Photo: Canva
August 4, 2023
Are Too Many Places Prompting for Tips?
Customers’ patience is being tested as tipping has expanded well beyond full-service dining and bars to quick-service restaurants, retailers, grocers, and even airport self-checkouts.
One reason tipping requests have become more pervasive is touchscreen tablets, which businesses are increasingly using as point of sale (POS) systems. Setting up a tipping prompt digitally is easy and more effective than the traditional tip jar that can be ignored.
A second reason is that the pandemic led many consumers to be more open to tipping service workers who were putting themselves at risk. While the pandemic is no longer a health emergency, many establishments continue to use tipping as a retention tool in a tight labor market. Many businesses are also reluctant to raise prices to offset higher input costs and see encouraging tipping as a better lever because it’s optional for customers.
Zachary Cheaney, owner of Main Squeeze Juice Co. in Mandeville, Louisiana, told The Wall Street Journal, “If customers completely stopped tipping, we would be forced to pay employees more, and it would be hard on us as business operators in this crazy environment of rising costs.”
The WSJ also noted that workers in all industries like tips, and knowing the customer will see the gratuity screen motivates them to work harder.
Social media is full of consumers outraged by abnormal tipping practices, with many believing the surge in tipping requests is passing the responsibility of providing fair worker wages from employers to customers.
According to a survey from Bankrate taken in May, 41% of U.S. adults believe employers should pay their staff more rather than have them depend on tips, while 16% said they would pay more for their orders if businesses got rid of tips altogether.
Businesses that don’t traditionally expect tips may also be more susceptible to losing customers who feel coerced by tipping requests. “If your users are not happy, it’s going to come back and bite you,” Tony Hu, a director at the Massachusetts Institute of Technology who teaches courses on product design, told The New York Times. “Ideally they should be tipping for an excellent experience.”
Discussion Questions
DISCUSSION QUESTIONS: Have tip requests from nontraditional venues, including retailers and grocers, gone too far, or has it become an acceptable norm? Do you see the benefits to businesses and workers outweighing the risks?
Poll
Loading …BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Neil Saunders
Managing Director, GlobalData
Paula Rosenblum
Co-founder, RSR Research
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Tipping is discretionary. Most people are decent and happy to tip for good service as a recognition of the skill and hard work of those serving or helping them. However, there are limits and asking people to tip for anything and everything is simply annoying. It can also be counterproductive if it puts customers off and makes them more miserly. Of course, employers should be paying employees enough so that they are not reliant on tips to make a living – but that’s a whole other debate!
Neil, spot on with your comments. We must be un-twins not separated at birth…
Haha! You never know!
Tips should be for full service. Employers should fund transactional POS positions, rather than offloading costs on customers. There is also no need to create an awkward experience for a consumer making transactional purchases. I would prefer to see companies ensure full service jobs receive tips, via technology, that allows consumers to tip without cash, instead of prompting every POS transaction with a tip screen.
I disagree. Full service is what the job should be. Tipping should be beyond full service.
Tipping has become a crutch for retailers and employees. I wouldn’t say I like being hit up for a tip on every tablet POS system for mundane transactions that don’t require employees to provide personal assistance. I don’t particularly appreciate feeling cheap when swiping through screens looking for the no-tip option. It may be my cynical nature, but I’m not confident that leaving a tip on a POS system gets to the employees. I may be naive, but when I do tip, even if I pay by credit card, I’ll typically leave a tip in cash, hoping that the wait staff or person helping me has a better chance of getting it.
Gary, I am with you all the way!
Gary, Gene I whole heartedly agree, When I tip I always use cash.
Tipping mania has passed the tipping point. The concept of tipping has been twisted beyond recognition, and it’s too easy to blame POS systems for this unfortunate practice. Customer-facing POS should enhance the checkout experience, not ruin it. Tipping is part of the brand experience. We need a hashtag meme to create a widespread backlash to stop the greedy practice of default tipping.
Service-based businesses also need to pay a living wage, like in Europe. Sadly, the American system of tipping service personnel is a relic of the Jim Crow era where businesses didn’t want to pay women and minorities a full wage. It’s a system of making customers subsidize businesses so they can underpay their workers and pocket the difference. Let’s at least get this tipping craze back to the baseline where only restaurants and coffee shops allow tipping.
U.S. customers expect to tip servers and local baristas. Anywhere else is unexpected and could potentially create an awkward experience.
Retailers, grocers, and other non-restaurant businesses should tread carefully before toggling on the tipping function on their POS.
