Restaurant CEO: Skip the Tip, I Pay Servers Over Minimum Wage
A restaurant CEO said skip the tip when it comes to his workers because in most cases they make above the federally mandated minimum wage of $7.25 an hour. Kevin Reddy, the Noodles & Co. CEO and Chairman, said his restaurants operate based on a different idea, and 15 to 18 percent extra isn't necessary.
The restaurant CEO's skip-the-tip policy comes based on the way Noodles & Co. operates: after customers order at the counter, workers bring them their food at the tables, but don't require a tip. The average meal costs around $8, and the organization doesn't mind paying their workers more to make up for the lack of tips.
"Respect doesn't cost you anything," Reddy told CNBC in an interview. "Being nice doesn't call you anything, and we don't really feel that folks should have to pay something additional for us to appreciate that they're choosing us over another restaurant."
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However, if guests really feel their service was exceptional, they can still tip and workers will accept it.
"We don't want our guests to feel we're trying to upsell them," the CEO stated. "We'd rather have them feel we'd rather upserve them than upsell them. That's why we're really cautious even about the price increases we pass on."
Furthermore, Noodles & Co.'s decision to pay their workers above minimum insulates them from potential changes to federal law that could raise minimum wages. President Obama has expressed support to raise minimum wage for federal contractors to $10.10 from $7.25, and after McDonald's workers have gone on strike several times, there could be changes coming for restaurant workers as well.
Reddy supports hiking the minimum wage, but said that the solution to the problem isn't that easy.
"I'm not opposed to things that help folks, but I'm also very pragmatic and I'm frustrated at times that good intentions don't get executed well and that there is waste in our government," he said. "So to me, I think as a society we should help people and set up a system where people can be successful and have high self-esteem."
Noodles & Co. has 380 locations across 29 states and Washington, D.C.
