My wife and I went out to dinner a couple weeks ago. After a nice meal I received the bill ($17.21 for a good Mexican dinner) and handed the waiter my credit card. He returned with the card and the customary charge receipts (one to sign and one to keep as my copy.)
I marked down the tip, added it to the price, and signed the restaurant's copy. Then I copied the info on my copy, put it on my money clip (for later recording), and we left.
A few days later when I was putting the charge into Quicken, I noticed something on the receipt that I had never seen before. Just under the spot where you write in the total amount was a line that read as follows:
15% = $2.58 18% = $3.09 $20% = $3.44
So they were suggesting tip amounts. Interesting.
As I said, I had never seen this before so it intrigued me. Perhaps it's been going on for quite some time and I simply never noticed. I'll look for it more in the future. But for now I wanted to ask if any of you have seen similar things on your credit card forms. I'd like to know how widespread it is.
I generally make a tip by taking 10% of the meal's cost (rounded up to the nearest number ending in "0" -- makes it easier to find the halfway mark next), then add another 50% of that (so I know how much 15% of it is.) Then I round that to the nearest dollar amount -- either up or down based on service. In most cases, I round up. If the service is horrendous, I round down. So in this case, here's what I went through:
- 10% of $17.21 is $1.72
- Round up to $1.80
- 50% of $1.80 is $0.90
- $1.80 + $0.90 = $2.70
- Round up to nearest dollar = $3.00
So I gave a $3.00 tip which, in this case, is just shy of 18%.
I know, it's kinda quirky, but it works for me. ;-)
Yes I've seen those suggested tip amounts on receipts before.
Another trick I've heard of to quickly figure a tip amount is to double the sales tax. So if your sales tax rate is in the 7-10% range then doubling it can quickly give you a tip in the 14-20% range.
Posted by: jim | March 19, 2012 at 03:50 PM
Jim, I used to do that too when I lived in Orange County, CA and had sales tax rates of 7.75%. But after a statewide increase and a LA-County voter-approved surcharge, along with LA County already having a higher rate than OC, for a time the LA sales tax rate was 10.25%! So I stopped calculating the tip that way.
Posted by: Jonathan | March 19, 2012 at 03:57 PM
Jim/Jonathan - great suggestion!
I had never heard that suggestion before and had the same though as I read FMF's calculation method. 7% sales tax in NJ so I'm going to take that approach and round up to the nearest dollar.
Posted by: John Z | March 19, 2012 at 04:05 PM
I've never seen that myself. A lot of people like to go with the double the tax method, but here in Florida, the sales tax is only 6% so double that is still only 12%, which isn't good especially f they were really attentive and proficient. Normally I'll just round up to the next whole dollar and take a flat 20%, since it's an easy number to calculate.
Posted by: Eric J. Nisall - DollarVersity | March 19, 2012 at 04:05 PM
I travel extensively on business and see the suggested tips very frequently. In New York , it is common to see the suggested tip range go up to 25%. Also, when I take taxis, many of them now have the credit card machines in the back seat. When using the card machine, it typically will have a default set for a 20% tip and you have to go through the menu to change it to a different amount.
Posted by: JimL | March 19, 2012 at 04:10 PM
I think it is just an acknowledgement that most people cannot do math.
I teach chemistry at a university. My experience is that, indeed, most people cannot do math.
Posted by: robin | March 19, 2012 at 04:18 PM
"it is common to see the suggested tip range go up to 25%"
sigh. Tips used to be 10%. then 15% was the standard. Now its hit 20%. It was inevitable that someone would start suggesting 25%. Sooner or later everyone will claim that 25% is the new standard. Then someone will start suggesting 30%...
Why do tip percentages keep going up like this and why do we all just play along? 50 years from now are we going to be tipping 80%?
Increased tip rates are not due to inflation. Food prices go up with inflation so a fixed % of the food price will have inflation built in.
Posted by: jim | March 19, 2012 at 04:20 PM
I've been seeing these Tip percentages on meal receipts for a few years now. I believe it's there for the math challenged customers.
