ACTA UNIVERSITATIS AGRICULTURAE ET SILVICULTURAE MENDELIANAE BRUNENSIS

Volume 66 31 Number 1, 2018

https://doi.org/10.11118/actaun201866010273

WHAT MOTIVATES RESTAURANT CUSTOMERS

TO TIP: EVIDENCE FROM THE CZECH REPUBLIC

Michal Kvasnička1
Department of Economics, School of Economics, Masaryk University, Žerotínovo nám. 617 / 9, 601 77 Brno, the
1

Czech Republic

Abstract

KVASNIČKA MICHAL. 2018. What Motivates Restaurant Customers to Tip: Evidence from the Czech
Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 66(1): 0273 – 0282.

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.

Keywords: tipping, motivation, social norms, gratitude, social pressure, strategic behavior, service
quality, patronage frequency, restaurants, the Czech Republic

INTRODUCTION The most important unresolved questions

Tipping is puzzling behavior. Since tips are paid include: how tips depend on service quality, on
after the service is delivered and are not legally the frequency with which customers encounter
enforceable, self‑interested agents should never tip particular servers, on customer group sizes, and
unless they repeatedly interact with the same waiter. why people tip at all when they can avoid it. In other
Yet most people tip even in one-off interactions, words, what motivates people to tip? Traditional
which suggests that tipping is influenced by empirical research methods based on exit survey
social norms and psychological factors rather data have provided mixed results, possibly because
than economic calculation. However, tipping is of the endogeneity of service quality, selection bias,
economically important too. Azar (2007b) claims and differences between individuals. For these
that the total amount tipped is around 27 billion reasons some researchers, e.g. Kahneman, Knetsch,
USD a year in US restaurants alone. Tipping may and Thaler (1986), Bodvarsson and Gibson (1999),
also have important managerial consequences: it Rogelberg et al. (1999), and Azar (2010b), have
can be a substitute for managerial supervision over adopted another approach: a hypothetical survey.
tipped employees if customers tip significantly In these surveys, researchers ask respondents
more for excellent service than for mediocre. directly how much they would tip in various
Even though the literature on tipping is hypothetical situations and what motivates them
enormous, some questions still remain unresolved. to tip. The experiment‑like structure of the surveys

273
274 Michal Kvasnička

eliminates problems with endogeneity, selection interacts with a waiter repeatedly. When the social
bias, etc. norm of tipping is taken into account, economic
The literature on tipping is extensive and two models predict that all customers tip but regular
excellent reviews have been already provided by patrons tip more and with more sensitivity to
Lynn (2006) and Azar (2007b). Therefore, I will service quality than one‑off customers, see e.g. Azar
focus here only on general results concerning (2007a). The empirical results are mixed. Several
the three determinants of tips explored in this exit‑survey studies found that the regular patrons
study – service quality, patronage frequency, and tip more than one‑off customers, see Lynn and
group size – in the USA, Canada, and Israel. I will Grassman (1990), Lynn and McCall (2000), Conlin,
review the methods and results of the three studies Lynn, and O’Donoghue (2003), Bodvarsson and
which I follow more closely, Bodvarsson and Gibson Gibson (1994), Azar (2007a), and Azar (2010a). On
(1999), Rogelberg et al. (1999), and Azar (2010b), in the other hand, Bodvarsson and Gibson (1997)
more detail in the Materials and Methods. I will found the relationship statistically significant
summarize what is known about restaurant tipping only in two out of seven restaurants, and even
in the Czech Republic too. there it was small. Hypothetical surveys found no
Theoretical models predict that customers will relationship between tips and patronage frequency,
tip more when service quality is better, see e.g. Azar see Kahneman, Knetsch, and Thaler (1986) and Azar
(2007a). However, exit surveys have found a weak (2010b). A possible explanation is that patronage
or nonexistent relationship between service quality frequency does not significantly affect tipping
and tip size. Lynn and Latané (1984) found no behavior, but serves as a proxy for a missing variable,
relationship. Bodvarsson and Gibson (1997) found most likely for unobserved customer incomes
a positive relationship in five out of seven restaurants which are correlated with tips, see Azar (2010b).
but a negative one in the two other restaurants; the Azar (2010b) also found that regular patrons do not
relationship was positive on average but very weak tip with greater sensitivity to service quality than
over all seven restaurants. Lynn and McCall (2000) one‑off customers.
found so weak a positive relationship that they Economic theory does not make clear predictions
doubted waiters would notice it in their earnings. as to how tips are influenced by the size of groups
Lynn (2003) found a very weak relationship, and so dining together, see Lynn (2006) or Azar (2007b).
did Azar (2009). On the other hand, two hypothetical Customers dining in bigger groups may tip more
surveys found that customers tip significantly more because of the stronger social pressure, or less
for better service, see Bodvarsson and Gibson (1999) because customers’ responsibility is more diffused
and Azar (2010b). Rogelberg et al. (1999) found by in bigger groups. It is also easier for waiters to serve
means of policy capturing on hypothetical survey groups than individuals seated separately. Moreover,
data that some customers tip more for better if customers pay together in groups, the magnitude
service while others do not. There are several effect1 can lower the percentage tip. The empirical
explanations of the discrepancy between the results results are mixed. Freeman et al. (1975), Lynn and
of hypothetical and exit surveys. Bodvarsson and Latané (1984), Bodvarsson and Gibson (1997), and
Gibson (1994) claim that the relationship between Bodvarsson and Gibson (1999) found that tips
tip size and service quality cannot be estimated from decrease with group size. Lynn and Grassman (1990)
exit survey data because the variability of quality and Azar (2010a) found no relationship. Conlin,
measures is too small since only well‑performing Lynn, and O’Donoghue (2003) found that customers
waiters can survive in an industry where tips are tip more when in bigger groups.
their major source of income. Azar (2007b) offers Tipping in the Czech Republic has been studied
two other explanations: 1) Customers want to tip by Kvasnička and Szalaiová (2015). Czech restaurant
based on service quality, but they succumb to the customers tip about 7 % of their bills and raise their
pressures of social norms at the restaurant. 2) Service tips with bill size. They tip more for better service
quality is endogenous – waiters can guess how too (however, this result is only tentative because
much a particular customer will tip and adjust their customers’ rating of service quality was not directly
efforts accordingly – and hence its impact cannot be observed and was substituted for by a proxy). Group
assessed by OLS. The latter explanation is consistent size lowers the percentage tip when the customers
with the findings of Bodvarsson and Gibson (1994), pay together. Surprisingly, regular patrons tip
who corrected for service quality endogeneity and significantly less and even withhold tips altogether
found a strong relationship between tip size and more often than non‑regular customers. There are
service quality in their exit survey data. Barkan and differences between genders too: male customers tip
Israeli (2004) provided direct evidence of service more than female customers and female waitresses
quality endogeneity. earn more than male waiters. Czech customers tip
Economic theory also predicts that by rounding up the bill to a round number, rather
a self‑interested agent should not tip unless she than by leaving a separate tip (tipping evolved from

