- With inflation near record highs, fewer consumers are tipping 20% or more.
- According to a recent report, takeout tips have dropped to an average of 14.4%.
- And yet, most people say that the tip prompt on the iPad screen makes them feel pressured to tip when they normally wouldn’t.
It’s holiday season, but Americans are feeling a little less generous.
With inflation near record highs, cash-strapped consumers have started to tip less – particularly when it comes to quick, casual dining and take-out.
“Tipping is the first sign of reduced spending,” said Amanda Belarmino, assistant professor of hospitality at the University of Nevada, Las Vegas.
About 17% of Americans tip less due to inflation, while only 10% tip more, according to a recent PlayUSA survey of more than 1,000 people. More than half, or 54%, also said they feel pressured to tip when checking out on an iPad.
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“Since everything has gotten more expensive, tipping has gone down,” said Irina Sirotkina, owner of Sweetly Bakery & Cafe in Battle Ground, Washington.
Like many other businesses, the bakery uses a contactless and digital payment method that encourages consumers to leave a tip when checking out. There are predefined options between 15% and 25% for each transaction.
“We encourage people to tip, but of course it’s not mandatory,” Sirotkina said.
Although the average transaction at Sweetly is less than $20, meaning a tip would be a few dollars at most, fewer people leave anything at all.
“Only about one in five people tip,” Sirotkina estimated.
Fewer consumers tip 20% or more
Ultimately, while many Americans said they would tip more than usual once business has resumed after the Covid pandemic, consumer habits haven’t changed much.
A 20% tip at a sit-down restaurant is still the standard, etiquette experts say. But there’s less consensus about tipping for a coffee-to-go or a grab-and-go snack.
While tipping in full-service restaurants has remained stable, averaging 19.6%, tipping in quick-service restaurants decreased slightly year-over-year to 16.8%.
When it comes to takeout, customers are tipping even less — now averaging 14.4% after it rose earlier in the pandemic, Toast found.
Just 43% of diners typically tip 20% or more, compared with 56% last year, according to a separate report by restaurant tech company Popmenu.
“Tipping behavior can vary based on market conditions,” said Brendan Sweeney, CEO and co-founder of Popmenu.
Americans have “peak fatigue”
“Part of that is tip fatigue,” said Eric Plam, founder and CEO of San Francisco-based startup Uptip, which aims to facilitate cashless tipping.
“During Covid everyone was shocked and felt generous,” Plam said. Now, “you’re starting to see people pull back a little bit,” he noted, particularly when it comes to point-of-sale tipping, where customers are encouraged to tip even before they get the product or product received service.
“That tipping at the point of sale is what people dislike the most,” he said, “forcing them to tip right there.”
Workers rely on tips as inflation exceeds wages
Tipping 15% instead of 18% may not seem significant, “but if you’re a server, 3% of your earnings is pretty powerful,” Belarmino said.
In fact, the median wage for fast-food and counter workers is $14.34 per hour for full-time workers and $12.14 for part-time workers — including tips — according to the latest data from the US Bureau of Labor Statistics.
“Anyone who’s worked in a restaurant knows how tough the day-to-day life can be and how tipping counts,” says Popmenu’s Sweeney.
As transactions become increasingly cashless, having a method to tip service industry workers who earn minimum wage or less than minimum wage is crucial, Plam added.
A landmark law in California aims to raise the minimum wage for fast-food and express delivery workers at chains with more than 100 locations statewide to as much as $22 an hour. California’s current minimum wage is $15.50 an hour.
president Joe Biden and many Democratic lawmakers have been pushing for a $15 hourly wage floor in the US
The current federal minimum wage is $7.25 per hour and has not changed since 2009.
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