In the News: Is Tipping becoming too much?

[Pesso]

Hey Sellers,

A big thanks to @TCSlaguna for finding and bringing up this article! 

This week we’re talking tips, with an article and video from CBS News reporting on the increased prevalence of businesses asking for tips, and the negative reaction that customers are starting to have. Looking forward to hearing about how your business and customers are handling tipping.

CBS News: "Tipflation" may be causing tipping backlash as more digital prompts ask for tips

According to the article, more businesses in the U.S. are asking for tips, especially through digital payments and registers. They even quote Square’s statistics that nearly 75% of remote food and beverage transactions automatically ask for a tip. They go on to say that as a result more customers are starting to become resentful and are less likely to tip, which might mean that it’s backfiring to a certain extent. It also did mention some of the positives, that some services providers with digital transactions and invoices can more discreetly have a prompt for tips without the traditional added pressure and awkwardness. 

When I owned my ice cream shop, we accepted cash tips for our employees, but not credit card tips. We paid our employees above the NYC $15 minimum wage, so tips became a bonus and not relied on. Even more, from our own experiences as customers at other businesses, we didn’t really love the pressure to tip that a screen on a register could sometimes lead to. We also had Square Loyalty, which a lot of our customers used, and in order to get to that screen, customers had to go through the tip screen, which just added to that pressure and in some cases led to folks not using Loyalty. But on the other hand, a lot of customers did ask us if we could accept credit card tips moving forward, so there was definitely an eagerness there. It’s a tricky balance! 

I know that tipping culture varies in different areas and countries. In the U.S., the onus is put on the customer to decide and leave a tip, even though it’s an expected and basically obligatory thing. Meanwhile in Europe it’s often added automatically to the bill, and is at a customers’ discretion in other parts of the world. Tell us about how it is where you are. 

What’s your perspective:

• How does your business handle tips?

• Have you seen or felt any recent changes in tipping at your or other businesses?

Can’t wait to hear your thoughts!
Pesso

[Sprinkles1970]

Having worked in food service for a long time, I believe tipping is a way to reward an individual server or a team for providing an elevated experience marked by expertise, engagement, and demeanor. However, I truly believe that as a customer, I play an intrinsic part in this.  When I dine out at a particular restaurant, my overall experience is greatly shaped by how I interact with staff. From the host's initial greeting, to the expediter pouring our water, to the server we eventually order from...these are human interactions I choose to be a part of. Most, but not all of the time, the level of service I receive depends on my engagement with these individual staff members. If I present myself as a pleasant and respectful person...I generally receive better service. In contrast, If I present my self as a flat or even disrespectful person...I will get the same treatment from the staff. My tip to the staff greatly depends on the overall level of the experience from the staff that I encounter, not the food I was served (kitchen staff at our place is paid hourly and have zero interaction with customers...an entirely different job...and they do not receive tips).

As the owner of an ice cream shop, we deal with a high volume of customers. Our interactions are short, but they can be impactful to both the customer and the employee. Generally, people enter our shop with enthusiasm and excitement. But occasionally we see an individual or group that entered our shop with some emotional baggage or expectations we simply could never meet. Our staff is trained and encouraged to treat everyone with respect and put their absolute best foot forward in terms of positivity and expertise. From all of these interactions it is clear who tips and how much they tip, and it is strongly correlated to how much the customer engages with our staff. Great customers get great service almost every time. Flat, monotone customers get "OK" service. Finally, grumpy or disrespectful customers are generally provided ice cream, asked to pay and forgotten about before the transaction is complete.

As restaurant folks will probably agree, if you have worked in restaurants you probably pay attention to these things. You also are more likely to treat other restaurant staff as brothers and sisters playing a similar game, and tip them according to the level at which they play.

[SplitGIllStudio]

I am able to offer credit card purchases for lower value items because of tips!  When I first started vending markets in person, over the course of a year I think I made about $8 in cash tips.  But when I moved to square, even though I still had cash tips as an option, I decided to set up a prompt for a tip.  I do two things though, I make sure that I'm not looking at the screen or verbally prompting the customer to tip, and I always have the 'no tip' option available.  But almost everyone leaves some kind of tip.  The same year, in half the amount of time, I made over $300 in tips!  That more than covered the cost of fees for people wanting to get a $1-2 item but not having cash.  And many of those people became repeat customers too.  So for me, I've largely had good experiences with requesting tips.

