Tipping rates slid in Q2 — but one sector still gets a hefty pour of gratitude
Square, a financial services and digital payments company, released a report on Thursday. It found that in Q2, average tips were down across the restaurant industry, dipping below 15% of the total ticket price for transactions across full- and quick-service restaurants, cafés, and bars.
While that may be good news for consumers who are tired of leaving tips, the economic impacts could have knock-on effects for the service workers who depend on them.
"As consumer confidence in the economy shifts and tips fall, workers are taking home less, which could lead to a return to labor uncertainties for the industry — adding to the crunch local restaurants are continuing to feel," Ming-Tai Huh, Head of Food and Beverage at Square, said in a statement.
The data, which compiles information from more than 100,000 restaurants using the Square payment system, analyzed more than 900 million transactions from Q1 2024 to the end of Q2 that were priced between $5 and $300 with a tip of at least $1. The report illuminates trends about tipping culture in the US, which is largely seen as more obligatory than in other countries.
The dip reflects how rattled US consumer confidence has been in recent months. While the Conference Board's Consumer Confidence Survey shows consumer attitudes rebounded slightly in July after a dip in the spring, consumers' assessment of the present economic outlook remains below last year's levels — and has not yet recovered from the hit they took during the pandemic.
At full-service restaurants and cafés, where American consumers are most comfortable leaving tips, rates have remained relatively flat, reducing by less than half a percentage point since Q1 of last year, according to Square's data.
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More significant fluctuations were seen at bars and quick-service restaurants, Square found: tips at bars reduced 0.4% in the last quarter alone, and QSR tips dipped by 0.6% in the same timeframe.
Despite the lower average tips across the board, transactions at bars still generate the largest gratuities at 16.96% of the total ticket price, Square found. So, while Americans are drinking less, it appears they still appreciate their bartender's service.
Patrons largely dislike the practice of leaving tips, especially when they feel obligated to do so or are asked to leave gratuities in non-traditional industries. Some say the practice has gotten out of control and have begun to avoid businesses that ask for them, Business Insider previously reported.
However, tipping remains essential to service workers, who depend on gratuities for a large percentage of their income.
"As previous Square research has underlined, tips make up a major part of workers' wages — the average restaurant employee earned nearly 23% of their income in tips in 2024," Huh said in a statement to Business Insider.
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