Dive Brief:
- Dine-in tips have steadily increased even as a 40-year high inflation rate has driven up restaurant costs, according to new data from Lightspeed Commerce emailed to Restaurant Dive. The data was collected from 6,000 bars and fast casual, casual and upscale restaurants between May 2021 and May 2022.
- Tip percentage growth, however, has slowed since May 2021, and tips for online orders have decreased even as the number of online orders has grown. The median average tip in May 2022 was 18.2%, while upscale restaurants with larger checks averaged over 32%.
- Diners are spending less as inflationary pressure lingers, a trend also evinced by a drop in restaurant traffic. Younger consumers in particular are visiting eateries less often than their older cohorts, per NPD Group data.
Dive Insight:
Trends in this data suggest diners are becoming more discerning with how they are spending their food money. Consumers may be reluctant to use their discretionary funds on digital orders such as third-party delivery purchases, for example, as such orders typically come with higher fees.
Diners may prefer to spend their money on hospitality and experience instead of digital fees. Dine-in tipping is also a way to directly support restaurants and essential workers who have faced workplace COVID-19 exposure throughout the past two years. A Toast report from Q1 found on-premise tips average about 20% versus off-premise tips, which average 15%.
Healthy tips could provide help employers retain workers as the labor market remains tight. If inflation stays high, however, which is expected in the near term, consumers could rein in even more of their spending and tips. Still, demand for eating out is strong. Despite a more contagious COVID-19 variant proliferating, the proportion of consumers across demographics who feel comfortable dining out has steadily increased since January, according to Morning Consult.
