The Tipping Point
The culture seems to be shifting.
WSJ (“Americans Are Tipping Less Than They Have in Years“):
People are tipping less at restaurants than they have in at least six years, driven by fatigue over rising prices and growing prompts for tips at places where gratuities haven’t historically been expected.
The average tip at full-service restaurants dropped to 19.3% for the three months that ended Sept. 30 and hasn’t budged much since, according to Toast, which operates restaurant payment systems. The decline highlights a bind restaurants find themselves in, as they face rising costs of ingredients and labor amid customer frustration over spiraling bills.
Tipping at U.S. sit-down restaurants in the past six years peaked at 19.9% in early 2021, when Americans were likely to express gratitude as Covid-19 lockdowns eased.
The headline finding is not that interesting to me without more data. Indeed, if customers are tipping a slightly lower percentage on a considerably larger base, servers may well be coming out ahead. But the broader attitudinal shifts comport with what I’m seeing.
People have become increasingly grumpy about dining out. Many have recoiled at menu prices that have risen sharply in recent years, and are going out less and ordering less when they do. Some restaurants have added mandatory gratuities and service fees to bills, driving up bills and resulting in some diners tipping less.
“Instead of that second or third drink, people will go home,” said Andrea Hill, director of operations for HMC Hospitality Group, a Chicago operator of Hooters restaurants. “Our servers are making less per table.”
Not to be a snob, but Hooters seems like a less than ideal baseline. But it’s inarguably true that prices have skyrocketed at sit-down restaurants in a very short period, that customer service has declined at the same time owing to smaller waitstaffs, and that some restaurants are are adding additional fees. The combination leads to grumpy diners.
About 38% of consumers reported tipping restaurant servers 20% or more in 2024, according to a survey last fall of 1,000 consumers by restaurant technology company Popmenu. That’s down from 56% of consumers in 2021, according to the company, which said budgets are weighing more on diners’ minds.
I wonder, though, if this reflects actual tipping practices or attitudes about tipping. I’ve been a pretty consistent “round up the bill and tip 20%” tipper for decades and doubt most people have started tipping less, given that it’s both a habitual practice and one with social pressures attacked. But now that damn near every transaction everywhere comes with a demand for a tip, those of us who refuse to tip at places where tipping was never customary or who tip considerably less in those circumstances than at a sit-down restaurant may well have adjusted their sense of how much they tip. “Well, I don’t tip at McDonalds or the Chinese takeout, so I guess I tip less than 20% on average.”
Regardless, I think almost all of the tipping fatigue we keep hearing about is from the demand for a tip being built into so many checkout systems.
Americans went to restaurants less in 2024 than they did in 2023. Restaurant chains and operators last year declared the most bankruptcies in decades, with the exception of 2020, when Covid-19 shutdowns decimated the industry, according to an analysis of BankruptcyData.com records. High-profile bankruptcies in 2024 included casual-dining chains Red Lobster and TGI Fridays.
We’ve discussed this phenomenon before. It makes sense that chain restaurants serving mediocre food at increasingly high prices will fall by the wayside. I was never a Red Lobster fan but TGI Fridays was perfectly fine for a burger and a beer or to grab a meal with the kids when you don’t feel like cooking. But those places are pricing themselves out of business. (I also don’t know who it is that’s paying $22 for a Five Guys hamburger, fries, and drink.)
Restaurant workers didn’t fare much better. Waiters, bartenders, cooks and other restaurant workers averaged less time working per week last year than 2023, according to federal data.
A one-year trend is not a trend. But, if customers are dining out less, it stands to reason that there’s less demand for waitstaff. Or that owners and managers are cutting staff hours rather than impose still higher menu prices.
Restaurant servers know customers are annoyed about how often they’re now asked for tips. Payment systems on digital tablets prompt them to add gratuities, even at businesses like airport concessions and gas stations.
“I can see tipping culture in the U.S. cracking,” said Jenni Emmons, a server at an upscale Chicago restaurant. “People are being pressured to tip for things they didn’t used to, and I feel my income is under threat because of this.”
Being constantly asked to tip for counter service and the like, which we’re not habituated to culturally, has been quite bizarre. Add to that routine asks for “donations” at places like grocery and department stores. Customers having gotten into the habit of saying No. A lot.
It’s entirely possible that, having gotten used to not automatically tipping 20 percent on those occasions, folks are questioning why they should have to do so at sit-down restaurants.
Some worker-advocacy groups maintain that servers, bartenders and other tip-earning workers rely too much on gratuities. They have taken aim at the tipped-wage system, in which many states permit restaurants and other businesses to pay tip-earning workers less than the minimum wage—so long as income from tips makes up the difference.