As for tips I give 20%. 10% if the service is bad. But if the service was "adequate" and up, they get 20%.
Posted by: Joe | March 19, 2012 at 04:27 PM
I first saw this in a biker bar where they have the best wings in Denver! Like other readers here; I figured their thinking was the folks can't do math or they are exceptionally cheap!
Posted by: Steve Mertz | March 19, 2012 at 04:40 PM
This reminds me of the idea of "price anchoring" as espoused by behavioral economics. By giving you an idea of what the tip *might* look like, your brain will probably tell you that what you *should* give is pretty close to that figure (so as to conform to the status quo).
Of course, if you don't see the tip ideas until days afterwards, you're thwarting the price anchoring restaurateurs! Congrats!
Posted by: Bryan at Pinch that Penny! | March 19, 2012 at 04:42 PM
Has anyone had an instance where the receipt has a section for a tip on the bottom yet "gratituity" has already been added automatically? This is most common on large groups. However I've seen it on regular tips too (note that I travel a lot). What is most annoying is that the waiter NEVER points this out. The first time I saw one of these I entered a 20% tip automatically... but after looking at the total I thought something was wrong and then i realized they were going to get a double tip.
Posted by: texashaze | March 19, 2012 at 05:16 PM
I have seen these before and to me they are just further proof of the ineffectiveness of the tipping model in driving service.
I agree with "Brian the Penny Pincher", this is price anchoring. They will likely claim it's about helping you calculate the tip and for a few people that me be a real problem, but mostly this is about giving you a subliminal message that good patrons tip in this particular range and if you are stingy you probably go for the bottom of the range. Never mind if you are below this range, then you must be an extreme cheap skate. That is the message they are attempting to send. Full disclosure: I usually tip part way between 15-20% and have gone over 20% on occasion and below 15% on occasion but can't recall ever going below 10% even for really bad service. I know people who leave 2 cents for bad service but I cannot bring myself to do that because I know that even bad service is service and the employee still needs to be paid.
If great service gets you 20% but horrible service gets you 15% does tipping really drive service? No it does not. Further, many people who wait tables have told me that there have been times when they were simply too busy to be able to give good service and they often times got great tips anyway. Other times they had the ability to give great service and would just as likely get a very stingy tip.
The establishment is trying to push their wage cost to their customers directly by suggesting the amount you should pay their employees. The tipping model is outdated.
Service based employees should be paid based on the level of service an establishment wants to provide it's customers. If they pay their help better they will attract better servers. Those wages will be reflected in prices and then a customer can select an establishment based on price and know that price will reflect both quality of product and quality of service.
The other problem with tipping is that it is progressive based pricing. Some people are very poor tippers. A server is compensated based on average tip rate so high tippers need to subsidize the low tippers. If it was in the price of the food, everyone would be paying for the quality of service they would get. The server doesn't typically know if they are getting a good tipping customer so every customer will get the same level of service from that server and the high tippers are paying for part of the service the low tippers are getting.
Tipping is a terrible way to sell a product, even if the product is service.
Posted by: Apex | March 19, 2012 at 05:17 PM
@texashaze. Yes I have seen that. It's unethical if intentional.
How about when you order a pizza from someplace like Dominos or Pizza Hut but you order it carry out and they have a tip line on their receipt. Who am I tipping? The guy who took it out of the oven and put it in the box? A buffet has way more service involved and you don't tip anybody for that. Why is buffet service free but carry out pizza has a tip line? What is next? Tip on the receipt at McDonalds?
Posted by: Apex | March 19, 2012 at 05:23 PM
Apex, Yeah I've seen those tip lines at pizza places too. I figure theres 2 possible reasons for the pizza places to have a tip line on the receipts. 1) its common to tip the delivery person so a tip line makes sense if its a delivery and people probably pay with CC for deliver so add a tip to the receipt and they may not have an easy on/off toggle for the tip line so they just leave it on all the time. 2) they just want you to tip them for nothing.
