Last Updated:
December 18, 2023

Understanding Restaurant Tipping: Guidelines for Tip Jars, Service Fees, and More

Explore the history & guidelines of restaurant tipping, including tip jars, service fees, and practices in different cultures, to make informed tipping choices.
Understanding Restaurant Tipping: Guidelines for Tip Jars, Service Fees, and More
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Should I Tip or Not? When it comes to tipping, there are many opinions on what is correct and expected.

Tipping at restaurants is a long-standing tradition in many cultures around the world. It is a way for patrons to show appreciation for good service and to acknowledge the hard work of servers and other staff members. However, the practice of giving a tip to the person receiving it can also be confusing and controversial. Some people believe that you should always tip for services, while others think that you should only tip when the service has been exceptional.

Picking the suitable amount to tip can be a sensitive and tricky subject. Everyone has their opinion on what is the appropriate tip, the person receiving it, and how much they deserve. As such, we have created this blog post to provide you with insight into the history of tipping at restaurants as well as current guidelines for when leaving a tip in a jar or directly to servers. By understanding these practices better, you will be able to make informed decisions about your own tipping habits during restaurant visits!

The Origins of Tipping

The origins of tipping can be traced back to medieval Europe, where it was common for customers to leave a small amount of money, known as "vail," for servers at inns and taverns as a way to express appreciation for better service. The practice then spread to other areas of servicing industries, such as hairdressers, barbers, and host clubs.

In the United States, the practice of tipping was initially limited to upscale restaurants and hotels, but it gradually became more common in other service-oriented industries. Today, many restaurants and different businesses in the service industry adopted their own tipping policies, which vary from business to business across the globe.

The truth about tipping in the US

In countries where tipping is a common practice, servers and other service workers often rely heavily on customer tips as a significant source of income, often more than their hourly wage. At some point, this is particularly true in the United States. Nevertheless, in some other countries, restaurants impose service fees, and the server's income doesn't heavily rely on patrons giving a tip.

According to Robin DiPietro, the director of the College of Hospitality, Retail, and Sport Management at the University of South Carolina, tipping is far more widespread in America than in other countries. In an interview with Newsweek, she discussed the ways in which servers across the country are paid less than minimum wages due to employers supplementing wages with a tip.

Factual data on American's tipping behaviors

  • Compared to any other age demographic, the most generous tippers during the holidays are older millennials (ages 33-41), of which 63% are likely to be more generous when it comes to tipping server staff like waiters and bartenders. (Bankrate)
  • During the holidays, a scant 42% of older boomers (68-76) are likely to be generous with server staff like waitpersons and bartenders, making them the least charitable age demographic. (Bankrate)  
  • An overwhelming majority of Americans, 73%, make sure to always tip when dining at a sit-down restaurant. (CreditCards.com)
  • A mere 13% of people dealing with takeout orders remember to tip the staff involved. (CreditCards.com)
  • A fair amount of 43% of patrons tends to generously tip restaurant servers 20% or more, demonstrating a heartening show of appreciation. (Popmenu)
  • The majority of consumers (32%) are typically generous when tipping delivery drivers, offering a gratuity of 20% or more. (Popmenu)
  • During the holidays, a majority (61%) of consumers anticipate leaving at least 20% as a gratuity. (Popmenu)
  • San Francisco is widely known for its culture of generosity, especially when it comes to tipping - 45% of orders in the city receive gratuity that exceeds 20%. (Popmenu)

The minimum wage in the service industry

Federal law requires employers to pay tipped employees at least $2.13 per hour, but many states have higher minimum wage requirements for tipped employees. Some states have eliminated the subminimum wage for tipped workers and require the employer to pay them the same minimum wage as other employees. Better service and higher wages should go hand in hand, so it's important to be aware of the minimum wage laws. Other support staff members and server receives a combination of hourly wages and tips. For example, a server's income might earn $5 per hour from their employer, plus an additional 15-20% in gratuity from patrons. A server's total earning would be determined by the number of hours worked, their hourly wage, and the number of tips received from patrons.

The cost of living is also a factor when determining how much to tip, with larger cities usually expecting bigger gratuity for the same level of service. The servers pay tax on their gratuity received and it is also important to remember that the tip goes not just toward the server, but can be shared amongst other support staff members in a restaurant or hotel.