New York-based One Fair Wage is one of the groups arguing that the system forces customers to subsidize restaurants that pay waitstaff low wages. Tip-earning workers, they said, deserve the same minimum wage paid to other employees, plus any gratuities customers might offer.
The campaign has secured recent victories in Chicago and Washington, D.C., where minimum wages for workers who receive tips are on track to match the broader minimum over the next few years. One Fair Wage plans to push similar bills or ballot measures this year in New York, Illinois, Ohio, Arizona and Maryland.
I would prefer a European-style system where gratuities are modest and the cost of paying the waitstaff is just built into the menu price. (Although Anthony Gill offers a thoughtful defense of tipping, on both economic and social grounds.) But you can’t have it both ways. If servers are paid a decent wage by their employers, the rationale for a huge tip on top of that disappears. (And the relative handful of restaurants that have tried to move to a no-tipping policies have mostly stopped, as servers found they made considerably less.)
The restaurant industry is pushing back, warning that the shift is already cutting into restaurant traffic, hurting operators and servers alike. Mike Whatley, the National Restaurant Association’s head of state affairs and local advocacy, said the trade group and its members are prepared to continue battling efforts to eliminate the tipped wage system.
In Washington, D.C., around 70% of restaurants have raised prices since voters struck down the tipped wage system through a ballot initiative in 2022, according to a local trade group.
Price increases in D.C. have averaged 9%, according to a survey of 158 operators the group conducted last fall. Many have imposed service fees and gratuities to offset the wage increase.
Fritz Brogan, who co-owns five bars and restaurants in the city, said the higher payroll costs have led him to raise menu prices by around 10% and trim employee hours. His Mission Navy Yard now charges $15 for an espresso martini, according to the restaurant’s website, up from $13 in 2023, according to an archived version of the site.
While 9% is a noticeable price increase in such a short period, it’s actually consistent with the larger inflation rate. And, while $15 for a cocktail is absurdly expensive by historical standards, it’s fairly common in DC and other high-income metro areas.
He is considering adding service charges next July, when the minimum wage for service staff rises to $12 an hour. That would add some $400,000 in costs across his 350 hourly staff, he estimated.
Brogan said the fees can leave diners confused and wondering whether they should still tip. “The last thing people want is to be doing calculus at the end of the night,” he said.
“Service charges” just make no sense to me. Restaurants are, by their nature, a service business. It would be like Starbucks offering a coffee surcharge to the listed price of their coffee.
Timely post in that just this week I went out for Mexican as a treat for myself and ordered a shredded beef burrito suino with rice and beans. It was $16. So with a drink and tip, ended up paying $27. And I was thinking, I just paid $27 for a burrito that I used to get a la carte for $8 flat to go. That’s what makes consumers shake their head and think the economy sucks, even though I could afford it no problem.
Was part of a large group for a celebration a few weeks ago at a chain restaurant. The tip surcharge was clearly marked as such, so I saw no reason to be confused. My past experience with large groups is that they are the worst of both worlds in that there’s usually a “others are probably over tipping, so no one will notice…” cohort in the group and another “the restaurant has tipped for me” one.
I found Korea to be easy with no tipping, but many common restaurants were sole proprietorships.
@,just nutha: I don’t mind a “we automatically add X% to large parties” policy if it’s clearly advertised. But a lot of restaurants started adding bullshit fees during COVID that were explicitly not shared with waitstaff, so we were expected to tip on top of that.
Doc J, I’m assuming you meant “attached,” but attacked works just as well.
I’ve always was irritated at the tip jar at places that was counter service. I always thought that if I was an owner I would ban that. It was the most blatant and visible push for subsidizing wages. On the other hand, those were the lowest paid workers. And notice the tablet payment devices start the tipping at 18%, not customary 15%. Human factors engineering at its most irritating.
It may be due to our increasing age and possibly due to lessons learned during COVID, my wife and I find that we enjoy cooking in rather than going out. If we go out, it is to a bar that has decent bar food because restaurant meals are too large for our decreasing metabolism.
California’s minimum wage is now $16.50/hour for all workers, with fast food workers making $20/hour minimum
The online discussion here in San Diego has been whether we need to still tip or not, given that we were previously subsidizing the restaurant owner being allowed to pay $2.50 or so per hour to tipped employees.
Businesses overplayed their hand on the tipping thing, hoping customers would pay their employees directly instead of having wages come out of business profits.
California lawmakers are somewhat responsive to public sentiment, which is why we take the lead on this stuff. Watch for other states to join in.
