Late last week, Joe’s Crab Shack announced its move toward a new business model, stating they were departing from the traditional low wage, tip-driven structure. In turn, wages for all wait staff will be increased. While this new development is piloted, a Hospitality Insurance Program is essential should you choose to forego tips in your own establishment.
The popular national seafood chain is following in the footsteps of fine dining restaurants in both New York and San Francisco that have recently adopted the new policy. Restaurant Business Magazine states that in jumping on the no-tip bandwagon, the company hopes to gain a competitive staffing advantage over its casual dining competitors who may offer starting wages as low as $2.13 per hour.
However, this model doesn’t come without its drawbacks. To accommodate the shift, restaurant prices will increase between 12 and 15 percent.
Another potential risk for those considering adopting this system is the inability to keep qualified staff. Owner Thad Vogler of Bar Agricole in San Francisco states "We haven’t been able to keep servers. We were hoping more restaurants would switch but, for now, it’s been impossible to compete with more traditional places in keeping front of the house staff who prefer the control and upside of the tip system.â€
However, positive outlook is also being incorporated. Another restaurant owner, Kurt Janowsky, states "We certainly attempt to motivate our servers to do an excellent job regardless of how tips are going. At least we wouldn’t have to deal with inevitable mood and attitude downturn that follows a server receiving a poor tip, especially if they feel they provided excellent service.â€
As New York restaurants embrace this shift, more followers are likely to ensue. At RMS Hospitality Group, we specialize in protecting restaurants like yours. Our packages combine expertly crafted underwriting expertise and unique coverage options to safeguard your business. For more information, contact us today at (888) 359-8390.
