Many Americans travel overseas and are baffled when they dine out at a restaurant and realize that tipping is not necessary, and can even be considered an insult. After all, the automatic tip added onto our restaurant bills at the end of a meal is considered the norm in the United States.
Recently, Danny Meyer (of Union Square Hospitality Group) eliminated tipping at all of their restaurants, and raised menu prices to make up for the difference in the wages of the staff. CNN Money recently explored the financial impact of the first chain restaurant in the US to eliminate tipping: Joe’s Crab Shack. The casual seafood chain eliminated gratuity in 18 restaurants beginning in August 2015, and is considering expanding this policy to all of their 130 nationwide locations. The restaurants which have eliminated gratuities have put up signs around the restaurant, and the tip line has been eliminated on credit and debit receipts.
“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.”
As a publicly traded company, their financials offer an interesting look into whether the no tipping policy makes sense for the restaurant. During an earnings call last week, Raymond Blanchette said menu prices will increase around 12-15%, but that this may change as the process evolves. He also expects the compensation policy to reduce labor costs and eventually beef up the restaurant’s bottom line. Though this is a small sample size, it will provide information for other restaurants to debate whether or not to eliminate tipping altogether.
What are your thoughts on tipping in restaurants? Should we, or is this no gratuity policy one that more restaurants should adopt?