Applebee's Kiosk Suggests Tip Based on After-Tax Total

A customer challenged the suggested gratuity on an Applebee's bill after calculating that the recommended amount exceeded the standard 20 percent tip of the pre-tax subtotal. The discrepancy, which appeared on a payment kiosk, prompted a viral TikTok video detailing the math behind the charge. The incident has drawn attention to how restaurants configure their point-of-sale systems to calculate suggested tips.

The customer’s total before tax and tip stood at $49.49. A standard 20 percent gratuity on that amount would equal $9.90. However, the kiosk suggested a tip of $11.30. The difference of $1.40 resulted from the system calculating the tip on the after-tax total of $56.50. The payment screen indicated that the gratuity was calculated after tax and before any discounts were applied.

Robert Mahon, managing partner of Mahon Hospitality Group in New York City, noted that restaurants generally control these settings. He explained that while payment systems like Toast default to calculating tips before tax, operators can change this in the back office. "It varies from restaurant to restaurant," Mahon said. "The systems come with default settings, but the restaurant can usually change them."

Mahon argued that gratuity should reflect the cost of food, drinks, and service rather than government taxes. "You're tipping for the food, drinks and service, adding tax into that calculation doesn't really make sense to me," he said. "Guests can always leave more if they want." He emphasized that transparency is essential when presenting suggested percentages to diners.

The restaurant chain and the customer have not yet responded to requests for comment. A similar issue was previously reported at Dave & Buster's, where diners questioned tips calculated on after-tax totals. While the Applebee's kiosk disclosed its calculation method, Mahon advised customers to verify the base amount before confirming a payment.

"The main thing is being clear. If someone hits 20%, they should know what they're leaving 20% on," Mahon said. "I'd want to see the full receipt before putting it all down to tax."