TAMPA Fla. Outback Steakhouse parent OSI Restaurant Partners Inc. has reportedly dropped its plan to deduct credit card processing fees from servers’ tips at restaurants in Arkansas and elsewhere.
News reports said that about 1,200 OSI-affiliated restaurants in 26 states either have the policy in place or were slated to have it adopted by outlets there. The company operates or franchises about 1,400 casual restaurants in total. Its other brands include Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse, Cheeseburger in Paradise, Roy’s and Blue Corral Seafood & Spirits.
Some of the states where OSI restaurants were poised to adopt the policy were targeted because of their relatively high minimum wages, Joseph Kadow, the casual-dining company’s vice president and chief officer for legal and corporate affairs, told the Tampa Tribune.
Other press reports quoted Kadow as saying that any money deducted from servers’ tips to pay for the fees would be refunded to the employees
OSI had tested the system in Illinois and then introduced it in Arkansas at the end of January, Kadow told the Tribune. Other reports said that employees in Little Rock and Roger, Ark., were informed last week of the new policy, but that OSI typically waits 14 days between the announcement and implementation.
The policy was scuttled on Friday after an outcry in Arkansas. Customers had jotted pointed objections on credit card receipts and then left their tips in cash, according to local media.
Typically restaurants pay credit card processing fees that can range form 1.5 percent to 3 percent of a transaction. Under OSI’s shelved policy, the company paid the fee on meal tabs, but deducted the charge from tips that were listed on credit card slips.