issue will be for those in better positions at nicer restaurants. Most servers working at nicer restaurants around town have a floor of $20/hour, a median of probably $25/hour, and an average of over $30/hour. Most all of those servers are getting paid $2.13/hour currently.

If the market trend leans toward a change in customer behavior that more or less forces the hands of restaurants to move to a wage based system, upscale dining servers will likely be hurt. There are more than a few making $35 - $45/hour and there's simply no way that is going to be achieved through standard wages paid by the restaurant. There are many upscale servers who retain their positions longer because the money is too good to pass up. A move toward wage-based pay would likely signal the end of many servers tenure in the industry because it may no longer be worth it. This would certainly cause a dip in quality of service at the nicest of establishments.

At the end of the day, we won't find out until this is actually implemented throughout many chains. But based on the service I've received in Europe and Argentina, I would expect to see some noticeable changes in dining in our culture. This could be a good thing, or it could be a frustrating thing. I'd personally love for our dining times to expand by about 30% to 50%. So dinners that normally take 45 minutes taking an hour. Hour long dinners taking an hour and a half. This will certainly be a step in that direction by necessity since restaurants will cut down on front of house staff leading to increased average service times.

[Teo9969]

I agree with jerry about how this might get interesting. I'm not sure what they make now but my daughter used to work for Joe's and it was a crap shoot on getting tips and keeping track of them. I'm sure she would have preferred a straight hourly wage. My biggest question is the quality of service since they don't have to rely on tips.

To be sure, I don't think quality of service from any given server will change. It will either be the same or better under a wage-based system than a tip-based system.

Rather, I think the bigger risk is the quality of the server. Good servers make more money in the industry than they would working a desk job at some random company, and they have an obscene amount more flexibility than those same people. There are certain advantages a 9-5 can't offer that a restaurant industry job can, and so there are people with high aptitudes staying in restaurants because they can make the money they want and live the lifestyle that fits them better. But if the market unwittingly puts a cap on that earning potential, you're going to lose some of those people with high aptitudes, simply because it's no longer worth their time.

[TU 'cane]

Intriguing, indeed.

I've read a few supposed European responses to this and they advised against it (of course, I'm sure we could find plenty applauding it). The main reason being:

In America, the staff tries to make your time spent and money spent worth it as they chase tips. Simply put: service is better because they have something work towards with tips.
Without tips, service is compromised because the staff knows they're getting paid, regardless.
Additionally, the food and drink costs increase, in this case by 15%.

Over the course of a meal for a family, that total increase may be more than what you usually tip (even if you tip "generously"), making the total cost of the meal more expensive. I'd be curious to see the math.

[kevinpate]

Are there many nicer dining establishments turning tables in under an hour?

Unless there is a reason to hurry, such as a more rapid bite before/after court due to another court/appointment, eating alone at a casual sit down spot typically closes in on or exceeds an hour.

I don't recall the last dinner out my lovely and I had that would have run less than 90+ minutes, lower scale or higher. Generally 120+ if we are dining with another couple or some of the family.

However, we are quite prone to dine outside the typical popular time slots as I am never going to be confused as someone who is a fan of crowded places. That may be why we don't tend to have anyone trying to swoosh us up and out.

And if I have great service, a no tip sign isn't going to mean much to me.
I'm still old school enough where tipping is a sign of respect for the effort expended, not simply an expected obligation to the shopkeep for me to help meet their payroll needs.

[TheTravellers]

...Most all of those servers are getting paid $2.13/hour currently.

Just want to make sure it's clear - if they get paid below minimum wage and the difference isn't made up by tips, the employer has to make up the difference between what they made and minimum wage, they do not just make $2.13/hour if they get no tips. Tons of people don't know the employer has to make up the difference between what they make per hour and minimum wage if what they made is less than minimum wage.

[jerrywall]

Just want to make sure it's clear - if they get paid below minimum wage and the difference isn't made up by tips, the employer has to make up the difference between what they made and minimum wage, they do not just make $2.13/hour if they get no tips. Tons of people don't know the employer has to make up the difference between what they make per hour and minimum wage if what they made is less than minimum wage.

The trouble is, some places don't make up the difference and the employees are afraid to file complaints. I know a few personally.

[Teo9969]

Intriguing, indeed.

I've read a few supposed European responses to this and they advised against it (of course, I'm sure we could find plenty applauding it). The main reason being:

In America, the staff tries to make your time spent and money spent worth it as they chase tips. Simply put: service is better because they have something work towards with tips.
Without tips, service is compromised because the staff knows they're getting paid, regardless.
Additionally, the food and drink costs increase, in this case by 15%.

Over the course of a meal for a family, that total increase may be more than what you usually tip (even if you tip "generously"), making the total cost of the meal more expensive. I'd be curious to see the math.

