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Plan Well, Retire Well

Saving and investing your money
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Eating Out Tips


I worked as a member of a wait/service staff (i.e., a tipped worker) for five different types of food service establishments during my undergraduate years. The tips I received helped pay for my student loan, maintaining my car, housing, and some of my other personal care needs. Even though I wasn't bringing in a lump sum, it all added up. I've also been in the role of the customer in situations where I am wondering whether I should tip a service person. In what situations do you tip or decide not to tip?

Researchers who study finance and human behaviors have been very interested in the tipping and the role it plays within our economic and social systems. Some suggested that social compliance and social pressure may motivate our tipping behaviors (Whaley et al., 2014). In other words, we tip because it is an important part of our social, cultural, economic, and dining experiences.

In this post, I describe the effects of tipping in twofold: (1) its role in the lives of service staff, and (2) how it relates to consumer spending on food.

As an economic activity, tipping allows the customers to provide a percentage of the wage of the service individual. So, in addition to their based pay, service staff receive money directly from customers. This system where servers are paid a small hourly amount for wages and tips are supposed to make up the difference to reach minimum wage is called tip credit. Some states have eliminated this type of system and support a higher minimum wage ($7.25 federal, higher in some states), one that doesn't rely on the tip credit for service workers.

While our tips help to support an economic system, this is not always the first thing we think about when we are dining out. Tipping in most cases is a voluntary act (in other cases, a provider can include a base tip for certain types of event and party size). Nonetheless, as you work on your food budget, make sure you include tips in the price for eating out and consider these factors that may influence what you leave for your server:

  • Type of meal: Take advantage of kids' meal and older patrons' reduced meal prices. Some restaurants offer reduced meals for children on specific days of the week. For example, $1.99 kids meal that includes an entrée, a drink, and dessert.
  • Portion size: Many food establishments serve large portion sizes for some meals. If you are like some members of my family and you don't like leftovers, avoid meal types that result in a lot of food waste and chose smaller portions that cost less.
  • Type of food and restaurant: If you have a specific diet or have picky eaters in your household, be reminded that additions and changes to the restaurant menu items may cost you more, and thus affect the amount you tip.
  • The right amount: Some service providers have adopted ways to make it easier for customers to tip. For example, some restaurants have self-check with a prompt that suggests, "10%, 15%, 20%, Customize, or No Tip". This allows customers to determine how much they would like to leave in tip.

Tips are an important source of income for many service staff, and it is a voluntary behavior that is embedded in our social-economic system. As it relates to our behaviors as consumers, it is important to consider how leaving "extra" money fits into our food or eating out budget. This also allows us to remain mindful of our tipping behaviors.



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