NEW YORK (WSLS 10) - The new no-tipping movement is really starting to pick up steam. Joe's Crab Shack is the first major restaurant to test the no-tip model in several of its restaurants.
The seafood chain has eliminated gratuity in 18 of its establishments since August.
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They are looking to expand this policy nationally.Joe Crab Shack has more than 130 locations nationwide
Front-house workers at the selected restaurants will now earn hourly wages of around $12-$14 an hour, but some can earn more.
"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."
Signs are posted throughout the restaurant informing diners of the new policy; and the tip line has been eliminated on credit and debit receipts.
As a way to pay for the increased wages,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.
The crab shack 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%. It his hope that once compensation changes, the retention rate will increase 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.