@James Joyner: Not what I experienced where I was living, but I probably don’t go to places similar to your choices either
@Tony W: If the online discussion centers on whether people making $16-20/hour are inadequately compensated or not in San Diego, your online community is out of touch with reality.
ETA: Ask yourselves how your lives would look on $20/hour and try again.
I have been pretty chill about the explosion in tipping, but was irked recently when I bought a couple of beers at the pro shop of a local public golf course and the guy behind the counter made a “joke” about people buying beers but not tipping (there was a tip jar on the counter).
I mean, dude, I don’t tip at the gas station if I buy a soda, either.
I worked for four years as a teenager at a Big Boy, with experience in every role except manager and owner. And I’m blessed enough that I can be reasonably generous now, so I am. But damn I wish there was a better system.
As noted, the standard tip percentage has increased from when I was a kid. And with other new charges, the advertised price of an item feels rather false when you actually pay the bill. And don’t get me started on DoorDash.
What I’ve seen in my limited European experiences feel better. Yeah, you still tip but it’s more like “keep the change” rather than this expectation that it’s all up to me whether the staff lives or dies.
I hit a breaking point last summer. Sent to a very nice restaurant and the bill had built in gratuity for the server. And the host. And the back of the house. All separate line items, together adding $100+ to the bill. Surprise!
So diners were just paying the whole staff’s wages, at least so it felt.
I’ve been tipping a lot less ever since. Servers still get the same gratuity I’ve always given, when the tip line comes up for counter service I rarely fill it out, whereas the four years after the pandemic I was always upping my gratuity.
” And, while $15 for a cocktail is absurdly expensive by historical standards, it’s fairly common in DC and other high-income metro areas.”
Can’t speak to other metro areas, but at a decent place in Manhattan a $15 cocktail is a bargain.
One nice thing about living here is when I go abroad to places where I’m warned food and drink is super-expensive, I tend to find it’s the same or a little less than at home…
A long time liberal tipper, instructed years ago by my hardworking sister who was at the time a wait person, I find myself conflicted over the automated request for tips at minimal, serve yourself eateries.
Balanced against my reluctance is the knowledge that most of the wait staff at these places do not make a living wage and likely cannot afford the healthcare that I have. So I continue to tip, but on a sliding scale for the amount of service rendered, i.e. self-serve verses full service.
Be kind. Do what you can.
@Neil Hudelson:
This is actually a violation of tradition, and disrupts the natural ecosystem of a restaurant. The waiter tips the bartender, the busboy and, in some places, the hostess. That’s why the bartender often prioritizes the waiter’s orders over those of people at the bar. The bartender knows he’s getting 10 or 20 percent of the waiter’s take. Same with busboys. The waiter needs the leverage to handle the bartender who, generally, has a slightly higher standing in the restaurant hierarchy, and might otherwise ignore waiters. Also, if you want a sneaky shooter mid-shift. . .
We have easily the best restaurant service in the world. It’s something we do very well, and something Brits and Europeans are often impressed by. So of course there are asshole owners trying to skim off the waiters and screw the whole structure up. Tips are sacred. Even when I was skimming from the register I never, ever touched another waiter’s tip. There’s what’s illegal, (skimming) and then there’s what’s sinful – screwing a fellow waiter.
@Tony W:
$16-20 an hour you won’t qualify to rent there, you can’t rent the parking spot to live in your car, IMO.
*H/t apartments.com
@clarkontheweekend:
Or maybe (excluding the most agregious instances), this increase in the service costs, reflects a reality that has been long denied and long suppressed.
Regardless, the “price mechanism” continues to receive signals from the marketplace with some potential buyers withholding and some supporting. It will likely settle at some point higher than previous because despite complaints, dining out is still compelling to a lot of people, and the new reality is already becoming accepted.
Let’s get real. The wonderful American lifestyle has long been subsidized by support from outside the immediate transaction. American energy and fuel costs have been subsidized by taxpayers, as has been food production. Agriculture itself, benefiting from Uncle Sam, has double dipped into the subsidies provided by ridiculously cheap immigrant labor for generations. Rising cost of consumer goods has been shored up by “offshoring.” I remember reading a startling cost analysis of soccer ball manufacturing made with the help of child labor in Bangladesh, for export to the US where they provide “cheap” amusement to our own kids.
Across the board, we need to snap out of our insular perceptions of what represents a fair price and good deal singularly for “us.”
Everything connects. What goes around comes around. “America First” is a surefire path to an America nobody else on the planet gives a damn about; a critical outcome in the face of major global challenges on our horizon.