1 The magnitude effect occurs when tips as a percentage of bills decrease as bills increase. It can be caused e.g. by
rounding, flat tipping (i.e. tipping dollar amounts instead of tipping a percentage of bills), etc.
 What Motivates Restaurant Customers to Tip: Evidence from the Czech Republic 275

letting waiters to keep the small change in the Czech for what reasons they tip, what factors determine
Republic). This creates a positive intercept when their tips, how much they would tip in twelve
regressing tips in CZK on its covariates, and hence hypothetical situations which differed in group sizes
the magnitude effect. (dining alone or with a friend), patronage frequency
This study explores the four puzzling questions (dining in a restaurant they will not revisit or where
stated above with a special emphasis on the impact they dine frequently), and in three levels of service
of service quality. Methodologically it builds on quality, why they tip more when waiters provide
the research of Bodvarsson and Gibson (1999), better service (if they do), and their characteristics
Rogelberg et al. (1999), and Azar (2010b). It uses (gender, type of study, nationality, and their actual
data from a new hypothetical survey carried out in customer frequency). The whole questionnaire will
the Czech Republic. The study contributes to the be provided on request.
previous research in two ways. First, it provides The survey was taken in April 2015, several
evidence from a new country. So far, empirical months after the students finished the course. It
studies on tipping have focused on the USA, Canada, produced 233 completed forms. However, some
and Israel. Evidence from the Czech Republic is of observations were eliminated for two reasons. First,
interest because this country has undergone other to study tipping in the Czech Republic and to get
developments, and tipping probably has different respondents of a similar kind as in the previous
origins here. Second, in comparison with previous research, the set of respondents was limited to
research based on hypothetical reviews, this study the Czech and Slovak students of economics at
utilizes more systematically both between and within Masaryk University – all responses from foreigners
information present in the data and focuses both on (except Slovaks2) and students of other schools
aggregate statistics and on individual behavior. were excluded from the dataset. Second, several
respondents stated their tips obviously incorrectly
(they claimed to tip more than 100 % of the bill; it
MATERIALS AND METHODS seems they filled in the bill plus tip instead of the
In this section, I will first introduce data used tip alone). Their responses were also eliminated
in this study and then explain my methodology. from the dataset. After this elimination, the dataset
Since my approach is closely related to methods in consists of 197 respondents.
the previous literature, I will first summarize the The structure of the dataset is as follows. Out
methods and results of the work I follow, and then of the 197 respondents, 112 were women and
explain how my approach differs from the previous 85 were men. 165 respondents visit restaurants at
one and what procedures are used to analyze data. least twice a month and of these 71 respondents
Description of methods is divided into subsections eat in restaurants at least twice a month (I denote
that correspond to the question explored: first, what the latter 71 respondents as regular customers).
motivates customers to tip; second, what determines The test indicates that gender and customer
how much the customers tip focusing on service frequency are independent (p‑value is 0.61). As
quality, patronage frequency, and group size; third, noted above, Czech customers usually use tips to
how individual customers’ tipping strategies differ round up the bill to tens of CZK. This rounding up
from each other; and fourth, why customers tip is also apparent in the dataset. Since the bill size was
more for better service and what constitutes a good 200 CZK3 in all treatments, most respondents stated
service. I will keep this structure in the following they would tip rounded figures like 0, 10, 20 CZK
sections too. etc. Out of all 2,364 tips stated by all respondents
in all hypothetical situations, 2,158 tips (i.e. 91.3 %)
Data were rounded up.
Respondents in previous hypothetical surveys
were overwhelmingly university students. Methods Used to Assess
Therefore, to be comparable, data used in this Reasons for Tipping
study was obtained by surveying students too. Hypothetical surveys allow us to ask respondents
The respondents were the students enrolled in the why they tip. Bodvarsson and Gibson (1999) asked
Principles of Microeconomics course at Masaryk their respondents (the US and Canadian students)
University School of Economics in the fall of 2014. to mark any number of the following three reasons
Most these students were freshmen while the rest for tipping: 1) to supplement waiters’ incomes, 2) to
were sophomores that had not passed the exam in reward waiters’ service (i.e. to tip out of gratitude), and
their first year and also several were students of other 3) because it is “right thing to do”. The most important
schools at Masaryk University. The students were reason for tipping both in the USA and Canada was
asked whether they tip when eating in restaurants, to reward waiters for their service, i.e. gratitude.

