Why Tipping Has Become So Annoying
The average full-service tip has reached its lowest point in six years. This decline is due to rising prices and frustration with retailers’ aggressive asking tactics.
Over the last several years, the average tip has significantly declined. According to Popmenu, 56% of Americans tipped 20% or more in 2021. Last year, that share fell -18 percentage points to 38%. An analysis by Toast found that average full-service tips have fallen from a high of 19.9% in Q1 2021 to 19.3% in Q3 2024.
What’s behind this decline?
Waning Sympathies: During pandemic lockdowns, tips rose to record levels. Consumers wanted to thank frontline workers, and stimulus gave them the extra cash to do so. Now that the pandemic is over, there is less desire to give the extra dollar.
High Prices: Despite the large decline in the inflation rate over the last couple of years, the rising price of tipped personal services (like eating out) hasn’t slowed down much. In January 2024, restaurant prices rose +5.1% YoY, compared to a +1.2% rise in grocery prices. Many eateries have also added new service fees to their bills. In the face of higher tabs, consumers are both ordering less food and leaving smaller tips.
Growing Frustration: Many customers are annoyed by pre-entered tip screens in establishments like fast food stores where little personal service is offered and an additional gratuity was never the norm. Some get so turned off by the perpetual “ask” that they begin tipping everyone less. (See “Americans Grow Cold on Tipping.”)
Changing Psychology: Americans are probably the most generous tippers in the world—thanks to a tacit sort of market deal that emerged early in U.S. history between the providers and consumers of many personal services. Providers understand that they work mostly “on spec,” and consumers understand that they need to reward a job well done. Accordingly, most states have historically operated under a tipped wage system, in which tipped workers may be paid less than minimum wage.
This deal is now under assault, not only from the proliferation of non-service stores that urge you to give them more, but also from standardized wage scales (or “pooled tipping” systems) that strip your tip of any transactional meaning. Some cities like D.C. and Chicago, for example, now require that the same minimum wage applies to all workers, including tipped workers. As a result of the higher base pay, consumers often feel less obligated to tip their servers the standard 15% or 20%. Cities that have ended the tipped wage system have also seen a large increase in menu prices.