When you Google “tipping culture,” one of the top suggestions is that “tipping culture is out of control.” That statement may seem ignorant to some, while others agree with it. As inflation continues to grow, so has the tipping and wage debate. Many restaurants have countered the impact of inflation by adding a service charge to their menu or increasing their workers’ wages.
Over the years, many restaurants have implemented service fees and gratuities. According to Square, in 2024, there was about a 3.7% increase in service fees, more than double since 2022. Service charges are a set amount added to a guest’s check instead of — or in addition to — a tip chosen by the guest, while gratuity is a set amount based on how much is ordered when the check arrives.
The Joel Palmer House, Christopher Czarnecki’s restaurant, has had a service fee implemented for years. Although there has been a rising prominence in service fees, the Joel Palmer House has had a 20% service charge in place since the 1960s at his family restaurant. “My grandparents were tired of seeing servers arguing over who deserved how much in tips from which tables,” Czarnecki says. He has seen a positive reaction from both the staff and customers, saying, “Nowadays, when I hire, it’s generally a positive response from new team members … In years past, I would get about one complaint per year, and more frequently than that, it would be because they wanted to tip in addition to the service charge!”
This recent increase was implemented to address the rising costs of food, wages, and taxes due to the lasting effects of COVID-19. The growth of service models like DoorDash, Instacart, and other food delivery services has expanded significantly as consumers were forced to stay quarantined. According to Pew Research, Americans say tipping has been expected in more places than it was five years ago. The pandemic was where the shift in attitude started, as many consumers began to realize the value of food service workers when the restaurant industry was decimated. Thus, an era of overtipping began to emerge. It was seen as a kind gesture to the workers and delivery people who risked their lives. Davis Lee, an avid user of Uber Eats during the pandemic, says, “I [would] always tip at least 20%. It was just a time when I felt really helpless, so being gracious felt like the right thing to do.”
While the pandemic affected consumers, it also greatly impacted those working in the food service industry. A Dave’s Hot Chicken employee, Io Dinnerlein, believes that COVID-19 continues to influence tipping by making the service less visible through technology like mobile ordering, which makes customers less inclined to leave a tip. “If you mobile-order and pick it up in the drive-through, you’re less likely to feel grateful that someone made the food than if you sat down in a restaurant,” Dinnerlein says.
Tips have also become incredibly important for many food service workers as inflation continues to rise. “[Of] my annual income last year, a third of it was tips,” Dinnerlein emphasizes. “If tips are bad, [I] might not have any extra money after rent; versus if tips are good, [I] might be able to take an extra day off.” Dinnerlein is not the only food service worker who is heavily reliant on tips. According to Square, tips make up an average of about 23% of restaurant workers’ total income. Kelly Zhu, a Dough Zone Dumpling House worker, feels similar to Dinnerlein, “It feels like we have to rely on tips instead of base wages, and because of that, I feel nasty attitudes come from both customers and workers themselves.”
Tipping habits also tend to vary significantly across generations. According to a study by SpotOn, Millennials and Generation X are the most generous tippers. These generations tip more often due to their incomes, which tend to be higher than younger generations, like Generation Z.
Consumers and workers must navigate a changing landscape as tipping practices evolve and service fees become more common. The rise of mobile ordering, third-party delivery services, and inflation has made tipping an increasingly complex situation. But, given that many service workers rely on tips for a significant portion of their income, this continues to raise debates about fair compensation, and equitable tipping models.