When I got married back in 2017, a small 60 person attendance, the caterer added a 15% gratuity to the final invoice (I don’t know if it was on the food expense, or the other expenses that I used the same company for). So only did i see it at the end, a few weeks before the wedding.
I asked about that….was it something I would pay in cash after the event, or what….She insisted it was mandatory! For catering staff, who I cannot imagine are tipped positions for income. They are certainly paid minimum wage before tips, so why is the tip even asked for, much less mandatory! I had to balance this frustration with not letting it fester and impact my enjoyment of the wedding/reception/party….but it still sticks in my craw.
@wr: You can definitely pay more. But $15 is the going rate for most cocktails at, say, the Fairfax, VA Ruth’s Chris. You don’t get into the stupid range until you get to something like the Georgetown Ritz-Carlton, where it’s $20-25. But, at that point, either someone else is paying for it or you’re not looking at prices.
The cocktail menu at Vanderpump in Vegas.
Ah, the “living wage surcharge” where the shithead owner wants to turn every receipt into a political statement about hope he resents paying his workers at all.
I don’t go back to those places.
“I would prefer a European-style system where gratuities are modest and the cost of paying the waitstaff is just built into the menu price.”
Just one man’s experience, but in Europe I’ve found service to be uniformly poor.
It might make sense for any analysis of tipping to be parsed. The tipping policy at TGIF or your local ho-hum Italian place is one thing. But if you go to Peter Lugar, Mortons or, say, NoBu (or any high end restaurant in a city) you can easily run up a $400 -$500 bill; split: 20% x $450 is $90. A waitperson may have just 5-6 tables a night. But that’s $450-550 in tips. Make whatever assumptions you want about how often they work, but let’s just say 250 nights a year. That’s $110-140K. Given that the median wage earner in the US makes $60K, its not a bad gig.
@Connor: I’m convinced! Stiff waiters and complain about tip culture because waiters at outlier establishments make above average wages. Good job and carry on!
@Just nutha ignint cracker: Other than the fact that I’m not advocating stiffing waiters, nor complaining about tip culture, you are doing great.
Rather, the point is that any analysis of tip culture probably needs to take into consideration the wide variety of tipping environments. Carry on.
@Connor: My husband and I travel pretty frequently, to Europe usually at least once a year (he has friends and family in the UK). Our service there is no different from the US.
@Connor: Wow! This is a red-letter day for my understanding of how society works. Until today, I had no idea whatsoever that people who can afford to patronize Morton’s and NoBu have no volition about how to spend their money. And no matter how much you’d like to demure on the point, using unicorn restaurants that most people will never go to as your talking point for “taking into consideration the wide variety of tipping environments” is still disingenuous.
@Jen: I’mma reverse bothsides y’all and say you’re both right.
Like Connor hints at, minimum wage workers are not gonna “customer is always right” you like they’re expected to in the US.
But to your point, I wouldn’t describe that as “poor” service. Spending a few bucks in many places in Europe will get you basic friendliness, but they’re not rude or incompetent. Often, service workers in other nations won’t fawn and fret over you, the way some Americans associate with “good” service.
Go to €500 a table restaurant in Europe, you’ll be genuflected to just like in the US. And less than that in some places. We’ve got red carpet treatment at places in Spain, Portugal, Greece, Italy, Croatia etc. for waaaay less.
Some cultures seem more…blunt and matter-of-fact than we Mericans may be used to. Like if a customer is a jerk, the server might say so. In the States, I’ve seen us get away with behavior that’s made me think, “Wow, that’s crazy. If that was me, I might lose my job dealing with that jackass.”
@DK: Yes, but adding to that, having lived in Europe, I am also aware that in many cases, they aren’t trying to flip the table, so you are left to your meal. A lot of what Americans perceive as “attentive service” is really waitstaff trying to get rid of you.
@Jen:
True. But also true that Americans simply don’t linger at table as long as, say, Italians. I lived for a while in Tuscany, and I have spent way too much of my life trying to get an Italian waiter to bring me the fucking check.
@Jen:
I also travel frequently in Europe and the service is usually professional, but can also be haughty and indifferent. It’s not just me saying American service is better, ask a European who has experienced the American version.
BTW I have always, since my days in restaurants, hated the term ‘server.’ The word ‘waiter’ had history, ‘server’ is just one of those stupid neologisms people imagine accomplish something. Americans are snobs about working class jobs, they think waiters are inferior and need to be patronized.
I read that headline, and after the last few days’ worth of news, I expected a completely different article.
@Just nutha ignint cracker: Do you ever make logical arguments? Please let me know so I can decide whether or not to engage with you.
@Jen: I believe you. I’m just saying one man’s experience.