Restaurant chain drops plan taking credit-card fees out of tips

Restaurant chain drops plan taking credit-card fees out of tips
By The Associated Press

LITTLE ROCK – A restaurant chain owning Bonefish Grill, Carraba’s Italian Grill and Outback Steakhouse says it has dropped a new policy that would have taken some credit card processing fees out of waiters’ tips in Arkansas.

OSI Restaurant Partners LLC said Friday it would halt the policy and refund any money already taken from servers in areas where the program already started.

Joe Kadow, executive vice president of Tampa, Fla.-based OSI, said in a statement that “upon reflection, we realize this decision is inconsistent with our principles and beliefs.”

“It is no secret that all casual-dining restaurants are facing unprecedented cost increases and substantial declines in profitability,” Kadow said.

The tip plan, first reported by the Arkansas Democrat-Gazette, called for passing along part of the debit and credit card fees — about 3 percent of tips on average. That would have meant a waiter would collect $19.40 out of a $20 tip.

Waiters and waitresses in Arkansas make $2.63 an hour plus tips. Gratuities come out to about $85 during a typical five-hour shift.

The credit-card fees would have been on top of a 3 percent “tip-out,” which goes to bartenders, hosts and busboys.

Tipping in cash meant the server didn’t lose money to the credit-card fee. At a Bone Fish restaurant in Little Rock, workers said customers have been scratching out the credit-card tip line, writing huge zeros and adding notes such as, “I will never tip through credit card again — it’s going to be cash for me, and you take that to corporate.”

“They did the right thing by retracting the policy,” said H.G. Parsa, department chairman of food service and lodging at the University of Central Florida’s Rosen School of Hospitality Management. “They shouldn’t have done it in the first place,” he added, saying it reminded him of a flip-flopping politician.

In an OSI guide obtained by the Democrat-Gazette, the company said there was a minimum waiting period of 14 days to instate the policy after the first meeting to inform the staff. All waiters and waitresses had to sign a document agreeing to the practice.

The guide listed 26 participating or designated states, including Arkansas, and about 1,200 restaurants. OSI operates in 50 states.

Shares in OSI traded down 2 cents Friday to close at $41.10.