Is tipping hurting the Restaurant industry?

Remember not so long ago when 15% was the standard tipping amount? And if you were alive in the 80s, you might remember 12% and even 10% as still being pretty standard. You might still think 18% is the average tip, and 20% is for exceptional service. But these recent years, 20% has become just average, with excellent service expecting 25%:

If you're generous, and are doing well financially, it's probably not a big deal. But with more Americans having tightened budgets, it's not hard to see why they're opting out from dining out to escape this 25% tax. More Americans prefer to stay at home, or just pick up that same food or even have it delivered. People are somehow more comfortable leaving a smaller tip for a driver, if they tip them at all.

Dining out is on a downward trend in the US, especially among millennials, and especially in more formal restaurants. Jersey Mike's Sub, Marco's Pizza, Wingstop, Raising Cane's Chicken, and Chick-Fil-A are the fastest growing types of restaurants right now. Most other generations are following the same pattern as millennials, according to Bank of America's data (Gen Y= Millennials):


Many experts have linked this shift away from dining out to an increase in price of goods outpacing increases in wages.
On top of that, millennials are starting their financial lives deeper in the red than any other generation. So with our wallets getting relatively lighter, what are restaurants doing in response? Is it still possible to get a decent meal at a decent restaurant for under $20? There's still options out there for around $15. But depending on the city, the average meal is probably gonna run you closer to $25. Here's a comparison between 22 popular restaurant chains:

Now remember to add that extra 20-25% to that bill.

There's not a simple solution to this. Restaurants are probably not gonna include service into their price, and make them seem even higher. This could also be bad for waiters and the service in general. I doubt too many restaurants are going to match that 20-25% rate into their wages. With consumers still preferring speed and convenience for their meals, and also preferring to save their money for the next new smart phone, restaurants are really gonna have to get creative to get those seats filled again.

Uploaded 06/18/2018
  • 0 Favorites
  • Flag
  • Flip
  • Pin It


  • Advertisement