Restaurant Briefing: The Tipping Point – How Gratuities Are Changing

Promote Your Business Restaurant Industry By American Express January 14, 2015

As service models have changed—with FSRs installing menu ordering tablets at tables or experimenting with express lunch service, and LSRs adding full-service-style amenities like table runners and bar service—consumers may not be drawing such a clear line as they once did between full-service restaurants (where gratuities are usually expected) and limited-service restaurants (where there is no such expectation).

We asked consumers where they feel they are “supposed to” tip for a dine-in meal. Fully 92% said one should tip at a traditional casual-dining restaurant; almost as many identified upscale casual-dining restaurants and family-style eateries as places where tips are expected. For all three sub-sectors of full service, the proportion of consumers saying tipping was an expected practice was up from 2011, when we last asked the question. (Three years ago, 85% said customers should tip in upscale casual-dining restaurants; 84% said the same for traditional casual dining and 80% for family-style restaurants.) The proportion of consumers saying that diners should tip at cafeterias and buffets is also up slightly from three years ago (29% vs. 27% in 2011) but the number identifying fast-casual or higher-end fast-food restaurants as tipworthy remains the same (23%).

Women are more likely to say customers should tip in upscale casual-dining restaurants and cafeterias or buffets, while men are more likely to say the same about traditional casual-dining establishments. Gender discrepancies are more pronounced for limited-service subsectors, with women far more likely to believe
diners should tip in fast-casual eateries (27% of women vs. 18% of men) or even in quick-service restaurants (8% of women vs. 4% of men).

At What Types of Restaurants Do You Feel You Are Supposed to Tip?

Tipping expectations in FSRs have sometimes gotten part of the blame for consumers’ gradual move away from full service and toward more patronage of limited-service restaurants. Overall, 37% of consumers admit that they do, on occasion, gravitate to a limited-service restaurant to avoid a tip—either often (9%),
sometimes (20%) or rarely (8%). However, tip avoidance as a motive for choosing an LSR is concentrated among younger adults; among those age 45 and up, only two out of 10 say they often or sometimes choose an LSR over an FSR to avoid having to tip, but many under-25, almost half, say the same.

Have You Ever Chosen an LSR Over an FSR Because You Couldn't Tip?

Whether or not they feel a tip is expected of them, 99% of consumers say they do tip their server for a full-service restaurant meal, and 57% tip more than 15%. Almost eight out of 10 also tip at least part of the time when dining at a cafeteria or buffet (where diners pick up their own food but staff members refill
drinks and bus tables)—though their tips in these establishments are typically smaller than at full-service restaurants, with almost half of tips 10% or less. Two-thirds of respondents also report tipping at fastcasual restaurants; there, tips are most likely to be in the 10%-15% range. Tipping remains rare in fast-food
restaurants, but two out of 10 respondents say they have tipped in such places.

How Much Do You Tip?

Close to a quarter of consumers report having increased their tipping level at full-service eateries in the past two years. Of the minority of consumers who tip at fast-food restaurants, three out of 10 say they have either increased their tipping level or begun tipping for the first time. Among tippers at fast-casual
restaurants, 22% say they have either stepped up the amount or started tipping since 2012. Diners are least likely to have changed their practices at cafeterias and buffets.

Do You Tip More Now Than You Did 2 Years Ago?

Besides choosing a limited-service spot rather than a full-service restaurant, another way patrons can avoid a tip is by ordering a takeaway meal rather than dining in. Yet the majority who order takeout from full-service restaurants report that they may leave a gratuity when picking up their meal. Four out of 10 would add a tip when paying for takeout food at a fast-casual restaurant, and two out of 10 would do so at a fast-food restaurant. A delivery meal is another matter, since it could be argued that the delivery runner exerts just as much effort to reach the customer’s home or office as a waiter or waitress would to serve a dine-in meal. Of consumers who order meals to be delivered from full-service restaurants, nine out of 10 tip the delivery person. For delivery from a fast-casual restaurant, more than eight out of 10 would add a tip to the bill, and two-thirds would do the same for fast-food delivery.

Where Do You Tip Now?

The graphic above also shows that a good proportion of carryout and delivery customers say they have increased their tips or begun tipping for the first time. The numbers are higher for takeout, where tips have not traditionally been expected, with about a quarter of takeout customers saying they are tipping more or have begun tipping. But for delivery orders as well, about two out of 10 patrons have boosted their tipping rate or taken up the practice of tipping.

A poll showing that a good proportion of consumers have increased tips or begun tipping in certain types of restaurants raises an obvious follow-up question: why? When we asked these consumers the reasons for their behavior, the most common answer given was that they had become more aware of how well or poorly restaurant staff are paid (44%). Beyond a focus on the restaurant industry in particular, 22% said working people in general have it harder than they once did. In addition to feeling more sensitive to the needs of workers, 15% of respondents said they have more money to spend now than two years ago and choose to spend some of it on tips.

The easiest way for limited-service restaurants to collect tips from generous customers is via a collection jar or box on the counter. Almost half of consumers report that they are somewhat or very likely to leave money in the tip jar.

But is the tip jar really a convenience for customers—or a turnoff? Consumers who don’t habitually plink coins into the tip jar say they don’t believe they should have to tip where there is no table service; that tips are necessary only in full service, where the gratuity represents a big part of the server’s compensation; or that they shouldn’t feel pressured to pay extra to fast-food restaurant employees who are merely fulfilling the job requirements.

Tipping customs may be changing in full-service restaurants, too, thanks to the rapid inroads being made by a new technology: tabletop iPads or other tablets used by customers to browse the menu, place their order and even settle their bill. In restaurants that have installed tabletop tablets—including Applebee’s, Chili’s and Buffalo Wild Wings units—servers are still on hand to refill drinks, fulfill customer requests and bus tables. With the server’s role being both transformed and reduced, how will tipping evolve?

While 40% of consumers overall say they would pay the same tip in a tablet-equipped restaurant that they would have paid if the server had taken the order and brought the check, 45% would reduce their tip—either a little (33%) or a lot (12%). Younger consumers, however, are different; while 41% would reduce their tip if they ordered and paid by tabletop tablet, and 34% would keep it the same, 26% say they would actually increase their tip. One possible explanation: one-third of Americans got their first job in the foodservice industry, and younger consumers may have more vivid and recent memories of their experiences (or those of their friends) living on restaurant wages.

If You Used a Tablet in A Restaurant, You Would Tip the Server...

Bottom line: Diners are trying to balance their own need for value with a growing appreciation of restaurant employees’ workloads and financial needs. Some are voluntarily increasing tips or adding a tip to their check where they never would have before. Operators shouldn’t believe that the modest uptick in tipping lowers their responsibility to pay their workers well. Quite the opposite; it suggests growing public attention to restaurant employees.

Source:  Technomic, Inc.