The only potential "hidden cost" for the guest is that they would have to pay tax on the new subtotal. You don't have to pay tax to tip someone (but if you tip on the post-tax total, it's essentially a moot point).

If a menu item is $10, the guest in Oklahoma pays $10.84 + Tip. So the grand-totals would be as follows:

w/ 10% tip - $11.92
w/ 15% tip - $12.47
w/ 20% tip - $13.01

In a scenario where menu prices are raised 15% but no tip occurs, the price for the Oklahoman would be $11.50 + tax = $12.46

So in terms of money, governments both municipal and state/federal will all likely see tax receipts grow from the hospitality industry. The guest will likely save a bit of money, and servers will likely lose out the most. Back of House (kitchen) staff will likely make more money. Restaurants may or may not make more money…They will have to start paying for staff that servers subsidize in most restaurants (Bus, Host, Bartender)

[jerrywall]

It would save me at the bar, I know. I tend to drop a dollar as a tip every time I get a beer (if I'm paying cash). So my tipping often runs 35-50%.

[Teo9969]

Just want to make sure it's clear - if they get paid below minimum wage and the difference isn't made up by tips, the employer has to make up the difference between what they made and minimum wage, they do not just make $2.13/hour if they get no tips. Tons of people don't know the employer has to make up the difference between what they make per hour and minimum wage if what they made is less than minimum wage.

That's not at all my point. None of the servers I'm talking about in that passage have any realistic shot of making so little money (minimum wage).

The point is that there are servers out there making $30/hour in tips and more. Their employers are paying them $2.13/hour. Nobody in their right mind thinks that a restaurant is going to be able to go from paying a sever $2.13/hour to $30/hour by a measly 15% increase in menu prices.

Regarding the law, the employer only has to meet those standards on a pay-period basis. If you log 5 hours in a shift and make $20, but over the pay period you log 50 hours and make $400, the restaurant owes you nothing for your crappy shift(s).

[Teo9969]

It would save me at the bar, I know. I tend to drop a dollar as a tip every time I get a beer (if I'm paying cash). So my tipping often runs 35-50%.

So you're buying $2/$3 beers?

[FighttheGoodFight]

So you're buying $2/$3 beers?

Too good for PBR?

[jerrywall]

Exactly!

Also Coop (cans). Skinny Slim's has them at happy hour for $3 a can, and I work right by the Edmond one, so tend to go their after work most days.

[Anonymous.]

Hopefully we continue to see the domino effect. Employers should be responsible for paying their employees. I would much rather spend more on menu prices than play games with my server and the others at the table.

And to tack on the comments above about bars and beer. The profit margin is already insane on most alcohol, especially canned/bottled beer that requires essentially zero skills to serve. Tipping $1 per trip to the bar is not only padding the owner's pockets nicely by buying the beer, but you are also now tipping very graciously to all of the staff.

[jerrywall]

And to tack on the comments above about bars and beer. The profit margin is already insane on most alcohol, especially canned/bottled beer that requires essentially zero skills to serve. Tipping $1 per trip to the bar is not only padding the owner's pockets nicely by buying the beer, but you are also now tipping very graciously to all of the staff.

Oh yeah, I know that. I just find it hard not to tip with each transaction. If I'm running a tab, I'll do a percentage calculation on the total, which ends up being considerably less, so I prefer to do so when possible. But if a bar is especially busy, I'll pay as I go.

[tfvc.org]

I just came back from Spain, and I didn't find the service any different than here if you take in account Spain's customs. The waiters all were attentive to my table's needs, they all seemed to care about their jobs and side duties as well. The only thing which is customary in Spain is you do have to ask for your check when you are ready to pay the bill, other than that there isn't much difference, and you can tip the waiter 1-2 Euros if you fell the service was good. Food and drinks seemed to be cheaper than here in America, especially wine and coffee. I ate breakfast for under 2 Euros at this little bar, it was toasted demi-baguette topped with shredded tomato, olive oil, and sea salt, and an espresso. Wine was usually 2-5 euros a glass as well. Some of the fancier restaurants of course you would pay more, but generally even in the touristy areas it was about the same if not a bit cheaper.

[TheTravellers]

When we were in Paris (no tips allowed), the service was *way* beyond any service we've had at any but the best/priciest restaurants here in the USA, and we ate at places that ranged from cheap to expensive.

[SoonerDave]

What I find interesting about this is that Joe's is really just the most publicized chain to go to a no-tip policy. There are smaller chains that did this long ago - McAlister's Deli a sizable one that comes to mind rather immediately.

I have zero problem with this if the business thinks its a smart decision for them. It's a bit less than optimal for the consumer, who now no longer has the option of rewarding superb service unless they choose to pay "off the record" above what is now built into the menu price. As someone else earlier noted, tipping isn't going to stop.