If tipping is what is keeping your retail business afloat, that bubble is going to burst sooner or later. Paying competitive wages needs to be built into your budget.
There’s a new off shoot to the abundance of tipping opportunities. Charity donations. I now have the opportunity, several times a week, to make charitable donations at the end of my grocery shopping. The cashiers used to be quite energetic about pointing to the screen and suggesting a donation. They are now silent, and I make an occasional donation. It’s to the local food bank, so sure, I’m in. Then yesterday, at the end of a Best Buy purchase, I had the opportunity to make a donation to a kids cancer charity. The salesperson was very nice in noting the screen, and said “Or you can just hit the skip button.” No pressure, just a quick pause in the final step. So I donated a couple of bucks and we wrapped up. I don’t mind tipping or donating, but the language and tone do make a difference in how I respond in the moment.
I think the “service charges” which are basically mandatory tips, are even more egregious, and they’re everywhere. I wanted to go see the Avett Brothers. The tickets were $350 each (good seats). When I went to check out they’d ballooned to $550 each because of service charges. I don’t like the Avett Brothers enough to pay that much, plus, they won’t even get the service charge.
it’s time to knock it off.
That’s just outrageous.
Joe Biden expressed your experience well. “Junk Fees”.
Tip jars for non-service situations are a blatant way for employers to shift the burden of labor cost onto consumers. They’re saving money by using kiosks and whatnot, but consumers are still expected to tip for services not rendered? Not a sustainable way to keep customers coming back.
I have no problem tipping where service is involved, even in settings like Panera or Starbucks — but many companies are using POS tipping as an excuse not to pay their employees more. And the options presented can be absurd: Adding a 25% or 30% tip is just too much. (The epitome of chutzpah.) Consumer backlash to this kind of overreach — call it tipping fatigue — threatens the legitimate uses of the custom.
Remember that story from a few weeks back about tipping requests at self-checkout? I hope that tipping mania does not reduce customers’ desire to tip for full service.
It’s increasingly expensive to maintain a physical location experience. In my experience (my daughter works in an ice cream shop), the employee wages have been cut below minimum wage with tips expected to make up the difference to minimum wage. Knowing this, unless the experience is terrible, and because I like going out for coffee, ice cream, a quick pick up bite to eat – I am generally an enthusiastic tipper.
Yes, many states and the federal government have two levels of minimum wages. One for workers who can generate tips, one for the rest of us. Guess which one is two to three times higher.
I’m curious if you know whether companies whose employees don’t “happen” to hit the min wage threshold with tips face any penalty?
In China, not only is tipping not expected. It is insulting. I learned the hard way, but quickly. And guess what. The service is always very good and friendly.
In the U.S., I don’t mind tipping for good service. (I don’t tip cranky waiters at all.) But, the businesses that generate tips are built on the workers’ backs. It is an excuse not to pay a minimum wage.
The two-level minimum wage should be done away with. If it means that the prices will go up, then they should.
Japan likewise, and the cost for everyday restaurant meals this Spring wasn’t any different from what I’ve paid in San Francisco or Dallas or here in Minneapolis this year. I can’t think of any other culture where tipping doesn’t exist where I have had poor service. So we can debunk the notion that tipping is essential for a good customer experience. Let’s just pay people a good wage, let competitive pricing level itself out, and I bet we’ll all be surprised how little the total cost of going out changes on the other side.
People should be paid a fair, living wage and people should be charged a fair, transparent price to support those wages. Among the many problems with the current system is that generous, decent people are paying into a system which allows others to be cheap
I would love to see his sign that says tipping is not necessary. We pay our employees a living wage but if you get great service it sure would be appreciated.
While I am highly empathetic to workers who rely upon tips as an element of their wages, tipping from a consumer’s perspective reflects a level of service that warranted a tip. Being asked for a tip when no additional service is provided seems highly inappropriate. It also feels like an employer is asking me to supplement their workforce when they don’t pay them fairly.
I am confident merchants love this trend–it potentially increases wages (and employee satisfaction?-maybe) at no cost to them.
Except for consumer/customer satisfaction….
The other day I saw an ecommerce site that asked for a tip at checkout. That was a surprise. Here is a great report with plenty of stats about tipping. It was a very interesting – and even entertaining – read. https://dealaid.org/data/tipping/
I was staying at the Orlando Hilton last month – ordered a carry out coffee and OJ – the Credit Card reader added an 18% tip. It was close to impossible to remove the tip. I got to the screen for tip amount and left .01 cents.