What Motivates Restaurant Customers to Tip: Evidence from the Czech Republic

Abstract

Although the literature on tipping is enormous, it is still unclear what motivates people to tip. In particular, it is unresolved how tips depend on service quality, patronage frequency, and group sizes, why people tip more for better service if they do, and why they tip at all when they can avoid it. This study aims to fill this gap. It uses survey data to explore what motivates Czech restaurant customers to tip. Reasons for tipping, factors constituting service quality, and reasons for tipping more for better service are explored by descriptive statistics. The impact of service quality, group size, and patronage frequency on tips is assessed by random effects estimator and simple policy capturing. The results show that Czech customers tip mostly because of gratitude, to follow the social norm, and to avoid feeling guilty when not tipping. Most Czechs do not tip to supplement waiters’ wages. Their tips are strongly influenced by service quality, which includes the whole experience of a dinner in a restaurant and not only the waiter’s performance. They reward a good service because it is fair, out of gratitude, and to motivate the waiters to provide good service in the future, but not because it is prescribed by social norms. On the other hand, there is little evidence that their tips depend on patronage frequency or group size.