A: Why did you tip them? They handed you a bag.
B: I felt pressure, don't yell at me.
Apparently, many Americans are having the conversation. An article in The Wall Street Journal reports that tipping has dropped, as documented by the popular restaurant payment platform Toast. While still above pre-pandemic levels, the average tip at full-service restaurants dropped to 19.3% from July to August 2024. In early 2021, during the pandemic, diners leaned into tipping as servers worked the front lines and tipping peaked at 19.9%.
Tipping Gone Wild
Four years later, the American economy has been roiled by inflation and the rising costs of everything for both consumers and restaurateurs. For restaurants, Bureau of Labor Statistics reports that hourly earnings for the hospitality industry grew almost 30% over four years from February 2020 to February 2024. On the consumer side, the Journal reports that diners are going out less and ordering less when they do.
For both, Nerd Wallet found that food prices have risen 28% in five years. All of this has created a complicated tug-of-war over who should foot the bill in the service industry.
When it comes to tipping fatigue, the Journal article points to "ubiquitous tip prompts" that greet us at every turn. Prior to the pandemic, tipping within the food service industry was for table service and bartenders. Now, almost any time a bag or cup passes over a counter, it comes with a tip prompt. Many owners of cafes, quick-service restaurants and stores are more than happy to allow their customers the opportunity to contribute.
Some restaurants are also adding fees, like a 3% processing fee, which can either confuse or irritate consumers. Food & Wine examined fees in-depth, noting that often servers are confused by these fees and can lose money to them. Does the fee go to servers? Should we reduce the tip by 3%? Can we sneak out of the restaurant quickly enough so the server doesn't see that we tipped only 17%?
Yelp's State of the Restaurant Industry report from this summer also shows a nationwide increase in tipping fatigue. Yelp combed through restaurant reviews looking at mentions of tipping. Reviews with the word "tipflation" increased 399% from May 2023 to April 2024 compared to the same period the year prior. Mentions of "gratuity" were up 140% for restaurants with a lower price point but up only 26% at pricer restaurants, indicating diners are more content tipping at fine-dining restaurants but not so much at counter-service spots.
"In addition to these nationwide tipping sentiments," the Yelp report continues, "Yelp data reveals that nearly every state saw a boost in gratuity-related mentions as diners experience tip fatigue across the country."
Automatic gratuity, or autograt, is also becoming more common as restaurants want to make sure their servers are paid. A problem here, that we see anyway, is when you don't find out about the autograt until after you blindly sign the check and walk out. Yes, you missed the sign on the wall and the note on the menu and you also failed to read the line-item receipt. In a social situation with drinks, this happens. It'd be nice if servers warned us, and yet ... This might be the quickest way to get your Yelp reviews ruined.
All of this is leading to a schism in tipping culture that doesn't look like it will be settled soon.