Posted by: jim | March 19, 2012 at 05:33 PM
@jim,
You are probably right. Still makes you feel like a bit of a scrooge for leaving it blank (you really should fill in the total line with the amount of the receipt or else someone could put in a tip for you). I am sure they still get some tips. I would be interested to know how many tip on that line just because it's there. The fact that it is there suggests you should give one.
Posted by: Apex | March 19, 2012 at 05:40 PM
If I recall right, I think the first time I got one of those tip line receipts at a pizza place I probably did tip $1 or $2. Probably just cause they caught me off guard and/or I didn't want to look like a cheapskate. So yeah I'm sure they get some tips that way. I now just write in $0 when promoted to tip without getting any service. You do need to write in something, since an unscrupulous person could add a tip of their own if you leave it blank.
Posted by: jim | March 19, 2012 at 06:15 PM
"Service based employees should be paid based on the level of service an establishment wants to provide it's customers. If they pay their help better they will attract better servers. Those wages will be reflected in prices and then a customer can select an establishment based on price and know that price will reflect both quality of product and quality of service." [Apex]
Totally agree.
Also, I don't think restaurants should underpay employees and expect the customer to literally pick up the tab so the employees can earn their way to a fair wage.
It seems like a way for the restaurant to get out of having to evaluate their own employees and pay them according to their performance. They put it on the customers who, when it comes down to it, don't have a vested interest in making sure the server gets a fair wage. Individual customers shouldn't be pressured to bear that responsibility, anyway, with suggested tip ranges and such.
Posted by: EM | March 19, 2012 at 06:45 PM
I've seen this and I agree, it is anchoring. It's hard to argue that it is necessary if we've all got calculators on our phones.
I also wonder how many restaurant meals is typical for the FMF readership and society at large.
I read a book about a NYC woman who didn't eat in a restaurant or order takeout food for 2 years. The monetary savings was incredible.
It is a very rare occasion for my husband and I to dine out. Except for vacations, it is fewer than 3x per year. I know several people battling diet related health issues and others who are struggling financially, yet they all seem to get regular meals at Applebee's and TGI Fridays and the like.
Posted by: Catherine | March 19, 2012 at 07:14 PM
I've never seen that on a receipt, but then again, I don't eat out much.
When I do, I have a similar approach to tipping -- I figure what 15% is, add it to the bill, and then round the tip up so that the total charge to my card is an even dollar amount. So in this case, 15% would get the bill to ~$19.90, I'd round the total up to $20 or $21.
Posted by: CH | March 19, 2012 at 07:40 PM
Catherine asked : "I also wonder how many restaurant meals is typical for the FMF readership and society at large."
According to BLS.gov the average American family spent $2505 on 'food away from home' in 2010. Middle quintile housholds spent $2164.
ref : ftp://ftp.bls.gov/pub/special.requests/ce/standard/2010/quintile.txt
Posted by: jim | March 19, 2012 at 07:57 PM
The tip %'s have been appearing for 3-4 years at least. While I think it may influence some diners as an anchoring mechanism and act as a replacement for good old-fashioned math for others, I think the primary intent is more nefarious - to increase the tip base for waitstaff. If you actually look at what the calculations are based on, it is the dining bill PLUS tax, which means you are tipping on your tax if you follow their guideline.
This is a pet peeve of mine, particularly because sales tax is relatively high where I live and I generally think of myself as a good tipper (20% usually), but I don't tip on the tax, so my good tips generally come in around the 18% suggestion.
@Catherine - if restaurants paid waiters more, they'd raise food prices...but probably not enough to attract the same talent. So you'd get slightly cheaper prices but worse service. My tip for you - continue to eat at home.
As an aside, these comments about how each of us calculate the tip are mind-boggling - are we that math-challenged that we can't calculate 15% to 20% of our bill, and we feel the need to impart wisdom as to the "special way" we do it?