(Except for that one guy who told me I was underselling my artwork because I had discounted a $80 print to $40 and then when he saw the tip prompt told me "I don't believe in tipping artists".  Please explain the logic, sir.) 

[Sprinkles1970]

Question for you SGS:  What does a tip represent to you?  As the artist who is selling your own work, the price you sell your work at is set by you.  If you think its worth more you can raise the price, or vice versa. So....what is the point of tipping the person who sets the price in the first place?  I tend to agree with the guy who mentioned you might be under pricing your artwork.

At a restaurant, a tip is a way of rewarding the server who does not have the ability to set the price of an item. The tip doesn't go to the owner, the person who did set the price. 

[SplitGIllStudio]

I think it depends on how you look at tips. It's pretty standard across all communities to tip your tattoo artist, even though they are setting the prices because when it comes down to it they're not setting the prices of the spaces they're renting or the bills that they're being charged for fees and advertisement and things like that. So for me, tipping is incredibly common amongst artisans in my experience.  For an artisan it's basically an indication that you support the work they do and feel that any extra assistance is worth the extra money you're giving them.

In the scenario I mentioned above, this gentleman had gone out of his way to spend 20 minutes talking to me at my booth (while I was still selling to other people). He mentioned a couple of times that he thought I should be selling that piece for more even after I said that it was an older work that I wanted to see go into the hands of someone who would really enjoy it and was excited to know that he was purchasing it to hang with another piece he really loved. While I wasn't expecting a tip, the fact that he then specifically said that he didn't believe in tipping artists after saying that he would have purchased the print for a higher price was absolutely baffling to me especially considering the very pleasant and enjoyable conversation that we just had! 

I do want to mention that, in many cases, artists are often not selling their work at a price where they'd actually recover the cost of work, fees, studio expenses, and booth rentals etc etc. If you're lucky (and it is largely luck) to be well known and have a decent enough following, or the type of work you do tends to run in larger and more expensive circles, You might be in the position that you can do that, but I've largely found that that is not the case. Most of the vendors I know either work at least one extra job that provides their base income, or they live with someone who can afford to take on an extra person's expenses so the artist can do the work they want to do.  Sometimes it's a combination of both.  Many of us cannot make a living off of art alone and in many cases, raising our prices pushes the people we want to serve out of the market for the items that we're selling. I do have higher priced items but those sell much more slowly and tend to be a specific type of affluent clientele who have disposable income. In our current economy, especially when you're a minority who makes content largely marketed towards other minorities, disposable income is something of a joke. But that doesn't mean that we don't want fun enjoyable things to brighten up our day which is why I try to keep my prices lower on certain items. I do work two jobs so that I can make art because I love creating and it's the fact that people do support me with tips that allows me to continue to keep my prices lower on some items and gives me the chance to experiment and try new things that I might not be able to risk otherwise!

tldr It was a funny scenario but tipping artist and tipping services workers are two different types of tips and of you can afford to tip an artist you absolutely should! 

(Also this reply got away from me a little bit but I hope it provides some context!)

[PianoTech23]

I don't mind tipping, but an automatic prompt for 35% at a coffee shop is a bit much.

[Sprinkles1970]

Then don't tip. You are not obligated to tip. I agree that 35% is ridiculous....but if you simply choose your own percent or no tip at all the vender will learn that they are outside of acceptable tipping limits. 

[cherimoya]

What about the VENDOR?

[cherimoya]

They're doing that across the board. But the truth is that if a cup of coffee ☕ costs $4, a 35% tip is $1.40. Actually, I have seen varying percentage options available. That's not the only one, is it? If the owner has set it to default to 35% only, I would tell the barista that you will tip when you have more options available. 

[Michael_L]

... although, if you're just getting a cup of coffee from the counter, the server isn't really doing anything special for you are they?  A tip has been connected to someone taking care of you personally, at least in the past, and a good tip is a reward for getting good service.  Someone behind the counter pouring coffee is just doing their basic job...

