Automatic tipping could become more common in Australia in response to rising operating costs despite a potential backlash from customers, the hospitality industry’s peak body says.
Automatic tipping, which adds a pre-set service charge to a bill, is permitted under Australian consumer law, as long as customers are alerted to the practice beforehand and can opt out of the fee.
One diner took to social media this month expressing concern about a Sydney wine bar which added a 10 per cent tip to their invoice.
The bill and the venue’s website included a disclaimer encouraging customers to ask if they wished for the fee to be removed.
The eatery has since scrapped the practice, following public backlash.
Hospitality cost crisis
While not widespread, the practice of automatic tipping has become more prevalent in cities across the country as Australia’s tipping culture continues to evolve.
Australian Cafe and Restaurant Association chief executive Wes Lambert said tipping helped eateries meet rising operating costs.
Automatic tipping has become more prominent due to rising business operating costs. (Pexels: Rachel Claire)
“There are only a handful of businesses in the CBDs around Australia that are doing this. However, it may become more mainstream as that cost of doing business crisis continues,” he said.
Mr Lambert said automatic tipping was more common at eateries popular with international tourists, who saw the practice as “more of a norm than an exception”.
Wes Lambert says automatic tipping is more popular at eateries frequented by international tourists. (ABC News: Greg Bigelow)
“Those businesses are recognising that that is something that their patrons are accustomed to doing, and so they’ve made it just a bit easier for those patrons to do so,” he said.
“As we see international tourism now back near pre-COVID levels, we are going to see more of these à la carte items, where a tip is included and, in some cases, it’s already been added to the bill.”
Tipping fatigue
While automatic tipping remains a legitimate option for retailers, businesses that adopt the practice risk frustrating customers not accustomed to leaving a tip.
“[Australia’s] anti-tipping culture is primarily based on the expectation that you’re going to be paid at least the minimum wage working in a restaurant,” University of New South Wales governance and regulation professor Rob Nichols said.
“Unlike some cultures like the US where you’re paid a very, very small amount and substantially all of your income comes from tips, that’s not the case in Australia.”
Rob Nichols says hospitality workers in countries such as the US rely on tips to top up their income. (ABC News: Steve Wang)
Dr Nichols said automatic tipping removed the ability for customers to control where the proceeds of their money went.
Hospo workers short-changed on tips during cash decline
“I think one of the big questions with automatic tipping and tipping at an EFTPOS machine is how much of that tip is going to the person who served you, or the person who cooked your food, or any of the staff in the restaurant, and how much goes to the restaurant itself,” he said.
Dr Nichols said customers should not be afraid to request suggested tips be removed from their invoice if they were concerned about the practice.
“Perhaps we need the anti-tipping culture to be a bit more stroppy when people try and add extras to the bill, because we’re pretty good as Australians about complaining about bills being too high in other areas,” he said.
“We should just have a little bit of confidence and say, ‘no I’m not paying that tip, I didn’t agree to it’.”
WA, NSW least generous tippers
It comes amid a general rise in tipping activity across the country, with Mr Lambert saying conservative estimates suggest Australians and tourists were tipping $3.5 billion a year.
Wes Lambert says Australians are tipping more than ever. (Pexels: energepic.com)
“Australians are tipping more frequently than ever,” he said.
“From fiscal year 2024-25, the number of transactions including a tip grew by 13 per cent year over year,” he said.
Mr Lambert said a recent survey by electronic payment service Zeller found Victorians were the most generous tippers in the country, spending an average of $39.50 on tips each meal.
At the other end of the spectrum, Western Australians spend $12.48 on tips on average, preceded by NSW customers, who fork out an average of $16.90 per meal.