Posted by: Greg | March 19, 2012 at 08:12 PM
@Apex You're wrong but also right but also wrong. :)
Tipping is an imperfect system. On a dinner that cost $15 at El Cheapo Taco, you're right, the difference between getting 10% for bad service and 20% for good service isn't a big deal.
But when the meal is $50, it starts to matter. Bad Service Waiter only gets $5 or even nothing. Good service gets Good Service Waiter $10. That's just one table. If they deliver good service to all their tables, it adds up.
I've traveled in Germany, France, and Denmark where restaurant and bar servers are not tipped like they are here. The service is WAY slower and ruder in those places. (In general, of course there are exceptions.)
Posted by: HogWild | March 19, 2012 at 08:31 PM
It annoys me that, based on the numbers you provided, they are tipping on tax, which generally I wouldn't do. I know it's not much different, but still, it's another way to get you to pay more.
Posted by: Mike B. | March 19, 2012 at 09:32 PM
In WA (and nearby Oregon) server's receive the full state minimum wage (highest in US at approximately $9.05~ and $ 8.80~ respectively.) So the menus tend to reflect higher prices, and higher tipping amount too! (I've asked restaurant owners, they say its true beacuse of the wages they must pay)...so at a "counter" like at a pizza place, I just "add the change" rounding to the even dollar amount, otherwise at a typical "casual" restaurant like your mexican restaurant, I'd tip "$ 2.79" thus my bill totals an even dollar amount of $20.00 and is easy to check on my statement...so usually I tip about 11-16% and at a 3,4,5 star place more,going up to but, not over 20%~ ALL depending on service. I note that the sales tax (approx 8.5% in WA) should not be counted in the tip but, I ignore it so the tip is in reality a bit higher than %'s I quoted.
Posted by: JeffinwesternWa | March 19, 2012 at 11:55 PM
Greg : "are we that math-challenged that we can't calculate 15% to 20% of our bill"
No. But if you can use a easy tactic to make math faster and easier then theres wrong with that. Doing so doesn't under cut ones ability to do long hand multiplication.
Posted by: jim | March 20, 2012 at 12:02 AM
In addition to OR & WA that Jeff pointed out, Alaska, California, NEvada, Minnesota and Montana all also require the full state minimum wage for servers.
REf: http://www.dol.gov/whd/state/tipped.htm
Posted by: jim | March 20, 2012 at 12:09 AM
Wow, I am kinda shocked at these answers. ACTUAL human beings are WAITING on you.
That being said, I like to have cash for my tip...a minimum of 20%. I don't like putting it on my card. Obviously I would like to pay for the whole thing with cash. If you can't pay at least 20%, then don't go out to eat. Sheesh, these people have to make a living, too!
Posted by: Melissa | March 20, 2012 at 01:35 AM
...and while I'm on my soapbox...it irritates me when tons of "church people" or Christians go out to eat on Sunday after going to church, then tip lousy. I am a Christian, and a "church goer"...so what message are we sending?? We need to tip generously, especially on those Sunday afternoon, so that the waitstaff can have a good feeling about waiting on us.
Posted by: Melissa | March 20, 2012 at 01:40 AM
As someone who has worked in the service industry in the past in a variety of areas, I tend to tip pretty high percentages. I agree that a huge part of the problem is restaurants paying their employees so little to start with, and basically demanding customers to bring it up to at least minimum wage. If I get above average service, I will tip a lot, average - then 15-20%, below average ~10%, terrible - nothing. Yes people can be busy and can make mistakes, and you should be able to pick up on that, but blatant rudeness from a server means no tip.
Posted by: Tyler S. | March 20, 2012 at 01:56 AM
I took my 9 year old grand to Outback just tonight. When the bill arrived I had her calculate the tip. If she can do it then anyone should be able to move the decimal point one place to the left (to get 10% of the total) and then double that amount to get 20%. It's not difficult. I then told her that I wanted my charge slip to reflect a full dollar amount and she had to think about the next dollar and how much more was needed. I've been doing this with her since before she was in kindergarden and it is second nature. Parents, please work with your children on mental mathematics. It will serve them well in the long run.
