Study Finds Most Consumers Not Ready to Stop Tipping

Danny Meyer has already announced his plan to ban tipping at his Union Square Hospitality restaurants, but are consumers ready for the change in all markets?
Danny Meyer has already announced his plan to ban tipping at his Union Square Hospitality restaurants, but are consumers ready for the change in all markets? Image Used with Permission

According to Horizon Media's latest Finger on the Pulse Survey—the agency's proprietary online research community comprised of 3,000 people reflective of the U.S. population—the majority of American consumers are not yet ready to embrace tipping bans, a phenomenon that is becoming increasingly popular in restaurants across the country.

Tip banning, or eliminating tipping in favor of paying servers a higher wage, is a becoming a hot issue as popular restaurant owners like Danny Meyer of Union Square Hospitality have begun instating the practice in their eateries. The change in practice isn't limited to the coasts. National chains like Joe's Crab Shack as well as independent establishments across the nation have also joined the ranks. This "service included" approach to the bill is already common in other parts of the world, including Europe.

Yet Horizon's latest Opinion Pulse data suggest these restaurants may be getting ahead of U.S. consumers' appetite for change: 81 percent of adult restaurant-goers are not yet ready to welcome built in tipping. These consumers want status quo—the decision to tip within their control and dependent on a positive service experience. For over half of these restaurant-goers, the main drawbacks of built-in tipping come down to expected effects on service: 55 percent say they would be forced to pay the same amount no matter how good or bad service is, and 52 percent say it should be up to them to decide how much to pay for service.

While older consumers are hesitant to embrace the change, Millennials and Generation Z are more ready for a tipping revolution: 29 percent of people ages 18-34 say tipping is an outdated and unfair practice versus 18 percent of people aged 35-49, and 13 percent of people aged 50-64. Just 44 percent of 18-34 say they are against tip being built into an item price, versus six in 10 of the older crowd (61 percent of 35-49 and 59 percent of 50-64). But just because they are more forward-thinking on the practice doesn't mean they think the change will happen quickly. In fact, they are more skeptical: 70 percent of Millennials and Gen Z say they think tipping practices will be the same as they are now in five years (versus 60 percent of 35-49 and 53 percent of 50-64).

"There are real economic and life-stage realities at play for the younger crowd," says Kirk Olson, vice president, TrendSights at Horizon Media. "Many Millennials still face underemployment and Gen Z-ers who've begun working are often working service jobs dependent on tips. Considering the rising popularity of Bernie Sanders' ‘living wage’ stance among the same group, it makes perfect sense that they show greater interest in seeing tipping evolve," continues Olson. "They're also more global and connected. They know 'service included' is the way it's done elsewhere and think it would be better for the U.S., even if they're not convinced it will become a reality any time soon."

Regardless of age, those who are interested in switching to a built-in tip structure are passionate about the benefits. Primarily as a way to better predict cost; those who prefer built-in tipping are over two and a half times more likely to say the cost of the entire meal would be clearer before ordering (70 percent vs. 26 percent who want tipping left as is). Fairness is an important motivator as well: 62 percent of those who welcome built-in tipping say it would ensure the servers earn a fair and livable wage (versus 32 percent who want things to stay as is), and 45 percent say the current tipping structure is outdated (versus 15 percent among those who want things to stay as is).

"While the research suggests consumers aren't quite ready to abandon tipping per se, it does portend that in the future convenience will likely trump control," says Rich Simms, executive vice president, managing partner at Horizon Media. "Tomorrow's restaurant-goers may find that not having to think about the tip is a core benefit of the whole transaction. Hospitality brands making the change now may be at the forefront of something that will become standard practice in ten more years."

How much more are they willing to pay per menu item to have tip built in? One third (34 percent) say they would pay up to 15 percent more per item, with an additional one in 10 saying an increase of 18-25 percent would be fair in order to change tipping practices.

News and information presented in this release has not been corroborated by FSR, Food News Media, or Journalistic, Inc.


Non-Tipping is wealth re-distribution cloaked in a fair wage costume. It does not increase wages it actually lowers income for the servers. In most cases the redistributed tips are used to beef up the compensation for the back-of-the-house employees out of the pockets of the servers. Demand is high for professionals in the kitchen and restaurants are feeling the pinch to offer higher incentives to attract and keep those pros. If we want higher wages for restaurant workers increasing the menu prices is the answer. We cant have it both ways and the money has to come from somewhere. Check the price of a sandwich at the airport vs. the corner deli, same bread, same ham, but the one in the airport supports the higher wage.

There is some truth in your comment, however, calling it "wealth re-distribution" is over-stating it. For most kitchen employees, it is a fairness issue, with a lot of resentment that servers can make $50, $100, or more per hour, and they earn less than $20. For an owner to pay comparable wages to the kitchen is unrealistic. Menu prices raised that high would drive customers away. In our state (CA), mandatory tip pooling that includes kitchen staff may or may not be legal depending on which court decision and agency regulation you believe, so that isn't an option either. It comes down, for the owner, to how do you keep the entire staff motivated and (reasonably) happy?

I am curious if any surveys have been taken in the Las Vegas market where food and beverage pay rates with benefit load can be in the 25.00 to 28.00 range for tipped staff. Does the average consumer who frequents the bars and restaurants have any idea of how high the wages are and would that impact their decision to tip generously or not tip at all if that information was widely known?

As you know the European model does exactly this. There is not tipping and the price is built in the menu to include gratuity. Service in Europe is legendary for being poor. Entrees are just dropped in front of you and customer service barley exists. Even in the finest of restaurants. Tips motivate... Even if the service staff is being paid more, they realize that there pay is based on merit. I also think the is just a way for restaurants to get a chunk of that money by justifying as being built into the menu. As a consumer, I would rather be able to tip and have that control/option.

In our establishment, tips are spread over the entire staff. We believe that all of our staff works together to create a great customer experience, whether you wash the plate they eat on, cook their food, or actually wait on the table. It fosters a team approach among all staff.

Add new comment