Americans are scaling back on restaurant gratuities, with average tips hitting their lowest point in six years according to new data from restaurant payment provider Toast.
The latest figures show tips at full-service restaurants dropped to 19.3% in the third quarter of 2023, marking a notable decline from the peak of 19.9% seen in early 2021 during the post-COVID reopening period.
Industry experts point to several factors driving this downward trend. Rising menu prices have left many diners feeling the pinch, leading them to cut back on both dining frequency and tip amounts. The growing presence of mandatory service charges and automatic gratuities at restaurants has also influenced tipping behavior, with some customers reducing discretionary tips in response to these added fees.
Customer frustration appears to stem from the combined impact of inflation on food costs and increased labor expenses, which restaurants have passed on through higher prices. This has created tension between establishments trying to maintain profitability and patrons experiencing sticker shock at their total bills.
The decline represents a stark contrast from early 2021, when generous tipping reflected public goodwill toward restaurants reopening after pandemic lockdowns. Today's tipping landscape suggests growing consumer resistance to rising costs across the dining industry.
The trend highlights broader challenges facing the restaurant sector as it navigates increased operating costs while trying to maintain customer satisfaction and staff compensation in an inflationary environment.