Tue. Mar 21st, 2023

At the height of the Covid-19 pandemic, many Americans vowed to offset the negative impact on service-industry workers by becoming better tippers. But new data shows that Americans have not only failed to follow through — they are worse tippers now than before Covid hit.

While 73% of Americans say they always tip at a sit-down restaurant, that’s down from 77% in 2019, according to a new demographically-weighted survey from CreditCards.com. And although 57% of Americans always tip food delivery people, that’s down from 63% in 2019. Only about four in 10 (43%) Americans always tip a taxi or rideshare driver, down from one in two (49%) before the pandemic.

The lone exception to the trend: Roughly two-thirds of Americans (66%) say they always tip their hairstylist or barber, up three points since 2019.

“While more than a third of Americans pledged to become better tippers in 2020 and 2021, it seems that sentiment has worn off,” said Ted Rossman, senior industry analyst at CreditCards.com. “Inflation is cutting into consumers’ purchasing power and a tight labor market has left many service industry businesses understaffed and struggling to provide top-notch customer experiences.”

Fast-food chains weathered the pandemic better than dine-in restaurants, largely thanks to drive-thru service and digital ordering. Two prime examples are McDonald’s, the world’s largest fast-food chain, and Starbucks, the only two restaurant companies in the top 500 of the Forbes Global 2000 in 2022. However, the biggest upward mover in the sector was Darden Restaurants, whose stable of full-service eateries includes Olive Garden, LongHorn Steakhouse and half a dozen others.

Decades-high inflation has replaced Covid as the service industry’s greatest threat. Historically, restaurants take a hit during times of high inflation, as consumers look for ways to cut back on discretionary spending. According to a new survey from CNBC, more than half (53%) of Americans now plan to cut back “mostly” on dining out. Recent data from Revenue Management Solutions shows that the average restaurant check was 7.2% higher year-over-year but restaurant traffic in April was down 9.4% during the same period.

The CreditCards.com survey also revealed confusion over tipping other types of service workers. For example, only 27% of Americans say they always leave a tip for hotel housekeepers, while 26% never do. The remainder — almost half of respondents — said they tip housekeepers only some of the time.

Younger American adults tend to be the biggest tippers, but they are also the most inconsistent. While the median tip for service at a sit-down meal is 20% for all generations, the average tips are much higher for Gen Zers (26%) and millennials (24%). Gen Xers leave an average tip of 20% and boomers give 19% on average. Still, it’s worth noting that over four in ten (43%) combined Gen Z and millennial restaurant goers leave nothing at least some of the time.

Restaurants and other establishments can inspire better tips through the power of suggestion, the CreditCards.com survey shows. Among Americans who have encountered suggested tip amounts, more than a quarter (26%) say they are inspired to tip more.

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