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Restaurants seeing less gratuity for takeout, delivery amid tipping fatigue

Posted at 6:00 PM, Sep 05, 2022
and last updated 2022-09-05 20:00:42-04

DENVER — Tips for restaurant staff have dropped since the beginning of the COVID-19 pandemic. A report by the digital restaurant payment platform Toast found that in the second quarter of this year, in-person dining tips remained consistent while take out and delivery tips dipped.

On average, in-person dining has remained at 19.7% on average, while takeout and delivery dropped to 14.5%. Tipping for quick-service establishments, meanwhile, have averaged 16.9%.

“I think that for the DoorDash, curbside pickup, in and out of the local coffee shop, I think that that's where we're seeing the tipping fatigue hit most,” said Jackson Lamb, a professor with the school of hospitality at Metropolitan State University of Denver.

Jackson believes part of the reason for the tipping fatigue might be the surcharges on bills for things like living wages or healthcare for staff. He also said cashless tipping applications might be part of the reason for less tipping since people aren’t left with change.

“Those improvements in technology have also stifled the tipping part of our industry, which is interesting,” Lamb said.

The quality of service is also different between in-person dining and take-out, for instance.

“When I'm sitting down and I'm being waited on and I'm having things brought to me, you know, that is a different style of service altogether, and I gladly pay for that,” Lamb said.

MSU economics professor Alex Padilla, meanwhile, said inflation might also be to blame. While wages remain the same, food prices are going up, meaning higher restaurant tabs and, therefore, higher tips.

During the pandemic, like many restaurants, Rioja Mediterranean Restaurant in Larimer Square had to rethink its model during the COVID-19 shutdowns, switching to a takeout and delivery model.

“We were open for takeout or limited sit down, and [customers] were very thankful. They were tipping, I think, more than typical at that time,” said owner Jennifer Jasinski.

Since then, business in downtown has certainly made a comeback, but not to pre-pandemic levels just yet.

Jasinski said because the restaurant is back to relying mainly on in-person dining, she hasn’t noticed a drop in tips for her staff. However, she is concerned about minimum wages increasing in Denver to $17.29 an hour starting Jan. 1.

“As that price goes up, to afford everybody, we're going to have to raise prices,” Jasinski said.

She's worried that this will cause bigger pay disparities between the front-house staff, waiters and bar tenders, who earn tips, and the back-house staff, dish washers and cooks, who don’t. She even foresees a scenario where waiters could earn more than the manager with tips.

Because of the wage increase, Jasinski says many of her fellow restaurants in the Denver area are switching to a service charge model, where the restaurant automatically adds a 20% to 22% tip to a bill. The money is then split between front and back house staff.

With the latest rate increase, Jasinski hasn’t decided quite yet whether she wants to move to that model, but she understands why others are.

“America, we’re the last country to be doing tipping. I think all around the world, people have already figured out that it's probably not as much of an equal model,” she said.

However, Padilla said switching to this model could have a downside.

“There is no rule that says you have to tip people, but the tip is a mechanism to recognize or separate good service from bad service,” Padilla said.

By tipping, Padilla said customers are able to show which restaurants they value. He worries that moving to an automatic tipping or surcharge model would result in worse quality.

“If you force employers to pay their workers more, regardless of the quality of a service, what's going to happen is that the quality of the service at the margin is likely to be going down,” Padilla said.

Love it or hate it, tipping is part of the American dining experience, but how much customers tip depends on them, and how long voluntary tipping stays could depend on the industry.