The response of the consumer won't be known for a time, because almost certainly the restaurant owners won't uniformly bump prices across their menu. Some items will go up more than others, and the net effect on demand will only be known after the new menus have been implemented a while. Psychologically, higher menu item prices may instinctively cause people to order less, at least for a time, even if they know they don't need to consider a tip into the bill when the meal is concluded.

The only remaining issue for me is whether the mathematics works out. I'm no business or restaurant expert, but from what I understand the cost of a menu item at an average restaurant gets divvied up roughly into thirds: one-third food cost, one-third labor, one-third overhead. If average hourly labor is going up from $8 to $15/hour, that's an 88% increase in labor cost, but a 15% bump in menu prices means a $15 item that contributes $5 to labor now contributes $5.75. I don't see how you cover that 88% increase in labor costs with only a 15% increase in menu prices.

I realize the real-world pricing model isn't that simplistic, and I realize a lot of places aren't paying $8, and they're not all going to $15/hour. But that general model shows to my naive eyes that this first step is far from the end of the road on how these price/wage changes work out.

[FighttheGoodFight]

When we were in Paris (no tips allowed), the service was *way* beyond any service we've had at any but the best/priciest restaurants here in the USA, and we ate at places that ranged from cheap to expensive.

Do you think the culture of never having tipping has effected this behavior though? Changing from tipping being the norm to no tipping could have different results maybe?

[MadMonk]

Just saw this episode of Adam Ruins Everything dealing with the idea of tipping. I thought it was an interesting take on the subject.

[TexanOkie]

This might be the libertarian in me, but I don't like the idea of a restaurant owner telling me I can't tip their employees for good service, even if the tipping is no longer out of obligation. Having a "no tip" policy essentially does that. I bagged groceries at Albertsons in high school, which had a "no tip" policy--we were specifically told not to accept tips, and people would actually get in trouble; if one of the parking lot surveillance cameras caught someone doing so, they would be reprimanded.

Additionally, the food and drink costs increase, in this case by 15%.

Over the course of a meal for a family, that total increase may be more than what you usually tip (even if you tip "generously"), making the total cost of the meal more expensive.

If meal prices are only increasing by about 15%, but that increase is more than what you usually tip, you are not a generous tipper. That's the thing about percentages--they stay the same and it's amount of the tip itself that proportionately increases when applied to increasing bills.

[jerrywall]

The only remaining issue for me is whether the mathematics works out. I'm no business or restaurant expert, but from what I understand the cost of a menu item at an average restaurant gets divvied up roughly into thirds: one-third food cost, one-third labor, one-third overhead. If average hourly labor is going up from $8 to $15/hour, that's an 88% increase in labor cost, but a 15% bump in menu prices means a $15 item that contributes $5 to labor now contributes $5.75. I don't see how you cover that 88% increase in labor costs with only a 15% increase in menu prices.

Because the waiter isn't serving just one $5 item an hour. They're hopefully working multiple tables, with multiple folks per table, and at lunch turning them at least once in an hour. So lets say you are working 3/4 tables, with an average of 3 folks each (some two tops, some 4 tops). Turn them once during the hour, you're talking 18-24 people, spending say $10 each. A 10% increase in prices, if necessary, is $18-24 additional dollars. Dinner you'll have less turns per hour, but the average ticket will be higher, especially if you sell alcohol, so you may be looking at no turn per hour, but at average ticket of $20, so it works out the same. It could potentially work out well for everyone but the waiter. The customer is paying a little more, but less than they might tip. The restaurant is now paying an additional $13 an hour, but is actually making more than that per hour over what they were making. For the waiter, the single advantage is consistency in pay. But now everything they make gets taxed (yeah, I know, technically they were supposed to pay taxes on all their tips but lets be honest).

It's also a lifestyle change for the wait staff. Most wait staff I know have gotten used to daily income. When I have seen them switch to jobs that pay weekly or bi weekly, I see them have budgeting issues.

The big thing that would be a bonus as a waiter for me, from personal experience, is that late night, comes in right before closing group, that hangs out for two hours, and then leaves a small tip. It would bug me less having to stay late if I knew I was guaranteed $15 an hour for staying late for a single table.

[Anonymous.]

I think it has all to do with that, the fact that America keeps the tipping legal (letting owners not pay their employees), is the reason it keeps happening.

You do your job well because you don't want to be fired. The incentive should not be an optional gratuity from random strangers who come in through the door. Restaurant owners should be ashamed of the entire system.

If you are paying servers $12+ an hour and they suck, they will be fired. Just like anyone else doing any other job ever. Honestly I think the tipping system in America is embarrassing, and people getting mad at tourists from other countries not knowing how to tip, should focus that energy towards changing the system here.