2 The Czech and Slovak people are treated together because the two nations have very similar language and culture,
were until recently part of one country, and there are many Slovaks living and studying in the Czech Republic.
3 200 CZK is a price of a decent dinner in a Czech restaurant. Depending on the current exchange rate, it is between
8 and 10 USD.
276 Michal Kvasnička

It was marked by 77 % of Americans and 81 % of low wages and depend on tips, 4) waiters could be
Canadians (the latter including visiting students). nasty when not tipped (i.e. retaliate immediately);
Supplementing waiters’ income was the second I have made the wording less expressive and more
most important reason for tipping in both countries, general than the risk that a waiter would yell at
marked by 70 % of Americans and 61 % of Canadians. a customer because no one I discussed the question
The “right thing to do” was minor – it was marked by with could imagine that this could happen), 5) the
25 % of respondents in both countries. Bodvarsson waiter could be nasty or provide worse service on
and Gibson (1999) noticed some differences between the next encounter when not tipped (i.e. future
regular and non‑regular customers in the USA. retaliation), 6) people around would look at the
First, 81 % of regular customers (in comparison with customer askance (i.e. social pressure; there is no
64 % of non‑regular ones) tip to reward good service. equivalent in Azar’s questionnaire; I have added
Second, 68 % of regular customers (in comparison this option to distinguish between following the
with 46 % of non‑regular ones) tip to supplement social norms through belief and following them to
waiters’ incomes. However, no similar difference was avoid social punishment), and 7) to avoid feeling
observed in Canada. guilty when not tipping (Azar has separated feeling
Azar (2010b) asked his respondents (US and Israeli guilty and embarrassed but the terms are closely
students and a few Israeli off‑college young people) related in Czech). As in the previous research, this
to mark any number of seven possible reasons for part is only descriptive. The goal is to find out for
tipping. These reasons included feeling guilty or what proportion of respondents is a given reason
embarrassed when not tipping, following social to tip important. Differences between genders and
norms, showing gratitude to waiters, supplementing regular and non‑regular customers are assessed
waiters’ low wages, and avoiding the risk that the with non‑parametric Wilcoxon and Kruskal – Wallis
waiters would provide worse service on the next tests which test whether both samples have the
encounter or would yell at the customer when not same mean and come from the same distribution
tipped. The most important reason for tipping respectively.
in the USA was compliance with social norms,
marked by 85 % of US respondents. The other Methods Used to Explore
important reasons included gratitude (68 %), Determinants of Tip Size
supplementing waiters’ wages (67 %), and feeling To explore the impact of service quality, group
guilty (60 %) and embarrassed (44 %). The same five size, and patronage frequency, the respondents of
reasons were important also in Israel though in previous surveys were asked how much they would
a slightly different order and with lower magnitudes. tip in several hypothetical situations. Bodvarsson
The most important reason for tipping in Israel and Gibson (1999) asked their respondents how
was gratitude (69 %), followed by compliance with much they would tip in six situations which differed
social norms (58 %), supplementing waiters’ wages in service quality (poor, satisfactory, and very good)
(32 %), and feeling embarrassed (23 %) and guilty and group size (dining alone or with a friend).
(13 %). The last two reasons were only marginal in The bill size was $10 where the customer dined
both countries: tipping to avoid the risk of worse alone and $20 where she dined with a friend (it was
future service was marked by 14 % of Americans assumed the customers pay together). They found
and 3 % of Israelis, the risk of yelling by 4 % of that customers tip significantly more for better
Americans and no Israeli. On average, Americans service both in the USA and Canada (for instance,
marked 3.42 and Israelis 1.98 reasons for tipping. Americans tip 6.5 % for poor service, 14.3 % for
Azar (2010b) divided these reasons into positive satisfactory service, and 21 % for very good service
and negative ones. Positive reasons are those when dining alone). Customers also tip slightly
where “good outcomes … happen when one more when alone than with a friend.
tips”, negative reasons are those where “negative Azar (2010b) asked each respondent how much
outcomes … happen when one does not tip” she would tip in five situations that differed only
(p. 425). He included tipping to show gratitude, in service quality (quality levels 1 and 5 were
to comply with social norms, and to supplement framed as “poor service” and “excellent service”
waiters’ low wages among positive reasons, and respectively). Azar used a between‑subject design
the rest among negative ones. In both countries, and distributed other treatments randomly among
respondents tip more for positive rather than respondents. These treatments differed in group
negative reasons. The ratio of positive to negative size (dining alone or with a friend) and patronage
reasons was 2.4 in the USA and 5.45 in Israel. frequency (dining at the restaurant only once, once
In this study, respondents were also asked a month, or once a week). Each customer’s part of
whether and why they tip. The reasons for tipping the bill was $10 in all cases (the respondent and her
were chosen to closely resemble the reasons used by friend paid separately). Azar analyzed the results
Azar (2010b) and were only slightly modified to take in two ways. First, he explored the determinants
into consideration the Czech language and culture. of average tips (the average of the five answers of
They included tipping because 1) it is a custom and each respondent) by regressing the average tips
it is expected (i.e. a social norm), 2) it is a reward on patronage frequency, group size, the number
for waiters’ service (i.e. gratitude), 3) waiters earn of reasons for tipping, and individual reasons for
 What Motivates Restaurant Customers to Tip: Evidence from the Czech Republic 277

