Dive Brief:
- The average tip size on food and beverage orders has fallen to its lowest levels in several quarters, according to data from Square.
- In Q2, the average tip was 14.9%, down from 15.2% in Q1, which the point-of-sales company said aligns declining consumer confidence in the macroeconomy. In 2023, average tips were 15.5%.
- Nominal hourly earnings for non-supervisory restaurant workers have grown over the last decade, but wage gains in early 2025 have been uneven. Hourly pay rose to $19.24 in March, dipped to $19.20 in April and peaked at $19.40 in May before falling to $19.29 in June, according to the Bureau of Labor Statistics.This bullet states what happened.
Dive Insight:
The decline in tips, which comprised 23% of restaurant wages last year, is having a dramatic impact on restaurant workers' income.
“As consumer confidence in the economy shifts and tips fall, workers are taking home less which could lead to a return to labor uncertainties for the industry — adding to the crunch local restaurants are continuing to feel,” Ming-Tai Huh, head of food and beverage at Square, said in a statement.
Even bars, which typically see the highest tip rates, the average tip fell from 17.4% in the first quarter to 16.9%, Square said. Tips at QSRs were down to 14.2% in the second quarter from 14.6% in the first quarter. Full-service restaurant tips declined to 14.6% in the second quarter compared to 14.8% in the first quarter.
This isn’t good news for retention either, which is a constant struggle at restaurants. According to a Legion’s 2025 State of the American Hourly Workforce report, 54% of restaurant and hospitality workers plan to leave their jobs within the next 12 months. Not being able to offer competitive pay is the top retention challenge for employers, per the report.
Despite tips decreasing, sales grew — albeit moderately — during the first half of the year, according to the report. QSR sales were up between 8.7% and 9.1%, following a peak of 15.8% sales growth in Q4 2024. Sales at fast casual restaurants were up 9.3% in Q4, but slowed down to 0.9% growth in 2025. This is in line with second-quarter earnings trends — Wingstop and Chipotle reported declines in same-store sales while Domino’s posted an increase.