The Owner's Responsibility

For businesses that involve gratuity, it is mandatory for them to report the cash tips their server receives from patrons to the Internal Revenue Service (IRS). They also have to deduct taxes from the server's payroll checks. It can be hard for proprietors to know the exact amount of tips, so the IRS suggests that proprietors estimate that a server may earn at least 8% of their total sales in tips. Proprietors can then deduct that amount accordingly.

A server's total earning is deducted to pay tax and proprietors can also deduct that amount accordingly. Proprietors should make sure they are aware of all state and federal minimum wage laws in their area, as well as the rules for the tipped server. They must ensure all staff members are receiving fair pay, tips included, to keep their business running smoothly and ethically.

The Tip Credits

It's important to understand that some restaurants may use a tip credit when paying their employees. This means that the proprietor is responsible for ensuring that their server receives at least the federal or state minimum wage, whichever is higher. However, it is also important to note that if a server works more than 40 hours per week, they are entitled to overtime pay, which is calculated as time and a half. This means that if you are leaving a tip, it's important to consider the work and the wage cost of the server and leave a fair tip accordingly. If you're unsure about the tipping policies in a particular restaurant, you can always ask the management or staff for more information.

The "Tipping Policy " in the Service Industry

In the hospitality industry, giving tip is an expected custom in restaurants, hotels, and bars alike. In the United States of America, there is no federal law that requires patrons to tip, but it is considered a social norm and is anticipated by many employees.

The tipping policy in a restaurant can vary depending on the establishment. Many sit-down restaurants include a service charge in the tab, while others expect patrons to leave a tip for their server in addition to the cost of the meal. It is customary to tip the servers 15-20% of the total tab, but this can vary depending on the level of services received. Some patrons may tip less or a larger amount depending on the level of service they received.

In certain territories, gratuities are incorporated into the service charge. And in other places, a tip isn't as ubiquitous - for instance, Japanese patrons aren't legally allowed to provide tips and it is discouraged in their society. Overall, It's always a nice gesture to reward exceptional service staff by leaving a generous tip as a sign of appreciation. By educating yourself on the tipping policy in your area, you can ensure that hospitality workers receive the recognition and compensation they deserve.

What you should know about leaving tips at restaurants

The customary tip amounts at restaurants

In the United States of America, the typical tip at a restaurant is 15-20% of the total bill price. TableAgent suggests that the best practice for tipping etiquette is to leave 15% for average service, while 20% should be left if you received quality treatment. However, when it comes to quality dining services, don't hesitate to express your gratitude with a gratuity amount of your choosing. Poor service, on the other hand, can still be rewarded with a tip, however, customers shouldn't feel obligated to leave anything for terrible service. Dining etiquette also dictates that the tip should be left in cash, not paid or added to a credit card. Data from Toast's recent trends report observed that total tips on the Toast platform averaged 18.9% of total check amounts in Q3 2023.

The use of tip jars

Tip jars are often used in sit-down restaurant establishments such as cafes, coffee shops, and ice cream shops. They are usually placed at the counter or near the register, and people feel free to leave a small cash tip if they wish. Both tax amount and changes should not be left in the jar, as this is considered a violation of the IRS rule.

Tipping at bars

The standard tip for a bartender in the United States is $1-$2 per drink or 15-20% of the total billed amount. However, like restaurants, the amount can vary depending on the level of services and the individual's personal preference. If you're ordering a round of drinks for a group, it's common to tip 20% of the total billed amount. It's also a good idea to tip more if the bartender provides an exceptional job or if you're ordering more complex or high-end wine. For example, the price of high-end wine can range from $15-$20 per glass so it's best to tip at least 20% of the total billed amount. And a glass of beer can range from $4-$6, so a tip of at least $1-$2 per drink is recommended.

Tipping at coffee shops

Just as in alcoholic drinks, a common practice for tipping on coffee is an amount between 10% to 15% of the price, or about $1 for one cup of drip coffee you pay. For those who are paying with cash, leaving a tip in change is often an accepted form of gratitude for the server. But if you want to be extra generous and leave an even larger amount of gratuity - there's no need to worry about having enough coins; simply pay your barista via the app! (Learn more about the app later in this post.)