tipping. In this way, the impact of service quality size (95 % of respondents), service quality (44 %),
could not be analyzed, and only the between waiter friendliness (34 %), and food quality (22 %).
information present in the data was used. Second, Data obtained in in this study allow for simplified
he explored the impact of service quality on tips by policy capturing too. Each respondent’s tips in
comparing the mean tips for every service quality the twelve hypothetical situations are regressed
level. He only partially confirmed the previous separately on four dummies (dinner with a friend,
results. Tips rose significantly with service quality dinner in a frequently visited restaurant, poor
both in the USA and Israel, but there was no service, and very good service) and on the intercept.
difference in tips due to group size or customer Instead of constructing clusters of similar tipping
frequency. Customers with more reasons for strategies, I will only ask whether each factor
tipping tipped more than customers with fewer increases, decreases, or does not change tips.
reasons for tipping. Two individual reasons for It decreases tips if the corresponding regression
tipping raised tips significantly (at a confidence parameter is negative and statistically significant
level of 10 % or less): social norms and gratitude in at a significance level of 10 %. It increases tips if the
the USA and gratitude and supplementing waiters’ parameter is positive and statistically significant.
incomes in Israel and in combined data for both It does not affect tips if the parameter is insignificant
countries together. or, for numerical stability, at an absolute value lower
In the present study, the respondents were asked than .
how much they would tip in twelve situations that
differed in service quality (poor, satisfactory, or very What Good Service Is and Why
good), customer frequency (dinner in a restaurant Customers Tip More For It
the customer will not revisit in the near future or Since customers usually tip more for better service,
dinner in a restaurant the customer visits at least it is interesting to know what constitutes good service
twice a month), and group size (the customer dines and why customers tip more for it. Bodvarsson and
alone or with a friend who is not her partner). In Gibson (1999) asked their respondents to mark any
all situations, each person paid separately a bill of number of five measures of service quality that are
200 CZK per person. Three quality levels were used fairly often used in the literature (waiters’ promptness,
to make the differences between quality levels more friendliness, attentiveness, appearance, and the
salient and to lower the number of questions the amount of work done) and one factor beyond waiters’
respondents had to answer. The differences between control (quality of meal). The four most important
the levels have to be salient because most Czech determinants of service quality were friendliness
customers tip in multiples of ten CZK when the (marked by 99 % of Americans and 98 % of Canadians),
bill is rounded, and barely noticeable differences promptness (marked by 95 % respondents in
could result in the same tips due to the rounding. both countries), attentiveness (marked by 90 % of
Two levels of patronage frequency were used for the Americans and 94 % of Canadians), and the amount
same reason. Since each respondent stated her tips of work done (79 % in the USA and 76 % in Canada).
in all twelve treatments (i.e. the dataset has a panel The last reason, waiters’ appearance, was much less
structure where one dimension is a person and the pronounced – it was marked by 62 % of Americans
other is a situation), both the between and within and 56 % of Canadians. Food quality was marked by
information can be utilized, and the impact of service 79 % of Americans and 70 % of Canadians. There were
quality can be estimated directly with the random some differences between regular and non‑regular
effects estimator, a panel econometric technique that customers too. Waiters’ appearance was less important
controls for unobserved heterogeneity. for regular customers than for non-regular ones in
both the countries. The amount of work done was less
Methods Used to Analyze important for regular customers than for non‑regular
Individual Tipping Strategies ones in the USA but not in Canada. In this study,
Both the previous literature and the results of respondents were asked the same question as in
the tests presented above suggest that there might Bodvarsson and Gibson (1999). One more quality
be differences between the tipping strategies of the factor (waiters’ politeness) and one more factor
individual respondents. One way to assess these beyond waiters’ control (restaurant appearance and
differences is policy capturing. In this method, one cleanliness) was added too.
regression is run for each respondent. The internal When we know what factors the customers
consistency of a respondent’s strategy (her “policy appreciate, it is interesting to know why they reward
function”) can be assessed by the individual them with higher tips when they are not obliged to
regression’s – the higher it is the more consistent do so. Azar (2010b) asked his respondent to mark any
the strategy is. Rogelberg et al. (1999) used policy number of the following reasons for why they tip more
capturing to assess individual differences in for better service (if they do): 1) to show their gratitude
tipping behavior and found that individual tipping for the service, 2) because they believe it is fair to tip
strategies are fairly consistent – the median was more for better service than for worse, 3) because social
around 80 %. All tipping strategies were linear. Most norms dictate tipping more for better service, or 4) to
customers reacted to two to four factors, usually bill teach waiters to perform well. The two most important
reasons were showing gratitude and fairness: 81 % of
278 Michal Kvasnička

