Kevin Reddy, chief executive of Noodles & Co., says one reason his restaurant chain keeps growing is that his customers don't have to leave a tip.
"You can get in and out of our restaurants for 25% less than a Chili's or an Applebee's," he tells me. "Our prices are lower to begin with, and you don't have to put a 15% to 20% tip on it."
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Reddy, a former executive at Chipotle Mexican Grill Inc. (NYSE:CMG) and McDonald's Corp. (NYSE:MCD), took over Broomfield, Colo.-based Noodles in 2006. He has more than doubled the size of his chain to 284 restaurants in 19 states, with annual sales of about $300 million. Not even the 2008 financial crisis or the high unemployment that followed has stopped him. His privately held chain is still rolling out more new restaurants this year, and no one expects a single tip.
Noodles is fast-casual with a menu ranging from mac & cheese for the kids to tasty Italian and Thai dishes for their parents. Unlike some other eateries that post hand-drawn signs on their counters like desperate street-corner beggars, Noodles has no guilt-tripping tip jar.
Reddy not only discourages tips, but is expanding service. Noodles is rolling out table service after 4:30 p.m. Customers still order at the counter, but once they sit down, everything comes through servers.
Another glass of wine? A beer? More food? What? You want to sit here all night and drink coffee refills? No problem, but we don't accept tips.
"One of our beliefs is that you have to appreciate and value serving others and not expect something extra for it," Reddy says.
I've always thought of tipping as a form of corruption on par with graft in Third World countries. Oh, you want me to do my job? Give me money.
I usually tip 15% to 20% since this is the local custom, but this custom derives from stingy employers who've long refused to pay wait staffs appropriately and expect the customers to make up for it.
Reddy says he prefers paying associates what they're worth. He'd rather hire those who provide a good customer experience out of their hearts, rather than out of some shallow expectation for a few extra bucks.
"Either you enjoy people, and you treat them right, or you don't," he says. "You're either genuine, truthful and nice, or you're not...If you would throw somebody under the bus to get ahead, nobody wants to work with you. You're not going to make it in our culture."
I hate tipping because it seems like no matter how much I am prepared to tip, there is always a bigger tipper in the house. I told Reddy how many years ago, I was dining with my wife at a pricey steak house in Greenwood Village, Colo., enjoying a high level of service until quite suddenly this service evaporated. No one was coming by our table. It was as if we had caught leprosy.
I looked across the restaurant to see a swirl of waiters and waitresses in white coats, serving bottles of wine and appetizer plates. It seemed as if everyone on staff had migrated to this one table.
Eventually, a small gap appeared between the whirling arms and legs, and I finally spied a glimpse of Pat Bowlen. Realizing I had to compete with the Denver Broncos owner to get a waiter to serve me an overpriced slab of beef ruined the whole night. The message was clear: Unless you are rich enough to own a football team with a tax-payer-subsidized stadium, go eat at Noodles.
"Something like that should never happen," says Reddy. "Who you are shouldn't determine how we treat you."
Reddy began to remind me of actor Steve Buscemi in the 1992 Quentin Tarantino film "Reservoir Dogs."
"I don't tip," Buscemi tells his accomplices at breakfast before a big heist. "I don't believe in it...As far as I'm concerned, they're just doing their jobs...These ladies aren't starving to death. They make minimum wage. I used to work minimum wage, and when I did, I wasn't lucky enough to have a job that society deemed tip worthy."
I tell Reddy this would make a fine training film for Noodles were it not for the profanity and a few gratuitous racial comments. I then ask what he'd do if he learned one of his employees took a tip.
"We would probably talk to them, and say, 'This is what we heard. Did it happen? This is why we'd like you to give it back.'"
And what if the customer made them take it? Isn't the customer always right?
"Some customers do get offended when we give it back," Reddy concedes. "But we want [servers] to share why it's not necessary."
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at email@example.com or tellittoal.com)
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