Tipping for delivery drivers

When receiving food delivery, it's customary to tip the driver 10-15% of the total bill, or a minimum price of $3 - $5, depending on the complexity of the order and the distance of the delivery. If the weather is bad, you might consider tipping more. It's also common to tip more for the exceptional job done. When it comes to other types of deliveries, it's less common to tip, but you can still tip a small amount if you wish. Remember, making a living as a delivery rider is an arduous job so even a small amount of tip is always appreciated.

Tipping for takeouts

Tip for takeout is not as common as tipping for dine-in services, but it is still appreciated by many establishments, especially for kitchen staff who prepare the food and handle the orders. It's not hope for or mandatory, but it's a nice way to show appreciation for the service received.

When it comes to takeout, a general rule of thumb is to tip around 10% of the total price, or $1-$2 for a small order and $2-$5 for a larger order. Paid based on a percentage of the total tab, more complicated orders should be replaced with larger tips. However, it's important to note that some restaurants include a service charge for takeout orders, in which case, it's not necessary to tip again. As always, it's a good idea to check the price in the bill for any automatic service charges or automatic gratuity fees before leaving a tip. If you're unsure, you can always ask the staff if they accept gratuity for takeout orders and if they have a preferred method of receiving them.

How are tips distributed among support staff members in the restaurant?

One way to fairly allot tips is to distribute them among the staff that interacted directly with the customers. A tipping pool system can be used where all tip collection is divided and rewarded amongst servers, bartenders, bussers, and food runners at either end of each shift or week. Many restaurants that serve a high volume of guests can benefit from a tipping pool system, which allows all employees to share in the rewards for providing excellent service. This not only encourages each staff member to contribute their best effort, but it also ensures they are justly compensated for their hard work and dedication.

Another method for the management to divide the tips among the staff is based on hours worked or performance. Some restaurants also have a "tip-out" system where a portion of the gratuity is given to back-of-house staff such as cooks and dishwashers, who may not receive direct payment from the patrons. In addition, a reward system where patrons can give a small amount to the servers and staff members who provided excellent services is also becoming increasingly popular. This reward system may be managed by the restaurant or through a third-party app, and the gratuities are distributed among the staff members who earn them. This system allows patrons to tip multiple staff members at once, and it also encourages better customer service.

In some places, the restaurant management itself takes a percentage of the tips for operational costs, and in some restaurants every hour worked, the restaurant will take a percentage of the tips made by each staff member. In general, proprietors should ensure that employee wages are fair and that tips are distributed in a manner consistent with local labor laws. It's always good to ask the management or the staff about the policy regarding tip distribution.

The collection of tips is essential for anyone in the service industry, this can make up a significant portion of the server's income. Advice for patrons is to always leave a generous tip, as most servers make a living and got paid based on their tips, so tip appropriately.

General guidelines for tipping etiquette

Tip etiquette can vary depending on the service and the culture, but here are some general guidelines to follow:

  1. Be aware of the common practice of the standard tipping rate for the service you are receiving. For example, in the United States, it's common to tip 15-20% for restaurant services and $1-2 per drink for bar services.
  2. Tip in cash whenever possible. This ensures that the person providing the services will receive the tip and can use it immediately.
  3. Be mindful of the services you are receiving. If the service is exceptional, consider tipping more than the standard rate. If the service is poor, consider tipping less or not at all.
  4. Don't skimp on tipping for large parties or special occasions. If you are part of a large group or you are celebrating a special occasion, it's common to tip more to show appreciation for the extra effort that the staff put in to serve your party. People feel more appreciated when they receive a generous tip, so don't be stingy.
  5. Remember to tip other service providers. In addition to restaurant and bar staff, other service providers such as hairdressers, taxi drivers, and delivery drivers also rely on gratuities for a significant portion of their income.
  6. Be discreet when giving tip. Avoid calling attention to the amount you are tipping and don't make a show of counting out your tip in front of the person you are tipping.
  7. Be considerate of the cultural norms. Tipping customs can vary by country and region, so it's a good idea to research the tipping etiquette of the place you are visiting.
  8. Be aware of automatic gratuity charges and taxes, those are already included in the bill, so you don't have to tip again.
  9. The tax amount is deducted from the tip amount and then shared between the support staff members. It is also important to remember that employees rely heavily on tips as a significant source of income, so it is recommended to leave money at least 15% as your gratuity tipped.
  10. Finally, remember that tipping is not required or anticipated everywhere, so if you're unsure of the etiquette in a particular place, it's better to err on the side of caution. The most important thing is to show appreciation for the service provided in whatever way you feel comfortable.

