Tipflation is real: the new guidelines of tipping at check-out.
You may have experienced it at the ballpark and your favorite fast food joint. You may even encounter it at your corner bakery or neighborhood bookstore: that digital screen asking whether you’d like to leave a 10, 20, or even 30% tip.
Welcome to tipflation, where the old rules of tipping are not what you remember. While the average American tip hovered around 15% for decades, the rate has climbed over the last 15 years, with Americans now tipping around 19% on average.
If the tip screen that appears when you pay for your drip coffee or footlong sub causes confusion, frustration, and even pangs of guilt or shame, you’re not alone. A 2023 survey by Bankrate found that two-thirds of Americans now hold a negative view of tipping, and one in three Americans think tipping culture is out of control.
But we have good news. While the rules have changed a bit, we have a few clear tips you can follow to reduce those stress levels and ensure you’re tipping appropriately while protecting your own wallet.
First, let’s take a quick look at how we got here.
What is tipflation, anyway?
Tipflation, or tip creep, are terms that describe the recent growth of service providers and retailers asking for gratuity during a transaction, as well as the increase in the default percentages being provided on receipts and screens. Where 10-20% used to be the standard tip in the U.S., many of these screens now start at 20% and go up.
Why is tipflation happening?
While there isn’t a single reason economists point to, most think it is the result of developments:
- Increased tips during the COVID-19 pandemic: when the 2020 pandemic shut down bars, restaurants and retailers, many Americans felt compelled to give larger tips to workers who braved working in-person to provide services to those at home. While the stay-at home orders have gone away, higher expectations around tipping have not.
- Increased reliance on technology during the pandemic: thousands of businesses that relied on paper receipts and cash registers in 2019 made the shift to “contactless,” digital ordering during the pandemic. And touch-screen payment systems like Square, Clover and Toast often default to asking for a tip as part of every transaction.
- Competition for workers and inflation: there is still a shortage of workers in the U.S., and attracting and retaining hourly workers is a top challenge for companies, many of which are also managing higher costs due to inflation. Asking consumers to tip is one way to increase wages for employees without impacting the company’s bottom line.
So, when should I tip and how much?
If you’re not sure what to do, here are some simple suggestions you can follow.
- At full-service restaurants, 20 is the new 15: software company Toast found that the average tip for full-service restaurant service has held steady at between 19.4% and 19.9% over the last five years. In other words, 20% does appear to be the new norm for table service establishments as well as services at spas and salons. Servers often expect that percentage to be applied to the pre-tax amount, so you can always save a bit going from the bill’s food and beverage subtotal versus the entire bill.
- Tip where you used to: according to Bankrate, only 22% of American adults tip at coffee shops, and only 13% tip when picking up takeout food from a restaurant. So there’s no need to feel obligated to tip at establishments where you didn’t before. If you would have left your change or a few bills in a tip jar, feel free to continue the practice, or tip when someone goes above and beyond. If you want to tip for fast casual or counter service, 10% is a good rule of thumb, but again: it really is a personal choice.
- Don’t feel guilty if you skip the tip: the new and least-comfortable tipping moment is at the counter of your neighborhood donut shop or convenience store, where three years ago you would not have been asked for a tip. First off, the processing software often defaults to asking for a tip in every transaction: the larger the overall amount being billed, the larger the fee the processing company gets to collect. In most cases the person behind the counter has no ability to change what the screen you’re looking at says; they may feel just as squeamish when the tip question comes up as you do!
In closing, think of the digital tip screens as an updated version of the old tip jar. Stick with what feels right for you, and when in doubt, default to 20% (pre-tax) for solid table-service and 10% — if you’re inclined — for above-and-beyond counter service. And enjoy your next burrito or caramel macchiato with less stress!
