Auto-tipping is creeping into Aussie dining—fair reward or sneaky fee?
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A new dining trend has left Australians questioning whether eating out is slowly losing its charm.
Diners in Sydney have discovered an unexpected fee on their restaurant bills that some say feels less like a choice and more like a trap.
While businesses defend the move as transparent and fair, frustrated customers argue it could mark the beginning of an unwelcome shift in the nation’s dining culture.
At the centre of the debate was Island Radio, a Southeast Asian restaurant and noodle bar in Redfern’s new $50 million dining precinct, which automatically added a 3 per cent gratuity to bills.
The restaurant explained the charge could be removed at any time upon request, and that for groups of eight or more it was replaced with a 10 per cent service fee.
This came on top of a 10 per cent Sunday surcharge and a 15 per cent public holiday surcharge.
The fee was listed on the restaurant’s website, menus, and printed at the bottom of receipts in small font between the subtotal and total lines.
One Sydney local who dined with 10 friends said the party failed to notice the added cost until after paying a bill totalling $1406.02.
The breakdown revealed a subtotal of $1278.20, with a 10 per cent gratuity of $127.82 and a Sunday surcharge of $106.70.
‘I’ve no issue at all with leaving a tip when receiving great service,’ the diner said.
‘The problem is that it leaves you with little to no choice in the matter.
‘If you do see the sign, or spot it on the receipt—it is hard to see as it is printed in a small font between the “subtotal” and the “total”—you have to actively seek for it to be removed.
‘For a lot of consumers, especially in the current climate, that leaves you in an uncomfortable and vulnerable position.’
Australian Restaurant & Cafe Association CEO Wes Lambert confirmed the practice was legal, explaining that the ACCC only required businesses to make surcharges clear before customers ordered.
‘Every business has a different revenue and cost structure, certainly when you go to hire a solicitor and the fee is $600-an-hour plus expenses, those expenses are variable but they let you know it exists,’ he said.
‘It’s just like this and becoming more commonplace.
‘So in practice, that is how it is supposed to work, but often times consumers might not read the fine print, and can certainly be surprised when it is added to the bill.’
Island Radio, owned by House Made Hospitality—the group behind Tilda, Grana, and Etheus in Bondi’s Promenade—stood by its system.
‘The optional 3 per cent gratuity at Island Radio, communicated at multiple stages during the booking process (on our website, in the booking widget, in the confirmation email), written on the menus, and verbalised again when the bill is presented, is designed to reward our team for their dedication and hard work,’ a spokesperson said.
‘It also serves to incentivise exceptional service and support increased tenure within our industry—at a time when experience is hard to find, and living costs are increasing.
‘This surcharge is not mandatory and can be removed at any point, no questions asked nor judgement given, should a guest request it.’
The group added that gratuities were processed through third-party software to ensure every dollar went directly to the team on shift, including kitchen staff.
Other House Made venues also applied similar fees, with Tilda charging 7 per cent, Etheus 5 per cent, and others following Island Radio’s 3 per cent model.
The move sparked backlash online, with Australians voicing fears that auto-tipping could become the norm.
‘Please don’t let opt-out tipping become a thing,’ one wrote on social media.
‘Let’s keep this kind of sneaky “gratuity” out. Our servers are paid fairly and companies should be held accountable for keeping their wages fair, not the customers,’ another said.
Zeller, a financial services firm, reported Australians were tipping more than ever, with the average tip climbing to $25.20 in 2024—up 25 per cent year on year.
The report credited the rise to electronic payment systems that made it easier for diners to leave tips.
Mr Lambert said the unease came not from tipping itself, but from its presentation.
He noted Australians traditionally preferred to decide for themselves whether service deserved a tip at the end of their meal.
One diner admitted that while the added charge was awkward to challenge, the food at Island Radio was ‘phenomenal’.
If you thought Island Radio’s auto-tipping sparked debate, it’s not the only venue facing scrutiny for how it handles gratuities.
Another restaurant recently came under fire after diners questioned whether they should have to justify asking for a charge to be removed.
The pushback shows just how divided opinions remain over where service fees cross the line.
Read more: ‘Do I need a reason?’: One restaurant's policy draws flak among Aussie food enthusiasts
If tipping in Australia shifts from choice to expectation, will dining out lose the sense of reward that once defined it?
