Why you should tip 25 percent

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By Christopher Elliott

The shameful state of the salaries of restaurant workers, who often earn a poverty-level $2.13 an hour before gratuities, is a topic that’s hotter than the biscuits in Paula Deen’s kitchen these days.

But while politicians argue about the minimum wage and lobbyists push to keep workers’ salaries artificially low, I have an unconventional recipe for righting this obvious wrong: Tip more.

Yes, some industry-watchers believe it’s time to freeze the tipping tradition. Withhold your gratuity and a fundamentally flawed and unfair system will crumble, they say. They’ll get no disagreement on the flawed and unfair part from me, but unless the cost of the gratuity is baked into menu prices, pulling your tips will just hurt the people it’s trying to help.

The number to aim for: 25%.

The challenge of higher menu prices

Paying a quarter in gratuity for every dollar you spend on a restaurant meal makes sense when you understand the economics of the restaurant business and your place in the food chain. It also makes sense when you talk with its best-known critics.

The poster child du jour for the no-tipping future is Sushi Yasuda, a traditional Japanese restaurant in midtown Manhattan, which cut gratuities this spring. Instead of soliciting tips from its guests, it raised menu prices to cover servers’ salaries. But Scott Rosenberg, the restaurant’s owner, concedes that when he eats elsewhere, “I always tip at least 25%.”

He says he’d like to see others follow his lead, but so far only one other restaurant he knows of, an Austin brew pub called Black Star Co-Op, has banned tips. There’s a reason other restaurants haven’t jumped on board this sushi boat: A Cornell University study finds that higher menu prices would drive customers away. Maybe price-sensitive patrons like the illusion that their entree is cheaper than it actually is.

Servers and sympathetic patrons

Most servers support the tipping economy, which doled out $40 billion in gratuities last year. They’re not exactly thrilled at the thought of losing their “bonuses,” some of which are effectively untaxed.

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“The vast majority of servers like the tipping system because it affords them a greater income than they could get from comparable, untipped work in terms of skills and education,” says Cornell Professor Mike Lynn, a leading expert on tipping.

Some patrons understand it takes more than rhetoric to reform the system, and in the meantime, they’re also overtipping. Amanda Huber, an office manager for a consulting company in Morrisville, N.C., is a former server and knows from experience how much a waitress depends on a reasonable tip to make ends meet.

The impact on frequent diners

“The hourly rate for most waitpeople will not even pay their taxes,” she says. “So they get a zero paycheck most of the time, before tips.”

By the way, if you’re reading this, here’s another compelling reason to tip above and beyond: Chances are, you’re a frequent traveler and you eat in a restaurant more than the average American, which is about five times a week. People turn to you for tips on tipping. Your attitudes toward gratuities can affect many restaurant guests and countless restaurant employees.

But perhaps the most compelling reason to tip 25% is understanding the economics of the restaurant business. Almost four in 10 restaurant industry workers earn at or below the federal minimum wage, even after factoring in tips, according to a study by the Aspen Institute. As a result, servers experience almost three times the poverty rate of the workforce as a whole and rely on food stamps at nearly double the rate of the general population. (Here’s our ultimate guide to travel food.)

Challenging the status quo

Sure, in a perfect world, all restaurant prices would cover the true cost of the meal, including your server’s salary. The abhorrent practice of forcing workers to rely on gratuities to earn a living has no place in 21st-century America. Just because restaurant owners can legally pay below-subsistence wages, and because their employees let them, doesn’t make it right.

A workforce that doesn’t have to stare poverty in the face every day would be better able to organize itself, educate consumers and push for meaningful change to America’s messed-up tipping culture. People often wonder what to do about mandatory restaurant tips.

Assuming, of course, servers want to end a warped tradition that keeps them in poverty and allows restaurants to misrepresent their menu prices. I hope they do.

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Christopher Elliott

Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can't. He's the author of numerous books on consumer advocacy and writes three nationally syndicated columns. He also publishes the Elliott Report, a news site for consumers, and Elliott Confidential, a critically acclaimed newsletter about customer service. If you have a consumer problem you can't solve, contact him directly through his advocacy website. You can also follow him on X, Facebook, and LinkedIn, or sign up for his daily newsletter.

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