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Joe's Crab Shack Is the First Major Chain to Drop Tipping

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Joe's prices are increasing 12 to 15 percent as part of the move.

Flickr/Javier Vidal

Following the lead of Danny Meyer's Union Square Hospitality Group and other trailblazing restaurants in the United States, national seafood chain Joe's Crab Shack is eliminating tipping from restaurants in participating markets. Servers will start at $14 and hour, according to Restaurant Business, and the bumped wages will be offset by price increases of 12 to 15 percent.

Ray Blanchette, CEO of Joe's parent company Ignite Restaurant Group, recently told investors the move should reduce staff turnover, improve service quality, and actually lower prices for customers who are typically more generous with their tipping. Testing of the new policy began in August and is still being rolled out across the country. Participating markets include Indianapolis, Omaha, St. Louis, and Pittsburgh. Joe's Crab Shack appears to be the first major chain to implement a no-tipping policy.

Another no-tipping breakthrough appears to be going down in Fairbanks, Alaska, where Lunch Cafe & Eatery is the first restaurant in the state to drop tips, reports Alaska Dispatch News. Lunch made the move in July, raising menu prices to balance out wage increases "upward of 30 percent" from at least $8.75 per hour. Alaska is one of eight states where tipped workers are paid the full minimum wage.

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