More restaurants do away with tipping

The food industry may be changing soon, as more restaurants implement new policies in which tipping is no longer an option, and increasing the pay to above minimum wage becomes the solution.

For many in the restaurant industry, tips are how they make their money when they are paid under minimum wage. Recently, Joe's Crab Shack became the first major chain restaurant to implement the no tipping policy. Instead, wages will be raised and so will their menu prices.

To tip or not to tip? That is the question many restaurants are asking themselves.

Austin-owned pub and brewery Black Star Co-op decided to try the no tipping policy when they opened five years ago. They've been successful with it so far.

"It's different than a normal business, where gratuity supplements the really low tipping minimum-wage. Here we just give ourselves a better wage and then the consumers don't have to supplement our wage," Johnny Livesay said, co-founder of Black Star Co-op.

They base their pay off of the universal living wage index, starting employees off at $13.10. Livesay said this method provides more stability.

"It really provides a better quality of life for them, rather than thinking, 'oh I've got to go to work a 16-hour double. Maybe I'll get tips, maybe I won't,” he said. “You know what you're going to get. You know what your paycheck is going to look like, roughly, based on that pay period.”

Joe's Crab Shack began testing this concept in August. Now it will be applied to all 113 locations. To offset the wage increase, the company is implementing a 12-to-15 percent increase to the restaurant's menu.

Richie Jackson of the Texas Restaurant Association says there could be one problem.

"Well, I think the question is, what's the level of customer acceptance going to be? There's still going to be desire, on the part of some customers, to show their appreciation for the wait staff and they'll continue to want to leave the tip as that long engrained custom that we have," said Jackson.

When it comes to quality of service, some restaurants adopting the policy are looking at providing an incentive for commission sales. Others think this concept creates team-service, since wait staff won't be competing over tips.

"Our standard is to definitely have the best standard of service, really go out of our way for our customers," Livesay said.

Wage rates will allegedly be based off of what shift the employee works. For instance, bartenders will get an average of what is normally paid out in tips.

Now, one question remains: could no-tipping be the way of the future?

"I think there are some pluses and some minuses. So we'll just see how this plays out," Jackson said.  

"I do think, overall, it's going to be where the industry is heading, but it's going to take some time. Even for us, it's still a process of understanding and learning what we're doing with our wage structure," Livesay said.

Restaurant tipping has been a hot topic recently. New York restaurant Mogul Danny Meyer announced last month he will eliminate tips at his 13 restaurants.