A new study from the CHR has found that tip percentages provide an indication of subsequent restaurant sales.

Lynn and Ukhov analyzed seven years of monthly charge-card sales and tip data for a multi-regional restaurant chain in the United States. "We found that tip percentages in one month accurately predicted food sales levels in the following month," said Lynn.

"Our data do not say why this is true, but we think that tips can be an indicator of how well consumers are doing and how optimistic they are regarding their future prospects. Since tips are entirely voluntary, it stands to reason that tips would go up when people are doing well, and that would be reflected in future visits to the restaurant."

Ukhov and Lynn conclude that tip percentages can be used as a management device in restaurants to help managers set sales forecasts.

The study "Tips Predict Restaurant Sales," by Michael Lynn and Andrey D. Ukhov, is available at no charge from the CHR. Lynn is the Burton M. Sack '61 Professor in Food and Beverage Management at the Cornell School of Hotel Administration, where Ukhov is an assistant professor.

About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 74 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices.