When Darryl Tom ate at a brewery in suburban Chicago recently, he bought a couple of expensive bottles of barrel-aged beer, a sandwich to go, plus a beer while he waited. The bill came to $80 and the lowest suggested tip displayed on the restaurant's iPad was 20%, or $16.
The request felt egregious on multiple levels, said Tom, an attorney who knows his tipping etiquette. Not only was there little to no service but the amount was calculated on the after-tax total.
Conventional etiquette doesn't require a tip for takeout. But if the order is large, complicated, or brought to you curbside by staff, then a 10% gratuity is fine, experts say. And tipping is always calculated on the pretax amount, generally 15% to 20% for sit-down meals.
Tipping requests have exploded in the past couple of years. Everywhere you go, a jar, a receipt, or a checkout screen displays a suggested amount, pressuring you to tip. Businesses often automatically ask for tips – even if it’s not warranted – and include a "helpful" guide with different percentages to make the math easier.
But buyer beware: those prompts could lead to overtipping, experts say.
How are businesses raking in more tips?
DoorDash warns customers now that if they don’t include an upfront tip for their delivery drivers, they should expect longer waits for their orders. That change caused a ruckus on social media, with some customers asking why they should tip before knowing if they’ll get good service or if they should even be the ones bearing the brunt of paying wages for DoorDash.
“Historically, tips were designed for services well performed," said Rob Burnette, chief executive and investment adviser at financial planning firm Outlook Financial Center in Troy, Ohio. "But it’s morphed into an expectation by servers not just to tip, but tip generously or they’ll call you out.”
Other ways businesses are pulling in bigger tips:
◾ Calculating tips on the after-tax amount, instead of the pretax, total: Tipping should be pretax because tax rates vary from city to city and have nothing to do with service, Burnette said.
◾ Calculating tips with fees, like a credit card processing fee, included.
◾ Calculating tips on after-tax amount AND with fees included.
◾ Including a suggested tip guide based on the after-tax amount, after-fee, and after an automatic gratuity has been added.
Asking for tips when there’s little to no service like at a coffee shop counter or when customers pick up a takeout order.
Why are businesses asking for more tips?
After more than two years of high inflation, businesses are feeling squeezed and looking for ways to pass on expenses by charging credit card processing fees and requesting more tips for staff, experts say.