America's irrational custom of tipping lives on, despite attempts to end it

Less than a year after it began experimenting with a no-tipping policy at 18 of its outlets nationwide, Joe's Crab Shack has restored tipping at all but four of the locations.

The lesson seems to be that even though much of the developed world has moved on from this archaic, class-based system, Americans remain convinced — wrongly, many researchers say — that service is always better, and prices cheaper, when tips are a factor.

Mike Lynn, a professor of consumer behavior at Cornell University School of Hotel Administration, said diners routinely disregard the tip they will leave when judging a restaurant's prices. Thus, if a restaurant has a no-tipping policy but 20 percent higher menu prices, it will be seen as a lot more expensive than a restaurant with 20 percent lower prices but where a 20 percent tip to the server is customary.

"Is that rational? No," Lynn said. "But it's what people think."

In recent years, restaurants in Los Angeles, New York and elsewhere have introduced no-tipping policies. A widespread end to tipping has been seen as unlikely, though, until large restaurant chains also did away with the practice. Joe's Crab Shack was the first national chain to give it a go.

The company has seafood restaurants in 32 states, including one in Minnesota. The no-tipping experiment was confined to restaurants in the Midwest.

Bob Merritt, CEO of the parent company that owns Joe's, shared some thoughts with investors in his company's recent first-quarter earnings call.

Merritt said the company's internal research found that almost 60 percent of Joe's Crab Shack customers disliked the no-tipping policy. He said customers felt they had lost control over quality of service and didn't trust managers to share the wealth of higher prices with employees.

The restaurants tried various ways of communicating how things now worked, Merritt said, but most patrons just wouldn't play ball. As for why four of the 18 outlets will continue without tipping, he said the company will try to figure out "why it worked in some places and why not in others."

In much of the developed world, it's simply a given that restaurants strive for good service: Diners aren't expected to be responsible for motivating servers.

Tipping is an absolute no-no in Japan, where a server would lose face if a diner suggested he or she wasn't always trying their best. Tipping also isn't customary in Australia, China, France, Italy, Singapore, South Korea, Spain, Sweden or Switzerland, among other nations.

American consumers seem to be of two minds. We believe tipping is essential to good restaurant service, but we usually don't tip hardworking staffers at fast-food outlets. We tip the person who cuts our hair but not the one who fixes our car.