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.