Americans and 55 % of Israelis indicated they tip more waiters may retaliate now or later (both p‑values are
for better service to show gratitude, 74 % of Americans 0.08). Positive reasons (reasons 1 – 3) predominate in
and 61 % of Israelis indicated they tip more for better the Czech Republic: the ratio of positive to negative
service because it is fair. The other two reasons are reasons here is 3. Interestingly, women and regular
much less important in both countries. Only 40 % of customers tip more because of positive reasons than
Americans and 36 % of Israelis tip more to teach waiters men and non‑regular customers (both Wilcoxon
to serve well, and 32 % of Americans and 6 % of Israelis and Kruskal‑Wallis tests indicate that the differences
believe that social norms require tipping more for are statistically significant with p‑values 0.002 and
better service. In this study, the respondents were 0.05 respectively for the difference between genders
asked the same question. and 0.007 and 0.037 respectively for the difference
Both these questions are only descriptive. The goal between regular and non‑regular customers).
is to find out what proportion of respondents agrees
with the statement. Differences between genders Determinants of Tip Size
and regular and non‑regular customers are again Factors influencing tip sizes are summarized
assessed with non‑parametric Wilcoxon and in regression Tab. II. The dependent variable is
Kruskal‑Wallis tests. tip size in CZK. All regression models show that
service quality affects tips strongly and statistically
RESULTS significantly: poor service lowers tips by about
10 CZK (i.e. about 5 % of the bill) while very good
In this section, I will summarize the results of this service raises them by about the same amount in
study. I will follow the same structure as described contrast to satisfactory service. Dining with a friend
in Materials and Methods. and repeated visits raise tips too but to a much
smaller degree. Since most respondents stated their
Reasons for Tipping
tips in rounded multiples of ten CZK, parameters
All respondents in our dataset claimed that they, in much smaller than 10 CZK indicate that only some
general, tip when they dine in restaurants (however, respondents in some situations tipped more when
2 out of 197 respondents stated zero tips in all the with a friend or in a restaurant they visit often.
situations given later in the survey). The reasons (Differences among individuals are further explored
why Czech customers tip are summarized in Tab. I. in the next section.)
The two most important reasons for tipping are to In the regression models in Tab. II, three covariates
reward waiters for their service, i.e. gratitude, (85.8 % were controlled for: respondents’ gender, actual
of respondents marked that reason) and to maintain customer frequency, and respondents’ reasons for
the custom, i.e. the social norm (78.7 %). The third tipping. While there is no significant difference
and fourth reasons for tipping (to avoid feeling between genders, regular customers tipped
guilty, 37.6 %, and social pressure, 23.4 %) are much significantly more than non‑regular customers.
less pronounced. Other reasons are marginal. There However, since the parameter is much lower than
are few differences between genders: men fear that 10 CZK, it seems that only some regular customers
waiters may retaliate now or later when not tipped tipped more than non‑regular ones. Respondents
more than women (p‑values of the differences are with more reasons for tipping tipped more than
0.046 and 0.04 respectively) and feel greater social customers with fewer reasons for tipping. Tips are
pressure too (p‑value of the difference is 0.055). most strongly influenced by three reasons: reward
There are some differences between regular and for good service (significant at a confidence level
non‑regular customers as well: regular customers of 5 %), social norms, and fear of future retaliation
pay less attention to social pressure (p‑value of the (both significant at 10 %); there is little evidence
difference is 0.033) and perhaps also fear less that

I: Reasons for tipping.