Diners in Sydney have discovered an unexpected fee on their restaurant bills that some say feels less like a choice and more like a trap.
While businesses defend the move as transparent and fair, frustrated customers argue it could mark the beginning of an unwelcome shift in the nation’s dining culture.
At the centre of the debate was Island Radio, a Southeast Asian restaurant and noodle bar in Redfern’s new $50 million dining precinct, which automatically added a 3 per cent gratuity to bills.
The restaurant explained the charge could be removed at any time upon request, and that for groups of eight or more it was replaced with a 10 per cent service fee.
This came on top of a 10 per cent Sunday surcharge and a 15 per cent public holiday surcharge.
Redfern restaurant sparks debate with auto-tip fee. Image source: Reddit/Instagram/IslandRadio
The fee was listed on the restaurant’s website, menus, and printed at the bottom of receipts in small font between the subtotal and total lines.
One Sydney local who dined with 10 friends said the party failed to notice the added cost until after paying a bill totalling $1406.02.
The breakdown revealed a subtotal of $1278.20, with a 10 per cent gratuity of $127.82 and a Sunday surcharge of $106.70.
‘I’ve no issue at all with leaving a tip when receiving great service,’ the diner said.
‘The problem is that it leaves you with little to no choice in the matter.
‘If you do see the sign, or spot it on the receipt—it is hard to see as it is printed in a small font between the “subtotal” and the “total”—you have to actively seek for it to be removed.
‘For a lot of consumers, especially in the current climate, that leaves you in an uncomfortable and vulnerable position.’
Australian Restaurant & Cafe Association CEO Wes Lambert confirmed the practice was legal, explaining that the ACCC only required businesses to make surcharges clear before customers ordered.
‘Every business has a different revenue and cost structure, certainly when you go to hire a solicitor and the fee is $600-an-hour plus expenses, those expenses are variable but they let you know it exists,’ he said.
‘It’s just like this and becoming more commonplace.
‘So in practice, that is how it is supposed to work, but often times consumers might not read the fine print, and can certainly be surprised when it is added to the bill.’
Island Radio, owned by House Made Hospitality—the group behind Tilda, Grana, and Etheus in Bondi’s Promenade—stood by its system.
‘The optional 3 per cent gratuity at Island Radio, communicated at multiple stages during the booking process (on our website, in the booking widget, in the confirmation email), written on the menus, and verbalised again when the bill is presented, is designed to reward our team for their dedication and hard work,’ a spokesperson said.
‘It also serves to incentivise exceptional service and support increased tenure within our industry—at a time when experience is hard to find, and living costs are increasing.
‘This surcharge is not mandatory and can be removed at any point, no questions asked nor judgement given, should a guest request it.’
The group added that gratuities were processed through third-party software to ensure every dollar went directly to the team on shift, including kitchen staff.
Other House Made venues also applied similar fees, with Tilda charging 7 per cent, Etheus 5 per cent, and others following Island Radio’s 3 per cent model.
The move sparked backlash online, with Australians voicing fears that auto-tipping could become the norm.
‘Please don’t let opt-out tipping become a thing,’ one wrote on social media.
‘Let’s keep this kind of sneaky “gratuity” out. Our servers are paid fairly and companies should be held accountable for keeping their wages fair, not the customers,’ another said.
Zeller, a financial services firm, reported Australians were tipping more than ever, with the average tip climbing to $25.20 in 2024—up 25 per cent year on year.
The report credited the rise to electronic payment systems that made it easier for diners to leave tips.
Mr Lambert said the unease came not from tipping itself, but from its presentation.
He noted Australians traditionally preferred to decide for themselves whether service deserved a tip at the end of their meal.
One diner admitted that while the added charge was awkward to challenge, the food at Island Radio was ‘phenomenal’.
If you thought Island Radio’s auto-tipping sparked debate, it’s not the only venue facing scrutiny for how it handles gratuities.
Another restaurant recently came under fire after diners questioned whether they should have to justify asking for a charge to be removed.
The pushback shows just how divided opinions remain over where service fees cross the line.
Read more: ‘Do I need a reason?’: One restaurant's policy draws flak among Aussie food enthusiasts
If tipping in Australia shifts from choice to expectation, will dining out lose the sense of reward that once defined it?
