Calculating the restaurant tip: why I don’t use percentages (and my own unusual approach)

Tipping in restaurants.

Do you do it?

Here in Amsterdam, it’s not expected. You can, and if you do, any amount > 0 is fine. [Though I’d guess anything less than 10 cents would be frowned upon as not even worth the trouble.]

Bento Box at a fancy Japanese restaurant in Amsterdam called Momo

In the U.S., the usual approach to tips is to do 15% [1] for good service, then adjust from there, depending on the service quality. 20% would be great service. 5% would be less-than-good service.

It’s hard for me to judge service quality. I demand nothing special from my servers. I virtually never have special requests, and it doesn’t matter to me how often they check on me. So calculating a tip based on service just hasn’t seemed right to me.

Here’s how I do it instead…

An unusual approach to calculating the tip

When I finish eating a meal, I ask myself what I think a fair price for that meal would be. In this judgment, I take into consideration the food itself, the quality of the food, the ambience and overall atmosphere, my general satisfaction, and, of course, the service. How much do I think I should pay for what I received?

Then, I use the tip to bring the total to the number that I came up with. For example, if the bill is $21.80, but I thought it was worth $20.00, I don’t leave any tip; I do, of course, pay the full $21.80. On the other hand, if I thought it was worth $30.00, I’ll add an $8.20 tip to bring the total to $30.00.

By the way, that’s a fairly pricey dinner for one person (me), but it’s very common here in Europe. I almost never think those $21.80-class meals are worth the money, so I rarely leave a tip. [Fortunately, it’s usually not really expected, either.]

On the other hand, I generally end up leaving larger tips for cheaper meals. If the bill is $5.00, but I thought it was worth $10.00,  I’ll add a $5.00 tip.

The result is that my tips are often drastically different from what you’d do with the traditional approach. When people go to more expensive restaurants, they generally tip more. I generally tip a bit less, because I’m typically unimpressed by their supposed “fanciness.” When people go to cheap restaurants, others generally tip less, while I generally tip a bit more, especially if the food is actually pretty good.

While my approach may not make sense in light of the fact that tips usually go straight into the waiter’s pocket– or sometimes split equally among the staff, or used for a party– I still think it works pretty well from the customer’s perspective. It compensates for restaurants that overcharge, while rewarding restaurants that are efficient and offer good value.

Otherwise, restaurants offering good value find it tough to compete with the luxury, overpriced establishments. Not only are their prices lower, but since tips are traditionally calculated as a percentage of the bill, their tips are lower as well! As a result, offering lower prices reduces their income more than it may appear.

This makes it difficult for a restaurant owner to successfully operate a business that targets budget diners. As a result, I suspect that dining out is generally more expensive than it could be.

What do you think of my tipping method? Do you follow the standard practice, or are you a bit more like me?

[1] Thanks, David. Turns out I’m a cheapskate :( but I’m working on it :)