And yes, here in Florida the 'suggested' tip amount appears on most restaurant receipts.
Posted by: toni | March 20, 2012 at 03:07 AM
@Melissa
1) I'm not sure what is so shocking about nearly every commenter saying they tip 15-20%. That seem pretty standard nowadays and, as one commenter pointed out, is much higher than was expected in the past.
2) Yes, actual human beings are waiting on you in a restaurant. That is what they are paid to do. For every client I provide a service to, I don't expect a bonus to do what is in my job description. I had the same attitude when I was younger working in food service.
3) If you choose to tip 20%, that's your prerogative. Tipping any less than that amount doesn't make a person any less of a Christian (and conversely, being a big tipper doesn't make you a better Christian).
4) How someone chooses to pay their bill is none of your business and may have nothing to do with whether or not they can afford to eat out. I rarely go out to eat, but when I do, I pay with credit because I don't like wasting my time going to the bank. Plus, I'm sure the waitstaff and restaurant owner would rather I pay with credit than not receive my business at all.
Your whole rant comes off as rather high and mighty. A better approach might have been to simply suggest that people treat others fairly and skip the implied "good Christians leave a 20% cash tip" and all the other nonsense.
Posted by: uclalien | March 20, 2012 at 03:47 AM
@ Melissa:
As a fellow Christian, I agree with you. I too, always try to tip generously, because I'm thankful for the service, and because I want to be a blessing to someone else. I've heard so many rants from servers about Christians who tip poorly (when service is good), and I can see it has a negative impact on said servers and their view of God and Christians. We're here to be positive impacts, not negative ones. So...well said, Melissa.
Posted by: BD | March 20, 2012 at 04:26 AM
In CA, I see suggested tips all the time. Don't even notice it anymore! :)
Posted by: Eric | March 20, 2012 at 05:22 AM
I like the suggested tip ideas particularly in bars where having a few drinks might make the patrons a little more "math challenged" than they might ordinarily be! ;)
Posted by: Anna @ Good Cents Savings | March 20, 2012 at 09:33 AM
@ HogWild
That's because in Europe, the tip is most often included in the price of the meal. When you tip at all, you're paying for extra nice service. I think that having the waiters know they have a guaranteed tip coming lowers the incentive to provide good service though. And you better be sure that is the policy of the restaurant or you're going to get an earful. Also, you probably don’t want to mess with people who are handling your food. ;-)
I have started to see the suggested tips more frequently. I honestly think it is because people have become so dependent on calculators they can't do simple arithmetic and actually just guess at what a good tip is—probably shorting the tip and going over most often. If I saw evidence of the math problem in my engineering courses, what does that mean for the general public?
I normally take 10%, double it, and then subtract depending on how good/poor the service was.
Posted by: PD | March 20, 2012 at 10:07 AM
I was a restaurant server all through college, and I never worked at a place that had suggested tips at the bottom. Being a restaurant patron, I understand why restaurants add this "feature," but I also think it's just slightly insulting to the guests and a little bit tacky. That being said, a 15-20% tip is perfectly adequate for full service in a restaurant. That is where I would put "average to good" service. 10% is bad service, 5% is awful. And I'll throw an extra 5% to a server that really goes above and beyond. If everyone tipped this way, I think people's overall experience would improve because tips are then directly correlated to service. I think most people just tip what they always tip without really thinking about the service they've received; I know I've been tipped more than I deserved at times, and at other times I would fall shy of giving my guests the moon and get nothing.
Posted by: Jenny | March 20, 2012 at 10:09 AM
I worked in a small mom and pop restaurant, and a coffee house in college. Therefore I know how hard it is to serve, can usually tell when something is a server's fault, and when something is not a server's fault. I typically give a 18-20% tip based on service (bad service gets less than 15%)...and I can easily be swayed one way or another.
What I don't understand is when people tip based on the food quality...unless the waiter is also cooking, they have nothing to do with the food quality (for the most part). A good server should not be punished for bad food and a bad server shouldn't be awarded for good food.
