Skip the tip, restaurant CEO says
Noodles & Co. boss Kevin Reddy says he doesn't want diners to feel pressure. It helps that he pays workers more than minimum wage.
No need for your internal Emily Post to debate the merits of 15 percent or 18 percent here. At Noodles & Co. (NDLS), the recommended tip is nothing.
"Respect doesn't cost you anything," Noodles CEO and Chairman Kevin Reddy said in an interview. "Being nice doesn't cost 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."
The no-tipping policy also plays into an emphasis on relative value at Noodles, which has about 380 locations in 29 states and Washington, D.C., that serve a variety of noodle and pasta dishes, he added. The average meal sets diners back about $8 -- a price tag that's higher than those of fast-food giants like McDonald's (MCD) or Wendy's (WEN) but lower than those of casual dining chains like Darden Restaurants' (DRI) Olive Garden or DineEquity's (DIN) Applebee's.
"We don't want our guests to feel we're trying to upsell them," Reddy added. "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."
Reddy stressed that the recommended policy isn't about denying team members tips since the policy means that Noodles must pay workers enough to make sure that it's not an issue. (He also mentioned that some customers insist on tipping despite the policy, which workers will then accept.)
While the company did not share payroll data, Noodles mostly pays workers above minimum wage, Reddy said. Since its pay is generally higher, potential hikes in the minimum wage rate won't affect the business too much, he added.
In recent months, the federal minimum wage has been a hot-button issue. Last month, President Barack Obama boosted the minimum pay for federal contractors hired in the future to $10.10 per hour. He's also voiced his support for the federal level for all workers to rise to $10.10 from the current $7.25. Separately, organized protests of fast food workers have lobbied for a jump to $15.
If minimum wage rose much higher than expected, the move could reset expectations across the industry, Reddy said.
Although he said he supports the idea of trying to pay people fairly, he doesn't think there's an easy answer to the minimum wage debate.
"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."
More from CNBC
The whole concept of tipping is ridiculous. Business owners should raise salaries by 20%, raise prices by 20%, and not allow tipping. That way all customers pay the same amount, and all servers earn the same amount. Why should a server make more money when a customer orders a $25 steak (earning a $5 tip) instead of when a customer orders a $15 chicken entree (earning a $3 tip)? The server's work is the exact same in both scenarios. And why should I pay more for my dinner than the person next to me, because I leave a 20% - 22% tip while the person next to me only leaves a 12% - 15% tip. Also, way too many people are expecting to be tipped nowadays. When I get my hair cut I can understand tipping the individual stylist, but when the owner of the establishment cuts my hair I'm supposed to tip her too? It makes no sense. Tipping was only supposed to be for restaurant workers who earn less than minimum wage. Now many people who earn much more than minimum wage are expecting tips too, and that's not what the concept of tipping was supposed to be about.
That's my two cents worth. Or three cents, with the tip.
I never could understand why a customer should have to pay for good service and not thier employer.
Tipping encourages good service. If I have a great waitress/waiter I will tip them good.
If they are no good they get very little.
Kind of like working. If you work hard and are smart maybe you'll get paid more than the mindless sloth.
Just a comment based on resturants in Australia, which also pay decent wages and discourage tipping.
the comment, either the aussie's are just way laid back naturally, or the lack of tipping for good service results in many slow seemingly uncaring wait staff.
the law of unintended consequences is always in play.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
It's time for a reality check in advance of the Chinese e-commerce giant's much anticipated initial public offering.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.