Restaurant Industry Insights

The Shifting Restaurant Tipping Culture

There was a time when most diners anticipated leaving a tip when they went out for a meal, a percentage of their bill. For many, that fell between 15 – 20%, sometimes more if they enjoyed exceptional service. Then, they started being asked to leave a gratuity in a growing number of places every time they faced a payment app. The good news for restaurants and their staff is that, according to a Pew survey, 92% of adults believe you should always or often leave a tip when dining at a restaurant where servers are waiting on them. The bad news, as revealed by a recent WalletHub survey, is that 75% of Americans feel tipping is “out of control.” They even have a name for it: Tipflation. An astounding 78% want automatic tipping to be stopped.

So, what do you do as a restauranteur to align with your customer’s desires while supporting your staff and their needs? 

What are Customers Tipping?

According to Pew Research, a standard tip when dining at a restaurant is 15% or less. About 57% of respondents said they would tip this amount at a restaurant they described as average food and service. Over 60% of Americans 65 and older fell into this range, compared to 54% of adults under 30.

A 2023 Bankrate survey found that 66% of Americans have negative views when it comes to tipping. Over 40% said businesses should pay more instead of relying on tips to help pay their employees. However, this survey showed that 44% of adults typically tip 20% at a sit-down restaurant.

Unfortunately, fewer people are tipping at restaurants, with a steady decline since 2019. Then, an average of 77% of the population tipped. Today, that number is down to 65%. 

However, if you want to be assured of a good tip, head to the Midwest. Midwesterners are likelier to tip, with 77% always tipping at a sit-down restaurant.

The Automatic Service Charge Debate

From many customers’ perspectives, a tipping charge turns something once optional into a mandatory add-on. It doesn’t allow them to base their tip on the level of service they received. Part of their hesitation can be linked to WalletHub’s findings that three in five Americans believe businesses are replacing employee salaries with customer tips. 

From a restaurant’s perspective, their employees should be paid for their efforts, and part of that payment comes in the form of tips. This is especially true for large parties that take significant time and energy to wait on. If they serve a large party that doesn’t believe in tipping, they lose a substantial amount of money.

The Tip Suggestion

So, if customers don’t like mandatory tip charges, what about the ubiquitous tip suggestion screen that pops up everywhere these days? The WalletHub survey noted that over 25% tip less when faced with these screens, while 22% tip more. 

What Can Prompt Guests to Tip More Without Being Asked?

A recent study by the International Journal of Hospitality Management found that a little smiley-face emoji printed next to the suggested gratuity provoked a positive response. In these cases, the study’s subjects tipped about 11% more on average. This action allows employers to help their staff without making a direct request or automatically adding it to the bill.  

Should Restaurants Add an Extra Tip Charge?

Head to Google and put in “tip charge,” and you’ll see that confusion runs deep. The most common question is if they should tip on top of a 20% service charge and where does the service charge go to. Transparency is one of the most essential elements in a restaurant, prompting customer loyalty and trust. 

If a surcharge or service charge is added to the bill, customers should know what they’re paying for. Does 100% go to the server? Is it shared among all servers? Does part of it go to the restaurant to offset rising costs instead of increasing the prices of menu items? Is it a pool for employee healthcare and benefits? 

No one wants to pay for an unknown item. Once aware, customers are less likely to be irritated. However, even when they believe in the cause and are sympathetic, they don’t always appreciate what they see as an extra burden. Even servers are not always fans, wanting more control of their own finances. 

According to the National Restaurant Association, about 15% of restaurant owners added surcharges in 2023. 

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