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.
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.”
A Hooters location in downtown Chicago sells a BBQ Bacon Cheddar burger for $12.49.
John Reilly, a doctor in Washington, D.C., considers himself a generous tipper. But he’s hitting his limit as menu prices rise. “Restaurants have not been doing well here in D.C., and price definitely has much do with it,” Reilly said.
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.
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.
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.
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.”
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.
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.
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.
Mohit Ganguly, a Washington resident, said it’s easy to miss the mandatory fees that most eateries in his area have tacked onto their menus. “Tipping 15% to 20% on top of that feels superfluous,” Ganguly said.
Source: https://www.wsj.com/business/hospitality/restaurant-tip-fatigue-servers-covid-9e198567?st=PYR2Ag