I think the tip line on slips from pizza joints and when gratuity is already added I think is a computer thing...it prints on all receipts regardless. I have no problem putting a line through that section when a tip is not appropriate.
I don't like when servers get below minimum wages because they also receive tips. The son of a friend of mine only get $2/hour plus tips...he's in college so it's do-able for him, but for someone on their own or raising a family, how can they make ends meet?
Posted by: Jo | March 20, 2012 at 11:07 AM
Also, when dining at a lower- priced restaurant, I tip higher. The person is doing the same amount of work, but the total cost of the meal is lower.
Posted by: CB | March 20, 2012 at 12:07 PM
There are a lot of restaurants where I live where you order at the counter but they bring the food to you and clean your table. You get your own drink. When you pay when you order though there is a line for tip. This leaves me confused because how do you tip for service before you get it? Also the only service you get is them bringing food out (even though you serve your own drinks, condiments, silverware, etc.) and they clean your table. This is at mexican, pizza places and higher end burger joints. What's everyone tip at these places?
Posted by: texashaze | March 20, 2012 at 12:19 PM
Went to coldstones (ice cream) the other day, ice cream was $3.50 but the bill had a space for a tip. I just paid the $3.50 with my card. does anyone tip for icecream?
Posted by: lynda | March 20, 2012 at 01:30 PM
Personally, tipping a percentage of the total bill is a weird way to reinforce good service, I think. It doesn't seem to me that the wait staff works any harder to bring me a $7 burger than a $24 steak & shrimp plate. If service is great, the tip should be the same for either meal in my opinion (and figured on the meal only--not including the tax).
Posted by: Grammy | March 20, 2012 at 01:50 PM
"ACTUAL human beings are WAITING on you."
If I were served by a trained circus bear or an android I'd probably tip more. Cause that would be neater.
Posted by: jim | March 20, 2012 at 06:07 PM
jim: Not agreeing with you on the bear. We all know he's just going to shed hair into your food. Finding fur stuck to my dinner will make me tip the bear LESS, not more.
Posted by: BD | March 21, 2012 at 01:24 AM
These have been on restaurant receipts for a decade now around here!
Posted by: RichGuy | March 21, 2012 at 06:31 PM
@jim - maybe you missed the point...in what other setting do you have a human being waiting on you hand and foot? As in every few minutes you can say, "Could you bring me some butter?" or "I'd like a refill." ...et al. It is a very personal thing. I actually do know, being a nurse, but we never got tips, lol.
The bear and android bit humor is not lost on me, btw. It is funny. :)
Posted by: Melissa | March 22, 2012 at 01:56 PM
Melissa,
Of course everyone here knows that REAL human beings are serving them. Did you think we thought that it was subhuman beasts bringing us food cause we 'only' tip 15-20%?
I don't really consider it "waiting on you hand and foot". They take an order then deliver food. There are millions of service industry jobs in the US so I don't think the service aspect of waiting is anything really unique. I'm not saying they shouldn't be tipped, just that its nothing to fawn over.
I don't know why you expressed shock at the answers here. Seems that the majority of people are saying they tip in the 15-20% range routinely. Thats common and stanardard tip rates. Tipping >20% is NOT the standard. If you want to be generous then fine, but don't get annoyed that everyone else doesn't follow along and keep increasing tip rates.
Posted by: jim | March 22, 2012 at 03:51 PM
20% minimum or stay home and eat a sandwich.
Posted by: Melissa | March 22, 2012 at 05:39 PM
Nope.
Posted by: jim | March 26, 2012 at 03:36 PM
@jim. Wow! $2500 is an awful lot of money for meals away from home.
I think we're around $500 for our 3 per year including the occasional pizza. When we go, we do it up right and tip well. But it's a very rare occasion.
I prefer to dine at home because I'm impatient with waiting to be seated and served. It ends up taking less time to cook at home.
Posted by: Catherine | March 26, 2012 at 09:51 PM