Customers are dining out more often than last year and reward excellent service, with the best tips at bars and fine-dining restaurants, according to the hospitality industry. data from Lightspeed Commerce Inc. Data suggests that customers are willing to tip higher for excellent service when digital tools are available to facilitate the payment process.
Key findings include:
- Tips are on the rise: Good news for the waiters: diners don’t skimp on tips. Year over year, the median tip percentage increased 2.3 percent, from 16.93 percent to 17.32 percent.
- Gourmet Bars and Restaurants Report Top Tips: Overall, tipping trends remain stable across all business types year-over-year, with customers continuing to tip about 3% more at bars (19.25% ) and gourmet restaurants (19.9%) than in casual restaurants (16.5%). .
- Advice for takeaway is down: Tips for online orders and delivery decreased slightly, from 8.83 percent to 8.07 percent. Despite getting the biggest in-house tips, bars have been hit hardest by takeout, with the median online and delivery tip falling nearly 10 percent to 8.54 percent.
- Tips on fast casual are increasing: Despite the backlash from “tipflation,” diners have not stopped tipping at fast casual restaurants, even though the median tip amount still hovers below 9%, well below the average of 17 .32%.
- Guests go out more often: People are dining out more frequently at both fine-dining and fast-casual restaurants, with total transactions increasing year-over-year at fine-dining restaurants and 3.53% at restaurants fast casual.
“Now more than ever, hospitality companies are turning to technology to help them generate additional revenue and improve the guest experience,” notes Peter Dougherty, managing director of hospitality at Lightspeed Commerce. “Our customers who have implemented in-app payments and automated tip prompts often tell us they see an increase in average tip amounts. The reality is that in our post-pandemic world, customers are looking for a frictionless, cashless payment experience, and they are willing to tip more for exceptional dining experiences, especially when they have access to digital tools that make the task easier. For hospitality businesses operating in a rapidly changing market, this extra income in the pockets of their employees is crucial to retaining staff without reducing their profit margins.
Modern Restaurant Management (MRM) Magazine reached out to the Lightspeed team to find out more.
What do the survey results tell you about the current state of tipping culture?
Lightspeed tipping data shows us that consumers reward great service with higher tips, but they don’t tip as much outside of traditional service locations. This indicates that tipping culture closely aligns with the added value consumers associate with different types of services. They enjoy the experience associated with dining out, but because delivery is no longer a “survival tactic” as it was during the pandemic, it has less relative value to customers.
Tipping culture closely aligns with the added value consumers associate with different types of services.
Payment methods also impact tipping culture. Restaurant owners are finding that having their servers offer a simple, seamless payment method – especially through mobile and pay-at-table technologies – leads to higher customer satisfaction and thus rewards servers with higher tips. It’s a win-win-win situation for the consumer, the employee who earns higher tips, and for the business owner who has happier customers and employees, while turning things around faster.
What can restaurateurs learn from the results to better interact with customers and not alienate them?
Tech-savvy restaurateurs should continue to do exactly what they’ve been doing so far: offering customers multiple options for ordering their food and drinks. Although the general public tends to return to sit-down dining, many have become accustomed to takeout and delivery services. Providing the simplest options for ordering AND paying is an effective way to build customer loyalty, while implementing analytics into your technology stack to increase personalization and maximize menu options.
What does the decrease in takeout/delivery tips indicate? Is this a slap back? Do they make a value distinction between the efforts involved?
It’s a natural progression as we return to the new post-pandemic life. While it won’t be exactly as we left it pre-COVID, there is less value associated with takeout. Consumers are more comfortable eating in a dining room with other people – and will tip more for that experience – but at the same time, they still want to have options and delivery will remain as important as it is today.
Is it an encouraging sign that people are dining out and tipping more?
Absolutely, it’s especially encouraging for restaurant workers who have held on in an industry that continues to experience significant turnover. Increasing server tipping is a key step in reversing the trend, and it’s encouraging to see how digital tipping is increasing as restaurateurs look to better reward their employees.
Data is based on a sample of thousands of Lightspeed-powered restaurants across North America.
