New Lightspeed Data Shows Takeout Tips are Down
Expectations and customs around tipping food service professionals has been in constant flux over the last few years. The rise of third party delivery platforms put distance between restaurants and their patrons during takeout transactions, eroding the personal relationship and face to face moments that inspire generous tips. Perhaps the middleman also compromised patrons’ trust that the tip would reach its intended recipient. In many cases, delivery platforms added a new delivery fee to the exchange that may have previously been allocated to a tip.
During Covid however, while full service restaurants were forced to close their dining rooms, communities rallied around their local food service establishments and showed their support and generosity by significantly increasing the amount they were tipping for takeout and delivery. Some of that culture lingered once restrictions were lifted in the form of tipflation; it is not uncommon to see tip presets on POS machines range between 18-30%.
New data on the way consumers tip at food service establishments is now suggesting that takeout and delivery tipping is declining while tipping for dine-in service is on the rise. Lightspeed Commerce Inc., unified POS and payments platform, analyzed internal data from thousands of restaurants that use their platform across North America. Their analysis reviewed tipping data, check size and more at bars, casual, fine dining, upscale and fast casual hospitality businesses comparing the period between April-June 2023 against April-June 2022. Here’s what they found. View the full report here.
Tipping is on the rise
Good news for servers: diners aren’t skimping on tips. Year-over-year, the median tip percentage increased by 2.3%, from 16.93% to 17.32%.
Bars and fine dining take home the biggest tips
Overall, tipping trends are staying stable across business types year-over-year, with customers continuing to tip around 3% more at bars (19.25%) and fine dining restaurants (19.9%) than they do in casual restaurants (16.5%).
Takeout tips are down
Tips for online orders and delivery dipped slightly, falling from 8.83% to 8.07%. In spite of earning the biggest in-house tips, bars were hit hardest on takeout, with the median online and delivery tip falling from almost 10% to 8.54%.
Tipping on fast casual is going strong
In spite of the “tipflation” backlash, diners haven’t stopped tipping in fast casual restaurants, though the median tip size is still hovering under 9%—well below the 17.32% average.
Diners are going out more often
People are dining out more frequently at both fine dining and fast casual restaurants, with the total number of transactions rising 3.60% year-over-year at fine dining and 3.53% at fast casual restaurants.