all women men regular non‑regular
1. social norm 78.7 % 83 % 72.9 % 73.2 % 81.7 %
2. gratitude 85.8 % 88.4 % 82.4 % 91.5 % 82.5 %
3. to supplement low wages 10.7 % 10.7 % 10.6 % 14.1 % 8.7 %
4. to avoid immediate retaliation 6.1 % 2.7 % 10.6 % 1.4 % 8.7 %
5. to avoid future retaliation 11.7 % 7.1 % 17.6 % 5.6 % 15.1 %
6. to avoid social pressure 23.4 % 17.9 % 30.6 % 14.1 % 28.6 %
7. to avoid guilt 37.6 % 40.2 % 34.1 % 38 % 37.3 %
number of reasons 2.54 2.5 2.59 2.38 2.63
average for positive reasons 58.4 % 60.7 % 55.3 % 59.6 % 57.6 %
average for negative reasons 19.7 % 17 % 23.2 % 14.8 % 22.4 %
positive to negative reasons ratio 3 3.6 2.4 4 2.6
 What Motivates Restaurant Customers to Tip: Evidence from the Czech Republic 279

that customers who claim they tip to supplement are much less common: 14.2 % of respondents tip
waiters’ low wages do actually tip more than others. the same for satisfactory and very good service but
Interestingly, Model (3) shows it is only infrequent less for poor service, 8.1 % of customers tip the same
customers who claim they tip more in often visited for poor and satisfactory service but more for very
restaurants (sum of coefficients of repeated visits good service, and only 3.5 % of customers (including
and of interaction between repeated visits and two respondents who never tip) tip the same for
regular patrons is insignificantly different from zero each service quality. The most common full strategy
with p‑value 0.5). (adopted by 52.8 % of respondents) is to tip the same
when alone as when with a friend, the same with
Individual Tipping Strategies no regard to patronage frequency, less for poor
The policy capturing provided 197 individual service, and more for very good service. The strategy
regressions with minimum equal to 45.7 and suggested by overall data (Tab. II), i.e. tipping more
median equal to 96.2. The inspection of individual with a friend, more in a revisited restaurant, less for
tipping strategies shows that most respondents poor service, and more for very good service, was
(79.7 %) tip the same when in a restaurant they visit adopted only by 3.6 % of respondents.
often as in restaurants they never revisit. Far fewer What Good Service Is and Why Customers Tip
respondents (15.2 %) tip more when in a restaurant More For It
they visit often. Surprisingly, 7.1 % of respondents tip What constitutes good service is summarized in
less when in restaurants they visit often. Similarly, Tab. III. Most respondents are willing to reward
most respondents (82.7 %) tip the same when they waiters’ attentiveness, politeness, friendliness,
dine with a friend as when alone. Many fewer and promptness. The other two reasons (the
respondents (15.7 %) tip more when with a friend amount of work done and waiters’ appearance)
and still fewer respondents (3.6 %) tip less when are considered by fewer respondents. There are
with a friend. The picture is different with service almost no differences between genders or regular
quality. Respondents use only four strategies to and non‑regular customers. The only significant
respond to service quality. The most often used difference lies in how customers respond to
strategy is to tip less for poor service and more for waiters’ appearance. While 40 % of men consider
very good service compared to satisfactory (74.1 % it when deciding how much to tip, only 14.3 % of
of respondents follow this strategy). Other strategies women do so (p‑value of the difference is well

II: Regression analysis of determinants of tips. The dependent variable is tips in CZK. Coefficients are estimated by random effect estimator.
Robust standard deviations are reported in parentheses.
(1) (2) (3)
gender = male 0.26 (0.88) 0.46 (0.86) 0.46 (0.86)
regular customer 2.16** (0.96) 2.01** (0.98) 2.09** (1.01)
*** ***
with friend 1.43 (0.26) 1.43 (0.26) 1.21*** (0.30)
*** ***
repeated visits 0.98 (0.28) 0.98 (0.28) 1.37*** (0.37)
quality = poor −10.38*** (0.39) −10.38*** (0.39) −9.98*** (0.51)
*** ***
quality = very good 10.57 (0.53) 10.57 (0.53) 10.01*** (0.60)
***
number of reasons to tip 1.29 (0.39)
reason to tip: social norm 1.81* (1.09) 1.81* (1.09)
reason to tip: gratitude 2.19** (1.11) 2.19** (1.11)
reason to tip: low wage 1.14 (1.16) 1.14 (1.16)
reason to tip: immediate retaliation 0.60 (1.72) 0.60 (1.72)
reason to tip: future retaliation 2.58* (1.38) 2.58* (1.38)
reason to tip: social pressure 0.003 (1.09) 0.003 (1.09)
reason to tip: guilt 1.33 (0.92) 1.33 (0.92)
regul. cust. * repeated visits −1.08** (0.55)
regul. cust. * with friend 0.62 (0.59)
regul. cust. * quality = poor −1.12 (0.79)
regul. cust. * quality = very good 1.56 (1.16)
*** ***
(intercept) 8.72 (1.37) 7.72 (1.57) 7.69*** (1.59)
Observations 2,364 2,364 2,364
R2 0.65 0.65 0.66
Adjusted R2 0.65 0.65 0.65
* p < 0.1; ** p < 0.05; *** p < 0.01
280 Michal Kvasnička

