Tipping and Service Charge

Author:

Low, Carolyn

Area of Honors:

Hotel, Restaurant, and Institutional Management

Degree:

Bachelor of Science

Document Type:

Thesis

Thesis Supervisors:

Dr. Anna S Mattila, Thesis Supervisor
Dr. Breffni M Noone, Thesis Honors Advisor

Keywords:

restaurant
tipping
service charge
tipping recommendations
no-tipping policy
customer preference
phenomenology

Abstract:

Dining is a large part of our lives, but with it comes the practice of tipping. Tipping seems easy but without an understanding of the many tipping practices, patrons may be caught by surprise and foodservice operators may find themselves saddled with indifferent servers. In the restaurant industry where the customer is king and profit margins are slim, it is beneficial to foodservice operators to understand customer preference between the two common tipping methods: voluntary tipping and service charge. Moreover, with the emerging trends of tipping recommendations and no-tipping policy, foodservice operators must focus on keeping employees motivated to provide patrons with memorable dining experiences. In this qualitative study, eleven individuals were interviewed to understand their exposure to the restaurant industry, tipping behavior, preferred tipping methods, and the underlying reasons for their choices. Tipping recommendations and no-tipping policy were also discussed to explore the feasibility of their implementation in the current foodservice environment. While many participants expressed that they tip based on the server’s performance, some based their decisions on the cohesiveness of their dining experience. Each method has its advantages and disadvantages but regardless of their choice, the participants wanted their dining experience to be enhanced by the server’s presence and appreciated it when restaurants are transparent about their tipping policy. In sum, foodservice operators can select the tipping method that best suits their restaurant as long as they provide quality service and ensure that patrons are informed about the restaurant’s tipping policy.