Survey Reveals Restaurant Workers and Consumers Aren't So Far Apart on Tip Culture

We've heard all the buzzwords, Tipflation, tip creep, and tipping fatigue, but how do restaurant workers on the receiving end of tips feel about the topic? A new survey from SpotOn finds that restaurant workers tipping expectations aren't all that far apart from those of consumers. Despite reports of "tipflation," study finds that most workers' tips have stayed the same, and their expectations remain modest.

• One-third of tipped workers have seen no change in their tips over the last year.
• SpotOn's own internal data showed a slight decrease of 0.1% (from 19% to 18.99%) in average tips of orders placed through the SpotOn Restaurant point-of-sale system between March 2023 and March 2024
• Over half of the respondents who receive tips believe that customers don't fully understand how tips factor into their wages
• Tipped restaurant workers have low expectations for tips, with over half of respondents only expecting to be tipped between 15% and 19% based on service
• When they choose to dine out at restaurants, however, industry workers are big spenders, with nearly half doling out 20% tips or higher.

Link to full report - "Beyond Gratuity: Perspectives of Restaurant Staff on Tipping Practices"

The emergence of preset tip amounts and requests for tips in spaces outside the hospitality industry has some Americans feeling burnt out from the concept of tipping altogether. While industries asking for tips have expanded, a new survey shows that "Tipflation," as it has been coined, is not padding the pockets of restaurant workers. Restaurant workers say that, in reality, the tips they expect and receive aren't experiencing the notable fluctuations being touted in the press.

The report reveals that two-thirds of workers report their tips have stayed the same or decreased in the last twelve months, and more than half of tipped workers expect a modest 15% to 19% tip.

This new data contradicts widespread reporting about increased tipping across the board. Instead, tipping trends remain relatively consistent. Internal data from SpotOn showed an average tip of 18.99% on orders placed through the SpotOn Restaurant point-of-sale system for March 2024. This is a slight decrease (0.1%) from 19% seen one year earlier in March 2023.

In the survey, tipped workers also reported modest expectations for the minimum they expect to be tipped based on service. 52% of tipped workers surveyed said they expect between 15% to 19%, and only 1 in 5 tipped workers expect 20% or more. Worker expectations align with recent Pew Research Center findings that most Americans say they would tip 15% or less for an average meal at a sit-down restaurant, with only a quarter of people saying they'd tip 20% or more.

For years, restaurants have been working to optimize payments, reservations, staffing, and inventory management with digital solutions to improve their bottom lines, including handheld point-of-sale devices. With a handheld, restaurant staff can take orders and payments in real-time, whether at the table or for line-busting busy crowds, improving staff efficiency and speed of service, resulting in a better guest experience and better tips. Restaurants using SpotOn handhelds typically see both their average ticket price and average tip amount go up. Tipped restaurant workers have largely embraced the technology due to the fact that servers can cover more tables and significantly increase their take-home pay. While tip percentages have remained stable, technological efficiencies are improving everything from ordering to bill payment. Speed remains one of the most important aspects of customer service, so omitting the kitchen round-trip to put in an order or running a credit card at a far away terminal has been transformative to the industry.

"We've seen at least a 5% to 7% increase in tips that servers and bartenders are making, thanks to SpotOn's handheld," said John Shepherd, Owner of Shep's and Salt. "Having that screen right in front of customers speeds up the process both when they're ordering and when they're closing out, making it easy for our staff to focus on serving guests and providing quick and exceptional service."

When it comes to pre-set tip amounts, 43% of tipped workers say that predefined tip amounts on point-of-sale systems are actually helpful to both guests and servers. When asked what the predefined tip amounts should be, most respondents selected the standard 12%, 15%, and 20% options. A further 43% indicated that even a 10% option would be suitable. SpotOn's default preset tip amounts are 15%, 18%, and 20%, aligning with expectations from both parties and can be edited by each restaurant operator. SpotOn recommends prompts be determined based on their restaurant's service type and geographic location, among other factors. While requests for tips outside the restaurant industry have been cited as contributing to tip fatigue, most industry workers indicated they did not see adding tips to non-hospitality services as detrimental to their take-home pay.

Restaurant workers and their guests may have similar expectations around standard tip amounts, but more than half of tipped workers surveyed believe customers do not understand how tips factor into their take-home pay. Most industry workers receive a tipped minimum wage combined with tips to reach the federal minimum wage. This is typical for the restaurant industry, which operates on unimaginably slim margins, often five to seven percent, and where every dollar and cent makes a difference. To combat inflation and rising costs without raising menu prices to unachievable levels, restaurant operators are turning to tech solutions to make the dining experience better for both guests and workers.

"The restaurant industry is in a tough position, facing rising costs, razor-thin margins, and changing consumer expectations," said Kevin Bryla, Chief Marketing Officer of SpotOn. "We've seen that the right restaurant technology can deliver an enhanced experience for guests and drive operational efficiency and improved profitability for restaurateurs - both of which translate to improved pay and workplace satisfaction for restaurant workers. All of those factors need to work together to make a meaningful difference in a tough industry and tougher economic environment."

SpotOn's "Beyond Gratuity: Perspectives of Restaurant Staff on Tipping Practices" report dives into other aspects of how restaurant workers view tipping, including generational differences, opinions on what kinds of eateries (including fast food) should be tipped, what metrics tips should be based on, and much more.

Additional Survey Highlights:

• Nearly half (47%) of survey respondents who receive tips said they feel positively about the current tipping culture in the restaurant industry, and only 8% felt that tipping culture is negative and harming the industry.
• Despite reports of tipflation and tip creep, industry workers who receive tips have not seen major changes in tipping in the past year. 36% report that their tips have stayed consistent, and 35% actually reported a decrease.
• Tipped restaurant workers are not worried that more businesses outside the industry asking for tips will negatively impact their own tips — 64% say it has had no impact, while 8% say it's even helping.
• When it comes to the minimum percentage they expect based on service, a majority (52%) of tipped workers expect between 15% and 19%.
• When they choose to dine out at restaurants, however, industry workers are big spenders, with nearly half doling out 20% tips or higher. While they believe they are better tippers from working in the industry, they expect less from their customers.
• 68% of respondents work at restaurants that do not currently charge a service fee, showing that the additional charge is less widely used than it may seem.
• If their restaurant does add an automatic gratuity, 46% of tipped workers do not expect customers to leave an additional tip.

Link to full report - "Beyond Gratuity: Perspectives of Restaurant Staff on Tipping Practices"