below 0.001). Many respondents take into account Czech Republic. The major difference between
also food quality and the restaurant’s appearance Czech and US, Canadian, and Israeli customers lies
and cleanliness, two factors that are beyond the in tipping to supplement waiters’ incomes. While
waiters’ control. This might suggest that many Czech more than two thirds of US customers, four fifth of
customers (especially regular ones) do not tip to Canadians, and third of Israelis tip for this reason,
reward the waiters’ performance only but to reward only 10.7 % of Czech restaurant customers do. This
the whole dining experience. difference may be caused by the fact that Czech
The reasons why restaurant customers reward waiters’ incomes consist mostly of payroll, not tips,
waiters with higher tips when the service is better are and that Czech customers know this.
summarized in Tab. IV. All respondents indicated at The findings about determinants of the tip
least one reason to tip more for better service. Most sizes partially confirm the previous findings by
Czech respondents stated they tip more for better Bodvarsson and Gibson (1999) and Azar (2010b).
service because it is fair and to show their gratitude. The strong influence of service quality is confirmed.
Social norms apparently do not prescribe tipping The effect of group size is unclear: Bodvarsson
more for better service in the Czech Republic. and Gibson (1999) found that customers dining in
Surprisingly, 61.4 % of Czech respondents stated groups tip a smaller percentage than lone customers.
they tip more for better services to teach waiters that Azar (2010b) found no effect. Respondents in this
their tips depend on service quality. study tipped on average a higher percentage when
dining in groups than alone. However, the effect may
be caused by a minority of respondents only. Azar’s
DISCUSSION claim that visiting frequency does not influence
In this section, I will compare the present tip size (found also by Kahneman, Knetsch, and
results with the results of the three studies I built Thaler (1986)) is also confirmed. Regular customers
methodologically on and will discuss some practical in this study tip the same with no regard to visiting
implications of the findings. I will also note the frequency. Non‑regular customers claim they would
limitations of the present study. tip more in restaurants they visit often than in
Let us start with the reasons for tipping. restaurants they do not revisit; however, their claim
The results partially confirm what is known from is purely speculative. Azar’s claim that people with
previous studies. As with the US, Israeli, and more reasons for tipping tip more is also confirmed
Canadian customers, Czech customers tip mostly for but the individual reasons are slightly different
two positive reasons (gratitude and social norms). It here. The only reasons for tipping statistically
seems that most Czech customers have internalized significant on a confidence level of 10 % are social
the social norm and follow it from belief rather norms and gratitude in the USA and gratitude and
than because of social pressure (78.7 % of the Czech supplementing waiters’ wages in Israel. Social
customers tip because of the social norm, yet only norms and gratitude are statistically significant in
23.4 % tip because of social pressure). Feeling guilty the Czech Republic as well. However, the low‑wage
when not tipping is also a strong motivation in the reason has very little support here. Instead, Czech

III: What constitutes good service.

all women men regular non‑regular
1. waiters’ attentiveness 94.9 % 95.5 % 94.1 % 95.8 % 94.4 %
2. waiters’ friendliness 84.8 % 81.2 % 89.4 % 87.3 % 83.3 %
3. waiters’ politeness 86.8 % 84.8 % 89.4 % 87.3 % 86.5 %
4. waiters’ promptness 80.2 % 77.7 % 83.5 % 80.3 % 80.2 %
5. waiters’ appearance 25.4 % 14.3 % 40 % 22.5 % 27 %
6. amount of work done 42.6 % 38.4 % 48.2 % 43.7 % 42.1 %
7. food quality 70.1 % 70.5 % 69.4 % 73.2 % 68.3 %
8. restaurant appearance 48.7 % 49.1 % 48.2 % 53.5 % 46 %
number of reasons 5.3 5.1 5.6 5.4 5.3

IV: Why customers tip more for better service.

all women men regular non‑regular
1. it is fair 89.8 % 91.1 % 88.2 % 90.1 % 89.7 %
2. to teach waiters 61.4 % 62.5 % 60 % 54.9 % 65.1 %
3. to show gratitude 70.6 % 70.5 % 70.6 % 73.2 % 69 %
4. because of social norms 23.9 % 24.1 % 23.5 % 22.5 % 24.6 %
number of reasons 2.5 2.5 2.4 2.4 2.5
 What Motivates Restaurant Customers to Tip: Evidence from the Czech Republic 281

