Study Finds Most Consumers Not Ready to Stop Tipping | Food Newsfeed

Study Finds Most Consumers Not Ready to Stop Tipping

February 02, 2016 Industry News
Industry News

According to Horizon Media's latest Finger on the Pulse Survey—the agency's proprietary online research community comprised of 3,000 people reflective of the U.S. population—the majority of American consumers are not yet ready to embrace tipping bans, a phenomenon that is becoming increasingly popular in restaurants across the country.

Tip banning, or eliminating tipping in favor of paying servers a higher wage, is a becoming a hot issue as popular restaurant owners like Danny Meyer of Union Square Hospitality have begun instating the practice in their eateries. The change in practice isn't limited to the coasts. National chains like Joe's Crab Shack as well as independent establishments across the nation have also joined the ranks. This "service included" approach to the bill is already common in other parts of the world, including Europe.

Yet Horizon's latest Opinion Pulse data suggest these restaurants may be getting ahead of U.S. consumers' appetite for change: 81 percent of adult restaurant-goers are not yet ready to welcome built in tipping. These consumers want status quo—the decision to tip within their control and dependent on a positive service experience. For over half of these restaurant-goers, the main drawbacks of built-in tipping come down to expected effects on service: 55 percent say they would be forced to pay the same amount no matter how good or bad service is, and 52 percent say it should be up to them to decide how much to pay for service.

While older consumers are hesitant to embrace the change, Millennials and Generation Z are more ready for a tipping revolution: 29 percent of people ages 18-34 say tipping is an outdated and unfair practice versus 18 percent of people aged 35-49, and 13 percent of people aged 50-64. Just 44 percent of 18-34 say they are against tip being built into an item price, versus six in 10 of the older crowd (61 percent of 35-49 and 59 percent of 50-64). But just because they are more forward-thinking on the practice doesn't mean they think the change will happen quickly. In fact, they are more skeptical: 70 percent of Millennials and Gen Z say they think tipping practices will be the same as they are now in five years (versus 60 percent of 35-49 and 53 percent of 50-64).

"There are real economic and life-stage realities at play for the younger crowd," says Kirk Olson, vice president, TrendSights at Horizon Media. "Many Millennials still face underemployment and Gen Z-ers who've begun working are often working service jobs dependent on tips. Considering the rising popularity of Bernie Sanders' ‘living wage’ stance among the same group, it makes perfect sense that they show greater interest in seeing tipping evolve," continues Olson. "They're also more global and connected. They know 'service included' is the way it's done elsewhere and think it would be better for the U.S., even if they're not convinced it will become a reality any time soon."

Regardless of age, those who are interested in switching to a built-in tip structure are passionate about the benefits. Primarily as a way to better predict cost; those who prefer built-in tipping are over two and a half times more likely to say the cost of the entire meal would be clearer before ordering (70 percent vs. 26 percent who want tipping left as is). Fairness is an important motivator as well: 62 percent of those who welcome built-in tipping say it would ensure the servers earn a fair and livable wage (versus 32 percent who want things to stay as is), and 45 percent say the current tipping structure is outdated (versus 15 percent among those who want things to stay as is).

"While the research suggests consumers aren't quite ready to abandon tipping per se, it does portend that in the future convenience will likely trump control," says Rich Simms, executive vice president, managing partner at Horizon Media. "Tomorrow's restaurant-goers may find that not having to think about the tip is a core benefit of the whole transaction. Hospitality brands making the change now may be at the forefront of something that will become standard practice in ten more years."

How much more are they willing to pay per menu item to have tip built in? One third (34 percent) say they would pay up to 15 percent more per item, with an additional one in 10 saying an increase of 18-25 percent would be fair in order to change tipping practices.

News and information presented in this release has not been corroborated by FSR, Food News Media, or Journalistic, Inc.