Darden Restaurants Might Nix Automatic Tips

Staff Writer
Now, tipping for large parties at restaurants like Olive Garden and Red Lobster might be optional

Photo Sasabune Omakase Modified: Flickr/erin/CC 4.0

Olive Garden, Red Lobster, and other Darden restaurants might get rid of automatic tips for large parties.

Just as high-end sushi restaurant Sushi Yasuda bans tipping altogether, Darden Restaurants has announced that it's considering dropping automatic tips at their chain restaurants, the Orlando Sentinel reports.

Darden, which owns chains like Olive Garden, Red Lobster, and LongHorn Steakhouse, has historically tacked on an automatic 18 percent tip for parties of eight or more. The practice of adding automatic gratuity is common in the restaurant industry.

Earlier this year, however, a customer sued restaurants like Olive Garden and Red Lobster for adding on automatic tips, even for smaller tables, in New York City, potentially because tourists tend to tip less than locals.

Unfortunately for these large corporations, an IRS ruling which goes into effect this January will regard automatic tips as part of wages, which could lead to higher payroll taxes for restaurants, the Sentinel reports.

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Darden is currently testing out a new policy where automatic tips aren't included in the bill, but the bill will provide exact amounts for 15-, 18-, and 20-percent tips, helping customers out with the math. For now, Darden has dropped the 18-percent tip at some 100 restaurants; the restaurant company will decide on a final policy for automatic tipping at the end of the year.