The casual seafood chain has eliminated gratuity in 18 establishments since August and could eventually expand the policy nationwide.
Front-house workers at the selected restaurants will now earn hourly wages of around $12-$14 an hour, but some can earn more.
With more than 130 locations nationwide, this is the first major restaurant chain to put a no-tipping system to the test.
"We picked a broad range of locations with different nuances to see how it responds in each different area," Raymond Blanchette, president and CEO of Ignite Restaurant Group, which owns Joe's Crab Shack, told CNNMoney. "We wanted a random sampling that would be indicative of how a national rollout would be."
There are signs on and around the restaurants informing diners of the new policy, and the tip line has been eliminated on credit and debit receipts.
During an earnings call last week, Blanchette said menu prices will increase around 12-15%, but prices can vary based on location and could change as the testing continues.
"Ultimately, people are paying less and hopefully we are delivering more value," Blanchette said in an interview Wednesday with CNNMoney. "It's one of the reasons we are testing, to make sure people are judging the total experience and not just menu price."
He also expects the compensation policy to reduce labor costs and eventually beef up the restaurant's bottom line.
Joe's has been experiencing slowing traffic, with sales and revenue taking a hit in the third quarter.
High turnover rates are common in the restaurant business, and at Joe's, Blanchette said front-house turnover rates are higher than 100%. He expects the compensation change will increase retention and create a better trained workforce.
Some workers have left because of the change, but Blanchette said the company isn't having any problems keeping the restaurants staffed. "The person happy at Joe's is the person looking for a stable income; it's a significant wage."
While still small, the move to eliminate tips in restaurants has been gaining some traction. In October, The Union Square Hospitality Group, which operates 12 restaurants in New York City announced it will phase out gratuity.
Blanchette said there is no timeline to eliminate tipping in every Joe's location. "It's difficult to be in the business of training your customers," he said. "If I didn't believe that this was important, there is no way I would undertake it."
Ignite Restaurant Group also operates Brick House Tavern + Tap, and as of right now, Blanchette said there's no plan to get rid of tipping at those establishments.
This only rewards grossly underpaid kitchen staff and consumers everywhere.
Moot point because Joe's Crab Shack sucks. I've eaten there twice and both times it was horrible.
The Modern will be the pilot restaurant, Mr. Meyer said, because its chef, Abram Bissell, has been agitating for higher pay to attract skilled cooks. The average hourly wage for kitchen employees at the restaurant is expected to rise to $15.25 from $11.75. Mr. Meyer said that restaurants such as his needed to stay competitive as the state moved to a $15 minimum wage for fast-food workers.
If cooks’ wages do not keep pace with the cost of living, he said, “it’s not going to be sustainable to attract the culinary talent that the city needs to keep its edge.”
I would think that this would put the establishment in a position of only getting mediocre help at best. Since it's stated that people have already left over it, they were obviously getting more than the new compensation being offered. This just seems to fall in line with what's being pumped through our society today starting in school, everyone gets a trophy just for participation, there's no reward for excelling. This only rewards half assed servers and cheap skate tippers IMHO.
Moot point because Joe's Crab Shack sucks. I've eaten there twice and both times it was horrible.
Blanchette said menu prices will increase around 12-15%,
I approve!
Another horrible thing Prohibition brought on this country.
https://www.youtube.com/watch?v=q_vivC7c_1k
Here's a more "high end" guy doing away with tipping
http://www.nytimes.com/2015/10/15/dining/danny-meyer-restaurants-no-tips.html
a really interesting tidbit in that article
I'm actually shocked that the first ones to do this is a cheap-ass seafood chain. I would think it would start in places where the meals are more expensive, so they can take the monetary cup.
Overall it is encouraging either way.
I just love the irony of the whining about tipped waiters/waitresses not making enough money because of the minimum wage laws. By doing away with tipping, it will make the wages far more equitable (not in their favor) for the type of work they're doing.
They arent the first. Maybe the first chain to do it but a few high end places have done this. They first took steps having a tip pool for foh employees and now they will raise the prices of all the food 15%-20% and use that money to pay for dishwashers and kitchen staff and lower the wage of the server.
Being a server in a high end restaurant requires vast knowledge of foods, liquors, wines and beers. Even someone at joes crab shack needs to know the difference between a muscle and a oyster. stone crab claws and snow crab. Australian lobster and main lobster. If a place like Gramercy Tavern is doing this I believe the top servers there will leave.
There are so many real reasons to insure you keep good wait staff in high end restaurants and those people cut their teeth working at places like joes crab shack. 10 years from now we will see a very different landscape for service in this country.
I know people don't appreciate it around here but it is a very high skill job that can pay well.
You do know that they are raising the prices? Gramercy Tavern is raising them 20% This is not about saving the consumer money.