A 2024 survey has revealed that nearly half of Brits (42%) would like to abolish service charge, amidst a growing gratuity lull in the UK service industry, sparking conversations around a ‘cost of tipping crisis’.
The survey, commissioned by Mojo Business, also revealed that the average tip amongst 18-24 year olds was more than three times greater than that of the 55-64 year olds.
Inflation, fuel prices and housing insecurity have pushed the UK into a financially tumultuous cost of living crisis, and across many sectors, including the service industry, spending has reduced.
Service staff are expressing concern that a drop in spending will have a knock-on effect, damaging both their opportunity to earn wages and the opportunity to generate tips on top.
2023’s ResDiary ‘State of Hospitality Report’ suggests that 35% of restaurants have changed their opening hours to reduce the number of days per week that they are open, with 66% of those restaurants claiming that this was due to dwindling customer figures.
The problems don’t stop there for the staff working in the restaurants, as fewer open hours means fewer hours to work, it also means that the money they can expect to earn from tips and gratuity across the month is lower.
Lauren, a member of service staff in Liverpool’s city centre said: “It’s tough because you know it’s not really anyone’s fault. I can’t afford to eat out much, I can’t afford to tip loads, so why could anyone else in a similar position?
“It’s not even that we’re significantly less busy, it’s just that we’re getting more people in looking for deals and our happy hour. If you’re out looking to cut your spending, it can be hard to justify an optional extra spend on your bill, even if you’re well meaning.
“But that’s not the answer you can give your landlord when you’re short on rent, or the person behind the till in Aldi.” she continued.
The survey also suggests that the reasons behind the drop in tip revenue are more complex than simply ‘less diners means less business’.
When asked about their priorities when choosing where to spend, 42% of customers said they prioritise ‘good value for money’, whereas only 14% prioritise ‘unique experiences’.
This statistic reflects people’s willingness to pay more for better service, which is key to generating tips and gratuity. It suggests that diners are increasingly interested in finding good value, and not in seeking good experience, which is likely to reduce the opportunities to earn tips across the industry.
However, the long-term future does look positive for service staff. The statistics suggest that younger people are significantly more likely to tip than older customers.
Gen Z was also the biggest supporter of a US-style tipping system, which normally attributes 20-25% to each bill, around double the standard 10-13% on most UK bills that contain a service charge.
On the age difference in tipping habits, Lauren said: “You do notice that younger people are more likely to press 5 or 10% on the reader, which is where most of our tips come from, and then more older people who pay cash and say “keep the change”.”.
