Controversy Erupts! Is the Increasing Interest in the Restaurant "Tipping System" Really a Bad Thing?

Table of Contents

1. Introduction ― Why Tipping Didn't Take Root in Japan

2. Three Factors Expanding the Introduction of Tips
    2-1 Surge in Inbound Tourism and Yen Depreciation Effect
    2-2 Severe Labor Shortage and Low Wage Structure
    2-3 Spread of Cashless Payments and Mobile Ordering

3. Field Report: The Light and Shadow of Stores Implementing Tips

4. Critics' Arguments ― Culture, Price, and Taxation

5. Proponents' Arguments ― Motivation and Customer Experience

6. Comparison with Overseas Models and Insights

7. Will Legal and Tax Systems Catch Up?

8. Future Scenarios and Recommendations

9. Conclusion

1. Introduction ― Why Tipping Didn't Take Root in Japan

In Japan, the business practice of including service charges in prices and offering "hospitality" as a value beyond fees is well-established. Travel guides often state "no tipping required" as a common phrase. This model ensures "uniform service provision" while eliminating the need for "customers to supplement employee wages."SoraNews24 -Japan News-

2. Three Factors Expanding the Introduction of Tips

2-1 Surge in Inbound Tourism and Yen Depreciation Effect

According to the Japan Tourism Agency, the number of visitors to Japan in 2024 is expected to recover to 108% of pre-COVID levels, with the weak yen making dining costs appear cheaper. There are more instances of foreign customers leaving "thank you cash" as per customs in the U.S. and other countries, leading to the installation of tip boxes as a receptacle.SoraNews24 -Japan News-

2-2 Severe Labor Shortage and Low Wage Structure

The effective job openings-to-applicants ratio in the food and beverage industry is expected to be 5.18 times in April 2025 (Ministry of Health, Labour and Welfare). Smaller businesses, which find it difficult to raise labor costs, are exploring systems that allow "tips to be returned to employees." The tipping function of Dainy has responded to these challenges with "direct charging."TV Asahi NEWS

2-3 Spread of Cashless Payments and Mobile Ordering

The penetration rate of mobile payments has surpassed 60% in urban areas, and it is technically easy to offer options such as "10%", "15%", and "20%" in app UIs. This reduces the psychological barrier of "tipping is a hassle."TV Asahi NEWSPress Release Distribution No.1｜PR TIMES

3. Field Report: The Light and Shadow of Stores Implementing Tips

A hamburger shop in Tokyo collected about 30,000 yen in tips within a month of implementation, which is planned to be used for employee benefits.TV Asahi NEWSHowever, the store has not announced the tipping function, fearing a "division between customers who pay and those who don't." On the other hand, Gyukatsu Motomura explains that their Tip Box was introduced because it is "a system that can legally manage income."SoraNews24 -Japan News-

4. Critics' Arguments ― Culture, Price, and Taxation

• Cultural Discomfort: It clashes with the value of "good service is expected," risking the "monetization" of customer experience.

• Price Pass-Through Risk: If base wages are lowered by incorporating tips, menu prices may ultimately rise.SoraNews24 -Japan News-

• Complex Taxation: If received directly by individuals, it is considered miscellaneous income (requiring declaration if over 200,000 yen annually); if through the store, it must be recorded as sales with withholding tax, making it complicated.Mochizuki Accounting Office

5. Proponents' Arguments ― Motivation and Customer Experience

• Wage Supplementation: Some stores estimate that tips have raised the average hourly wage by 3-4%.TV Asahi NEWS

• Visibility of Staff Evaluation: New features allowing individual tipping, like "support cheers," have increased employee satisfaction.TV Asahi NEWS

• Reducing Stress for Foreign Customers: Resolves the situation of "wanting to pay but unable to," potentially spreading through word of mouth.

6. Comparison with Overseas Models and Insights

• United States: Wage dependency on tips. Service disparity and wage instability have become social issues.

• Europe: Service charges included with optional additions. A compromise for price transparency and employee protection.

• South Korea: Basically follows the Japanese model, but tipping culture is growing in certain upscale establishments.
  
  Japan might adopt a "service charge disclosure + optional tip" hybrid model.

7. Will Legal and Tax Systems Catch Up?

According to the National Tax Agency FAQ, tips are considered "expenditures separate from compensation" and are not subject to consumption tax as taxable purchases. Income classification is either miscellaneous income or business income. Designing systems that retain tax evidence through POS integration is essential.Mochizuki Accounting Office

8. Future Scenarios and Recommendations

1. Establishment of Industry Guidelines: Clearly define service charges, tips, and donations

2. Simplification of Tax Processing: API integration between payment platforms and the National Tax Agency

3. Employee Protection Measures: Store models that allocate a certain percentage of tips to employee benefits

4. Prevention of Dual Price Display: Establish rules for menu displays indicating "no tip required, but welcome"
   
   
   

9. Conclusion

The tipping system is neither an "evil" nor a "complete good." The decision to implement it depends on

• Customer Experience (freedom to pay)

• Improvement of Employee Treatment

• Harmony of Price and Culture
  
  how these are designed. Legal development and industry self-regulation should work in tandem to create a system where "those who want to pay can do so comfortably, and those who don't aren't made to feel guilty," which could be seen as an update to Japanese hospitality.

List of Reference Articles

• Increase in Restaurant Sales with the Introduction of Tipping System: Results from Startup "Dainy"

• Great Debate over the Introduction of "Tipping System" in Gyukatsu Chain: Is Japan's "Omotenashi Culture" Crumbling?

• The "Tipping Culture" of Foreign Visitors to Japan is Stirring the Restaurant Industry: The Debate over the Introduction of "Tip Box"

• Are Tips Taxable? The National Tax Agency's View and Processing Methods