customers who fear a waiter might retaliate in future on service quality provided. While only 40 % of
tip significantly more than other customers. Americans and 36 % of Israelis marked this reason, it
Contrary to results of Rogelberg et al. (1999) and was marked by 61.4 % of Czech respondents.
in accordance with both Bodvarsson and Gibson Overall, these findings support the notion that
(1999) and Azar (2010b), virtually all respondents interpersonal relationship and social norms might
in the present study consider service quality when strongly influence human behavior even in the
tipping, though some of them (22.3 %) react to it in economic context. They might suggest that practice
a non‑linear way and either only punish poor service of giving gratuities could partially substitute for the
or only reward very good service. The reaction to need for management oversight because customers
group size and visiting frequency is less clear. Most determine the amount tipped by the quality of the
customers (68 %) seem to consider neither group service provided. However, it is not certain whether
size, nor visiting frequency when tipping. Of course, the difference in tips for excellent and poor service
this may be an artifact of the rounding to multiples is sufficient to eliminate the need for managerial
of 10 CZK. If this was the case then most customers’ supervision altogether because tips are rather small
premium for dining in groups or in often revisited
in the Czech Republic and must be supplemented
restaurants would be very small. Moreover, it would
with wages. Moreover, some customers may tip even
be uncertain whether the premium is positive or
when the service is poor to keep the social norm
negative since some customers raise their tips while
and to avoid waiters’ retaliation. This study does not
others lower them when in groups or in often visited
address this question directly and thus it remains to
restaurants. Overall, there is little evidence that
most customers tip differently when in groups or in be answered by a following study.
revisited restaurants in the present data. Finally, the limitations of the present study should
The definition of good service is very similar to be noted. The limitations are the same as in the
what Bodvarsson and Gibson (1999) found in the papers on which this study is methodologically
USA and Canada. The only difference is that Czech based. The first limitation is that all respondents
customers (at least Czech women) considered the were young university students living in the same
amount of work done and waiters’ appearance city. Thus the results may not be easily generalizable
much less than their US and Canadian counterparts. for other social groups in the Czech Republic.
The reasons why Czech customers reward waiters The second limitation is that all data were obtained
with higher tips when the service is better are very by a survey. Therefore, the results show how
similar to what Azar (2010b) found in the USA respondents want to act, but it is possible that
and Israel. The most striking difference between they will behave differently in the real situation.
the Czech Republic and the USA and Israel lies Therefore, further research is needed to obtain the
in tipping to teach waiters that their tips depend definitive conclusions.

CONCLUSION
The present study explores what motivates Czech restaurant customers to tip: why they tip and how
their tips depend on service quality, patronage frequency, and group size. It supports the major
results of previous studies by Bodvarsson and Gibson (1999) and Azar (2010b), and partially also the
results of Rogelberg et al. (1999). However, there are many minor differences in tipping motivation and
behavior between Czech and American, Canadian, and Israeli customers. Czech restaurant customers
tip mostly for positive reasons: to show their gratitude for service and to follow social norms which
most of them follow from belief and not because of social pressure. However, one negative reason
for tipping is strongly felt by Czech customers too: they tip to avoid feeling guilty when not tipping.
Unlike American and Israeli consumers, only a few Czechs tip to supplement waiters’ low wages.
Czech customers with more motives for tipping tip more. Especially customers who tip to keep
social norms and to show their gratitude tip more than others. Unlike Americans and Israelis, Czech
customers who fear that waiters might retaliate in the future if not tipped tip more too. On the other
hand, there is little evidence that the customers who claim that they tip to supplement waiters’ low
wages do actually tip more than others.
There is strong evidence that Czech customers tip more for better service. Panel regression on the
aggregate data shows that in general customers reduce their tips by 5 % if the service is poor and raise
their tips by 5 % if the service is very good. This holds true on an individual level too. Simplified policy
capturing shows that the vast majority of customers consider service quality when tipping. Some
customers only punish poor service but tip the same for satisfactory and very good service; others
only reward very good service but tip the same for that which is poor or satisfactory. However, most
customers tip least for poor service, more for satisfactory service, and most for very good service.
Most Czech customers tip more for better service because it is fair and to show their gratitude,
and not because it is required by social norms. Unlike Americans and Israelis, almost two thirds of
Czech customers tip more for better service to motivate waiters to provide good service in the future.
282 Michal Kvasnička

The notion of service quality is similar in the Czech Republic to that in the USA and Canada. Waiters’
friendliness, promptness, and attentiveness are the most important characteristics of service quality.
However, the amount of work done and waiters’ appearance is much less important in the Czech
Republic than in the USA and Canada. As elsewhere, Czech customers also tip to reward factors that
are beyond the control of waiters such as food quality and restaurant appearance and cleanliness,
which suggests that tips are a reward for the whole dining experience and not only for the service
provided by waiters.
The impact of group size on tips is uncertain. Panel regression on aggregate data shows that customers,
on average, tip more when with a friend than alone. However, most customers individually tip the
same regardless whether they are alone or with a friend. Only a minority of customers tip more with
a friend while other minority does the opposite. The aggregate effect seen in the panel regression
seems to be caused by the fact that the first minority is slightly more represented in the data than the
latter. The visiting frequency probably has no effect on tipping since it is mostly respondents who visit
no restaurants frequently who claim they tip more in restaurants they visit often.

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Contact information
Michal Kvasnička: michal.kvasnicka@econ.muni.cz
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