Joe's Crab Shack to end no-tipping policy

The policy meant that bartenders, servers and hosts would be paid at a higher fixed hourly rate. Menu prices were increased to make up for the change.

CNN Money reported that servers were paid at least $12 an hour. Before Joe's tested the policy, severs earned $2 an hour plus tips.

The restaurants testing the policy lost an average of 8 to 10 percent of customers.

"We tried it for quite a while and we tried communicating it different ways," Bob Merritt, CEO of Joe's parent company Ignite Restaurant Group, told CNN Money.

Joe's Crab Shack has more than 100 U.S. locations.

Research from the test showed that about 60 percent of customers did not like the no-tipping policy because they believed that it took away the incentive for good work.

Although the policy will end at most of the restaurants in which it was tested, it will continue at four locations where it performed well.

"We are going to try to figure out why it worked in some places and why not in others," Merritt told Nation's Restaurant News. "The way we look at it is: We are really continuing the tests in place with where it works."