Tipping in restaurants fell for the first time since 2020

Tip 20% According to most etiquette experts, eating at a sit-down restaurant is still the standard in the U.S. — diners disagree.

After remaining stable for years, tipping at full-service restaurants fell to 19.4% in the second quarter of 2023, according to the latest study from online restaurant platform Toast Restaurant Trend Reportwhich represents the lowest average since the start of the Covid-19 pandemic.

The report states that the main cause of this is tip fatigue.

“During Covid, everyone was generous,” said Eric Plam, founder and CEO of San Francisco-based startup Uptip, which aims to enable cashless tipping.

“The problem is that it reached a new standard that none of us could really live with,” he added, particularly when it comes to tip requests across a broader range of establishments, a trend also known as “tip creep.” becomes.

With more tipping options and pre-determined options at the point of sale that can range from 15% to 35% for each transaction, tipping is less about rewarding good service, he said.

Now consumers are fighting back.

According to a recent report, two-thirds of Americans have negative attitudes toward tipping Bankrateespecially when it comes to contactless and digital payment requests.

Higher prices due to ongoing inflation have also left more consumers cash-strapped.

In addition, the increasing use of additives also played a role, according to Toast. Fees for restaurant employee health insurance, credit card transactions, etc even tap water “This is intended to result in guests leaving less on the total,” Plam said. “You don’t have to tip as much if they cover health insurance,” he said. “That’s the quick calculation.”

These days, fewer consumers also said they “always” tip when eating out or for other services such as ride-hailing, haircuts, food delivery, housekeeping and home repairs compared to last year, according to Bankrate.

However, as transactions increasingly become cashless, it is critical to have a method to tip workers in the service industry who earn minimum wage or less than minimum wage, Plam added.

Under federal law, employers can pay employees just $2.13 per hour – much less than minimum wage – if the tips they receive bring them up to a base salary. Some states are now increasing the minimum hourly wage for tipped workers or have eliminated tipped wages altogether.

For restaurant workers, tips can increase wages about 90%according to data provided to CNBC by payroll platform Gusto.

Nevertheless, tips have fallen slightly compared to the previous year, Gusto also noted.

“What we are seeing is stabilization at lower levels as part of the post-pandemic surge,” said Luke Pardue, an economist at Gusto.

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