Consumer Trends

As tipping spreads, restaurants risk ticking off customers

The pandemic and its aftermath have upended tipping etiquette in America, leaving consumers frustrated and confused even as many pony up for the extra charges.
frustrated customer in restaurant regarding tipping
Art by Marty McCake

One evening earlier this month, Julie, a marketing executive in New York City, was ordering sushi online for pickup. 

Julie usually doesn’t tip on pickup orders, but when she tried to enter “0” in the tip field, the website wouldn’t let her complete the order.

“I ended up on my pickup just putting a dollar because I couldn’t even do $0,” she said. (Consumers interviewed for this story are identified by their first names for privacy reasons.)

Julie’s experience illustrates the changing state of tipping in America today. Consumers are now not only tipping more, but also more often, at places they were never expected to before—at the gas station, the deli counter, and, yes, at fast-food restaurants. A columnist for Restaurant Business was recently asked to tip her plumber.

“Trying to look cool, I tapped the 20% box and spent the rest of the day wondering when exactly such tradesmen had joined the ranks of tipped employees,” Nancy Kruse wrote in August.

Indeed, the creep of tipping into more and more transactions is moving faster than the etiquette, sweeping consumers along with it even as many remain unsure about which situations actually warrant a tip and what is the appropriate amount to give.

Of course, tipping has long been customary in sit-down restaurants, where gratuities typically make up the bulk of servers’ hourly pay. But more recently, cafes and other counter-service spots have begun holding out their hands. It’s in part a product of an industrywide labor crunch. Operators have raised wages significantly over the past two years to help attract workers, but tipping has given them another way to sweeten their employment proposition. 

As an example of the pay boost tips can provide to traditionally non-tipped workers, consider Jersey Mike's, where gratuities add about $4 to employees' hourly wages.

"Now with the credit cards, we thought that would diminish, but it's just gained," CEO Peter Cancro told RB's A Deeper Dive podcast in 2021.

The proliferation of tipping has been further enabled by technology. The tip field is standard for online orders, and asking for a tip at the counter is now as simple as putting a prompt (with suggested amounts) on the digital checkout screen—a far more explicit nudge than the old-fashioned tip jar.

And while the deluge of added charges may be good for employees and, by extension, their employers, it could damage restaurants’ relationship with customers. As President Biden put it in his State of the Union address in February, “Americans are tired of being played for suckers.”

He was referring to the extra fees levied by airlines, hotels and credit card companies. But would anyone have batted an eyelash if he’d included restaurants in that group?

“There’s a contract that exists between the restaurant and the diner, and the contract is the price that’s on the menu,” said Robert Byrne, director of consumer and industry insights for research firm Technomic, a sister company of Restaurant Business.

When you start adding 20% to the menu price, “restaurants run the risk of beginning to look and feel like those industries—airlines, hotels and whatnot—where consumer disillusionment is often the result of all of those individual line items that just add up and add up and add up.”

Third-party delivery, with its price markups and litany of fees, is the most egregious example of this in restaurants.

“There’s so many fees now that all of a sudden your $30 dinner for two becomes a $60 dinner for two,” Julie said. “If you have a certain [price] in your head … you might actually lower your tip because your fees are so high.”

Ironically, the tipping turmoil comes at a time when Americans are tipping better than ever. Average tip size peaked at more than 20% in the first months of the pandemic, according to data from tech supplier Toast, as consumers sought to support essential workers. The pandemic has since eased but that generosity has not: People tipped an average of 19.6% at full-service restaurants in the fourth quarter of 2022, Toast found. 

At QSRs, meanwhile, the average tip was 15.9% in Q4, down slightly from 16.4% the year before. And nearly half (48%) of QSR orders included a tip in the fourth quarter, up from 40% in 2020. The data suggests that concerns about “tipping fatigue” could be overblown.

“Consumers continued to tip restaurant staff generously as inflation remained high,” Toast reported.

At the same time, many consumers say they’re strongly opposed to tipping at restaurants without table service. More than 6 in 10 told Technomic that fast-food places like McDonald’s and Subway shouldn’t ask for a tip at all; another 17% said it’s OK if they ask but that they typically don’t add one. 

But there are certainly those who want to tip fast-food employees. Sonic Drive-In introduced a tipping option on its app in late 2021, saying that it was one of the most-requested updates from customers.

Overall, consumers are more welcoming toward tips at fast casuals like Chipotle and Panera, even though the absence of gratuities was once viewed as a big part of these concepts' appeal. About a third of respondents said those places shouldn’t ask for tips, while a quarter said they don't mind but won't typically leave one.