The "No Tipping Policy"

In recent years, the hospitality industry is facing a trend of "no-tipping" policies, where some restaurants and other establishments have eliminated the expectation for patrons to tip and instead pay their employees a higher base wage. These policies aim to provide a more stable income for support staff members and reduce the wage gap between kitchen staff and front-of-house staff. A big part of this movement is to ensure workers in the hospitality industry are fairly compensated, and that patrons are not anticipated to subsidize wages through tip.

There are certain situations in which it may be appropriate not to leave a tip, although it's generally considered good manners to do so when possible.

  1. Poor service: If the services you received were poor quality, it may be appropriate not to leave a tip or to leave a lower tip than usual.
  2. Automatic service charge: If the bill already includes a service charge, it's not necessary to leave an additional tip.
  3. Gratuities can vary widely depending on culture and context, making it important to be mindful when traveling: If you are in a country where the culture and customs of tipping are different than yours, it's not necessary to tip, or might be considered impolite as I mentioned earlier.
  4. Tipping is not anticipated: In some countries, service charges are mandatory, and in some cases, tipping is not expected or even considered impolite.
  5. You cannot afford to tip: If you are on a tight budget, it's understandable not to tip, or to tip less. You don't want to have an extra cost that you cannot afford. No matter the situation, it's always a good idea to show appreciation for the service provided in some form or another.

An important message to remember is that while tipping is appreciated, it is not required and should never be a source of stress or financial burden.

Service Charge vs. Tipping

It is critical to be aware of the difference between service fees and tips, or customers may not realize they are being charged for a service. Unfortunately, this can happen when patrons pay their bills without realizing that an additional service charge has already been applied.

A service charge is a fee that is added to a customer's bill by the restaurant or other service provider. This charge is usually a percentage of the total price and is intended to compensate the server for its services. It is often paid or added automatically to the billed price, particularly for large parties or special occasions.

Tipping, on the other hand, is a voluntary act of gratitude on the part of the customer. It is a way for patrons to show appreciation for the services they received and is usually given in banknotes. The amount of the tip is typically determined by the customer and is based on the level of service they received.

In some familiar cases, the service charge and the tip are used together. For example, a restaurant might add a service charge to the bill for large groups and also provide an opportunity for patrons to leave a separate tip for the staff. It's important to note that in some countries, service charge is mandatory, like in some countries in Europe and Asia. At this point, it's not anticipated to tip again. It's always a good idea to check the bill for any automatic service charges or gratuity fees before leaving a tip, to avoid over-tippings.

4 Digital Tip Jar Ideas in 2023

  1. Venmo: Venmo is a popular mobile payment app that allows patrons to easily send money to businesses and individuals. Restaurants and other servicing providers can set up a Venmo account and ask customers to tip using the app.
  2. QR Code: Businesses can display a QR code at their location that patrons can scan to access a digital tip jar. This can be linked to a payment app such as PayPal or Venmo, or to a website where customers can leave a tip.
  3. Contactless payments: Many servicing providers now accept contactless payments such as Apple Pay and Google Wallet, which allow patrons to quickly and easily leave a tip using their mobile devices.
  4. Social Media: Many servicing providers are using social media platforms such as Instagram and Facebook to set up a digital tip jar. Patrons can send their gratuities directly to the servicing provider's account, which is a convenient and easy way to show appreciation for the services received.

It's worth noting that digitally tipped jars can also help to service providers keep track of their tips, reducing the need for cash handling and making it easy for them to split this amount among the staff.

See your ROI prosper as you implement these restaurant tipping guidelines. Your dedication to ethical practices ensures that your establishment thrives financially while nurturing a reputation for excellence and fairness.

In conclusion

This post has been written to help you understand and navigate the complexities of tipping, there is no correct answer when it comes to tipping. When it comes to giving gratuity, it's important to consider your own cultural norms and budget. If you're ever unsure of what's appropriate in a certain country or region, it's a good idea to do a bit of research or ask locals for guidance, because you might stumble on some countries where tipping is not legally allowed, so better be safe than sorry.

At the end of the day, the most important thing is to show your appreciation in a way that works best for you and aligns with your personal preferences and financial ability. Putting your happiness first.


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