Leaving a gratuity has long been part of American culture, particularly at an establishment like a restaurant where employees rely on the generosity of others for their income. However, tipping has gone to a new level in the wake of the pandemic, spilling over from sit-down meals to just about anywhere goods and services are sold.
Now signs suggest that consumers may be growing weary of adding on to the bill. Of course, tipping is subjective, and not everybody is complaining.
When dining out at a restaurant, the standard tip amount is 20% of the bill — as long as the service is exceptional. If the service is less than ideal, it is customary for the patron to adjust the percentage accordingly. U.S. consumers don’t seem to have a problem with that. However, what appears to be causing some pushback is an expectation among businesses for customers to tip when making a standard purchase, such as a cup of coffee or a snack that they take on the go.
Uptip Founder and CEO Eric Plan told CNBC, “Part of it is tip fatigue.”
Gratuities became more complex as a result of the pandemic when consumers started tipping for services they usually would not, such as ride-share services and curbside deliveries for take-out. Lockdowns and social distancing restrictions made service providers into unlikely heroes overnight.
Suddenly electronic payments were the preferred method for everybody in the middle of the health crisis, where tipping prompts became standard alongside the check-out experience. While this courtesy went a long way for workers during the pandemic, it may have consumers feeling a bit jilted now that the dust has settled.
Record-high inflation that has gripped the economy has thrown a wrench into the tipping culture, considering consumers must dig deeper into their pockets to pay for rent, groceries, automobiles, fuel, airline tickets, and more this year vs. 2021. Early in the pandemic, as of April 2020, tips were up 23.5%, according to Square data cited by The New York Times. As of March 2022, that rate had fallen to less than 20%.
One small business owner of a bakery and café in Washington State told CNBC how they have experienced a drop in tipping since prices went up. This business has integrated digital payments at the register, where customers are automatically prompted to tip anywhere from 15-25%. While it’s not mandated, it has created confusion around what’s socially acceptable for everyday purchases. At the café, approximately 20% of customers decide to tip.
A recent study by payroll fintech Toast suggests that the so-called tipping fatigue may be a myth. According to Toast’s findings, consumers have been digging into their pockets to tip even amid sky-high inflation. As prices have risen, “the average same-store tip amount” has climbed close to 10% vs. year-ago levels, according to the report.
Toast further breaks down the data between in-person and take-out diners. As of the second quarter of 2022, in-person diners tipped 19.7% on average compared with 14.5% for delivery or take-out customers. The findings continued a trend that played out in Q1 too.
Meanwhile, the gap between the highest and lowest tippers in the country is not too wide, with Indiana in the No. 1 spot at 21% and California at the bottom of the list at 17.5%. Texas rolled in at No. 45 with an average tip of 18.8%, according to Toast data.
