That reminds me of Circuit City. The folks in the back room discovered that one of the big expense items was the sales commissions that they were paying to their best sales people. Simple solution. Get rid of those high cost employees and replace them with the sales staff that weren’t getting paid nearly as much.
Needless to say, the chain did a ‘crash and burn’ shortly after getting rid of their best salespeople. I expect some senior exec got a nice bonus for implementing that cost savings plan.
Here, some bright exec at Ignite figured out that they would raise prices 15 to 20 percent, put the wait staff on a straight salary, and corporate could pocket the difference. At least they decided to try it at a sample of restaurants first, instead of destroying the whole chain with what proved to be a very bad idea.
Yep, Circuit City ... remember when they had their own video format they were pushing ... Divx or something like that.
I think tipping makes more sense when thought of in terms of a sales commission. Something I picked up from my daily Mises Institute email a while back.