Degree

Honors Baccalaureate

Department

Economics and Finance

Document Type

Thesis

Abstract

This study examines the impact of voluntary tipping compared to mandatory service charges on consumer satisfaction. An analysis was conducted which contained data from restaurants based in the coastal region of southern California. The dataset utilizes a citizen-curated list compiled of restaurants that impose mandatory service charges alongside a list of restaurants. This second list is compiled of restaurants that offer comparable cuisine and pricing but contrasting tipping practices. Restaurants that impose mandatory service charges of 15% or 20% were compared to restaurants that use traditional voluntary tipping. This study uses Yelp star reviews to measure consumer satisfaction. The study employed descriptive statistics, t-tests, and a multiple linear regression, to explain that mandatory service charges are associated with lower consumer satisfaction. Additional effects from other amenities were also recognized. Limitations, including potential selection bias and regional focus, are addressed and directions for future research are proposed. The study provides recommendations for restaurant owners who contemplating the implementation of varying tipping practices.

Date

Spring 2026

First Committee Chair

Cary Heath

Second Committee Chair

Gary Wagner

Third Committee Chair

Kaitlin Simpson

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