The restaurant hangover is a feeling of indigestion and irritability caused by excessive tip demands when you get your bill.
With some customers still adjusting to a 20-per-cent tipping standard, restaurants are programming their payment terminals to offer prompts for as much as 22, 25 and even 30-per-cent tips. If you feel like tipping has gone too far, hospitality consultant David Hopkins feels your pain.
“Coming out of COVID, I feel like a lot of restaurant operators may have tried to get more tips into the system to help their staff,” said Mr. Hopkins, president of The Fifteen Group. “But now, it seems like it’s gone way too far.”
We’ve all had to tolerate food inflation, which affects both costs at the grocery store and in restaurants. But tip inflation is harder to accept because it seems so arbitrary. What, exactly, are the rules for tipping?
Let’s start with tipping on the entire bill – food drink and tax – or just on food and drink. Mr. Hopkins said the old system of paper-based credit card transactions allowed diners to set a tip based only on food and drink. Now, payment terminals typically apply the tip you select on the entire bill.
You can still base your tip on just food and drink, but you have to recognize how you’ll come across. “This is part of the challenge,” Mr. Hopkins said. “You will be perceived as a cheap customer probably, but that doesn’t make it wrong.”
As for the percentage amount, Mr. Hopkins suggested restaurants use tipping options of 15, 18 and 20 per cent or more. Significantly higher options ignore the fact that customers are already paying more in tips because of increased costs for food and drink at restaurants.
If yesterday’s $100 meal now costs $130, a 20-per-cent tip rises to $26 from $20. On a splurge meal of $200, a 25-per-cent tip amounts to a rather shocking $50.
The pandemic was brutal all around, but restaurants were slammed particularly hard. Their dining rooms were shut, forcing them to rely on takeout food orders without lucrative booze sales. Next came soaring costs for food and labour that were passed along through higher menu prices.
In the postlockdown spending binge, diners took these cost increases in stride. But now, with a slowing economy and growing financial stress from high rates and inflation, restaurant spending is slipping.
RBC Economics said recently that October saw the largest monthly decline in discretionary-services sector spending in six months, with restaurants and hotels singled out. “Consumers are dealing with 30-per-cent price increases, and these massive tips,” Mr. Hopkins said. “They’re saying they cannot afford to eat out any more. It’s too expensive.”
Another way to cope with high dining costs is to seek out restaurants that offer great value for the dollar. I asked readers of the Carrick on Money newsletter for high-value restaurant suggestions and have received more than 180 so far in large and small communities across the country. I’m going to put them in a spreadsheet available to people who subscribe to the newsletter – you can sign up here or at theglobeandmail.com/newsletters.
Mr. Hopkins said it’s okay to scale your tip to the dining experience. The more effort your server puts in, the more you tip. Yes, this means you can tip a token amount, or nothing, at a fast food or coffee spot where someone just hands you your order.
Wondering who benefits from tip money? Mr. Hopkins said servers get most of it, but some is often distributed to kitchen staff and other workers. Higher levels of tipping may be used by some restaurants as a way of boosting pay for staff, he added.
Spending at restaurants is already slipping – is a tipping backlash possible among people who do dine out? Mr. Hopkins sees more people looking for an “other” button when examining the tipping options on a payment terminal and then choosing their own amount.
Meantime, keep your eye on the default amounts on those terminals. Thirty-per-cent tips are out there. Anyone have the brass to push it to 35 per cent?
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