Restaurant tips in large American cities have been on the rise since the onset of the COVID-19 pandemic, but new evidence suggests that Americans are experiencing tipping fatigue. The tipping boom is likely coming to an end in Chicago restaurants, after the city government passed a new ordinance in October to gradually phase out tipped wages, said Michigan State University Hospitality Professor Michael McCall.
A 2022 survey by the point-of-sale company Toast found that 48 percent of the orders it tracked nationally included tips, up from just over 36 percent in mid-2020. The average Chicagoan’s restaurant tip was 19.3 percent, tied for the fifth-highest rate in the country.
Gratuity screens popularized during the pandemic have contributed to the increase in tipping revenue, McCall said.
“Having those screens in front of people does put additional pressure on them,” he said. “When you have a screen in front of you and it starts at 20%, I wasn’t going to even give you a tip, now I gotta start at 20?”
That said, Illinois residents as a whole leave the smallest average tips in the country, averaging 14.2 percent, well below the national average of 18 percent, according to a 2023 survey by USA Today.
Some restaurant owners have added automatic service charges to the bill–with mixed results.
“Whether they’re paying a 20 percent gratuity or a 20 percent service charge, exactly the same amount is charged to their credit card,” said TJ Callahan, restaurant owner and founding member of Farmheads Hospitality Group. “But for the guests, psychologically, it was wildly different for whatever reason.”
Callahan added a 20 percent service charge at Thomas & Dutch, his Evanston location, when it opened in April. The restaurant shuttered six months later in October and the service charge played a large role in its failure, Callahan told The Chicago Reporter.
Paulie Gee’s, a casual pizza restaurant in Wicker Park, has added a 15% service charge to its bills since 2022. Customers still have the option to tip but are not expected to, said manager Tony Dezutter.
The charge has ensured that Paulie Gee’s workers earn a livable wage instead of having to rely on tips, said employee Miguel Hugetz.
“Because the wages are so good here, I intend to stay as long as I am living in Chicago,” he said. “It’s good for retention, and I also think it’s good for output and productivity. I want to be productive here because I know I’m getting paid a good amount.”
The Aon Center’s Starbucks location pays employees a base salary above the minimum wage but has a touchscreen in case customers want to leave a tip, said barista Aaron Allen.
Allen, who was formerly a waiter at Anto Pizza and Pasta in Rogers Park, said that service charges should be reserved for sit-down restaurants that host large groups of people.
“I feel better about myself when someone tips me willingly because that means I exceeded their expectations,” he said.
The tipping culture in American cities like Chicago is uncommon across the rest of the world, said Jean Kim, a psychiatrist and contributor to Psychology Today, an online publication focusing on human behavior. Many European countries pay their workers a living wage before tips, while tips are often outright refused in Japan, said Kim.
Chicago’s One Fair Wage ordinance will end subminimum wages by 2028, meaning that workers will be guaranteed at least $15.80 per hour. Before the ordinance, many workers depended on tips from customers to earn a minimum wage.