The response was similar for coffee cafes like Starbucks and Dunkin', though more than a quarter (28%) said they typically tip a dollar or two at a place like Starbucks.

In all of the above scenarios, young people were far more open to tipping. Thirty percent of Gen Zers said they tip at QSRs while just 16% overall said they do so. Forty-six percent of that generation said QSRs should not ask for tips, compared to 59% of millennials, 66% of Gen Xers and 68% of boomers who opposed the practice.

Byrne noted that younger people are more likely than others to be working in the service industry and therefore understand the difference a tip makes for an employee's income. Also, one could make a connection between tipping and environmental, social and governance (ESG) issues, "and younger cohorts by and large tend to be more invested in such matters," he said.

Middle-income earners, meanwhile, were more resistant to tipping on average. Among people making $50,000 to $75,000 a year, 67% said fast-food places shouldn't ask for tips. That's compared to 57% of people earning less than $50,000 who said so.

Whether consumers like it or not, the mere presence of a tipping option at these limited-service concepts is a big change for U.S. tipping culture.

“Tipping is based on the service you are going to provide me or that you have provided me,” Byrne said. At a QSR, where the customer pays before they get their food, “you have no idea what the service is going to be like.” 

Sixty-eight percent of people still base their tip on the customer service they receive, according to a survey of more than 1,000 consumers by casino news site PlayUSA. The remaining 32% said they tip the same regardless of service.

At a Starbucks on Chicago’s Northwest side, the credit card terminal asks customers if they want to add a tip before paying. The suggested options are $1, $2 or $5. You can also choose to enter a different amount or decline altogether.

The 15,500-unit chain began rolling out the ability to tip on credit cards in September, saying it wanted to allow customers to recognize baristas no matter how they payed. Starbucks Workers United, the union that represents employees at about 280 of the chain’s stores, has taken credit for the change. A barista at the Chicago store said that most customers do leave a tip via the new system.

Omar, a regular at the location, said he usually tips 50 cents or $1 for his daily coffee. He used to tip more, but he’s in between jobs at the moment. Inflation has also made it harder to give as much as he would like. 

When asked whether she will tip at a counter-service place like Starbucks, Julie lets out a sigh, followed by a long pause. 

“That’s tricky,” she said. 

Her first experience with tipping while growing up was at a sushi bar, where she could sit and watch the chef making her food. She would put the tip right on the bar where the chef would pick it up.

“Going back to my own personal experience, if I see real craftsmanship going into something, I’d be more likely to add an additional tip,” she said. But that’s less likely to happen at a limited-service place.

And yet consumers’ convictions are being tested by the assertiveness of tip screens at the checkout, which forces them to make a decision right in front of the employee.

More than half (54%) of consumers told PlayUSA that they feel pressure to tip during iPad checkouts, and 51% have tipped when they otherwise wouldn’t have in that situation.

“People don’t like to think of themselves as jerks,” Byrne said. “It preys on that sort of psychology.” 

Some consumers say they feel a different kind of pressure to tip at the point of sale: a responsibility to help compensate employees, even ones that are making the full minimum wage or more. 

K., a restaurateur in Cleveland, said he tips 20% even if the service is bad. “With me being an owner of a restaurant, I understand wages a little bit more now,” he said. “I definitely try to show love when I can.”

Miriam, a web designer, said she also tips well regardless of service, and that her behavior is driven in part by guilt over how little she feels workers are paid.

However, she said, if a restaurant is paying a good wage and taking care of its staff, “they should strongly promote this messaging so that patrons can feel really good about doing business with them, guilt-free.”

Others agree that there’s a lack of clear guidance around why they are supposed to tip and how much. While 20% has become the standard for full-service, for instance, what’s appropriate for delivery? Pickup? A coffee?

“15-20-25% is the social norm, so now that’s the norm when you go buy a coffee,” said Ben Alkire, marketing coordinator for catering delivery company Deliver That. “I think the options could be adjusted for the service you’re actually receiving.”

A survey by Nationwide Insurance found that consumers are making distinctions in their tipping habits depending on the scenario. The average tip for fine dining was 19%, but 17% for “family-style” service. Delivery was 15% and takeout was 9%. Fast casual was 9%.

And though there has been mounting consumer pushback, Byrne said it likely won’t be enough to reverse the tipping trend in restaurants. 

“I think that the thing that pushes us that far is where we start to see restaurants struggle with sales growth” as inflation decelerates, he said. “That is where you’re gonna start to see restaurants look around and say, ‘What do we do?’ And [tipping] might be one of the casualties of that.”

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