[cherimoya]

Exactly. I give baristas tips for lattes because it's an extra step. Plus I'm a regular at this one place and I don't want to look like a cheapskate. I'm drinking lattes there. There are usually multiple options like 20%, 30%, etc. If they only had 30%, I would not give a tip and then tell them afterwards that there has to be more than one option. I have a feeling people aren't seeing the screen properly.

[Smithward]

We're a small wine bar. We skip the tip screen for smaller purchases (e.g. if a table just has a few drinks) but if they've had a meal we usually give them the Square Terminal with the tip screen showing and leave them to it. Most customers do tip, typically 10%.

Pleasingly, when we do deliberately or accidentally skip the tip screen, it's not uncommon for customers to say "hey, how do I leave a tip?" and we have to go back a screen. So, rather than tip 'fatigue', we often have people requesting to make a tip!

We're in Australia, and pay above award, so tips are considered a nice bonus and a morale booster, not an essential part of pay.

[CraftDonuts]

We operate a donut/coffee food truck.  Frankly, my employees are pretty spoiled because of tips!  We pay well above min wage in the $16-$18/hr range but at minimum our employees see another $10-$15 an hour in tips, largely through credit card tips.  Two years ago this was more like $8/hr in tips but it has grown a lot over a couple years.  Now if they have a day where tips are $8-9/hr they are heartbroken.  I try to remind them that they are making around close to $30/hr on average which is more than my wife and I make per hour in this business!

I am quite confident that if we took away tipping my team would all quit the next day.  So once you are in this setup it is pretty hard to get out.  

If the day ever comes that there is some kind of "tip revolution" and customers are not tipping in the masses we plan to add 10% to all of our prices, remove tipping options for customers and pay out employees a 10% bonus based on total sales.  It would still be a reduction for the team since we currently average about 15% in tips overall.

[Doran]

We don't use the tip screen at all anymore.  Since we are retail and service it was just too complicated plus it felt like after Covid people really became annoyed with tips.  We raised our prices and dumped tips.  It works for us.  

[Purple_HS]

Interesting.  I think most are afraid to make the bold step of raising upfront sticker prices. Good for you!!

[Stacelyn24]

Fortunately, my business falls in the beauty sector...so tipping is quite common practice.  Once the service is done and the card is ran then it the next screen does come up asking for tips...we only have a handful of clients who do not tip and it's never been any pressure for them to do so:)

On the other hand....tipping has become extremely popular in other industries out side of the food and beauty industry.  I don't mind tipping, I just mind when someone expects me to tip extremely high when unfortunately the added fees have made the original prices so much higher (ex. DoorDash).

[cherimoya]

I hate tipping. Just charge the price and let that be the end of it.

[Michael_L]

The screen asking for tips is pressure, or it feels that way to me anyway.  It's hard to look at someone across the counter and click 'no tip' -- it feels rude.  If they assure you it isn't necessary, that just feels like them being polite but doesn't really change the feeling.

Not that you should stop - in your business it is expected.  Just realize that asking for something, even politely, does feel like pressure to some people.

[HairByBobby]

I am seriously experiencing tipping fatigue. I own a hair salon. About half my clients tip. Some have the old school thinking that you don't tip the owner. I find this odd as I do not have employees. I make about the same at the end of the day as a commissioned stylist as theres no other income but me. I think as tipping as an extra Very nice bonus. I have become resentful at places that use tipping pay their employees hourly wages.  I generally tip high but have started to feel annoyed that many restaurants use it to offset the wait staffs hourly pay. Wait staff are paid set hourly only of tips don't take them there. So customers are really paying the staff.   On a side note. Why doesn't the kitchen staff get some tips? Without their hard work the customers wouldn't be happy. When I eat great food I tend to tip more. It helps to create the happy experience.  

[Michael_L]

Tipping has value, but only because of our minimum-wage business culture.

Being a server at a restaurant is one of the few ways a college student can earn a decent income, because of the tips.  So many restaurant owners pay the bare minimum that it wouldn't be a good job without it.

I will agree, though, that tips are getting out of hand.  Not so long ago a 10% tip was ok and a 15% tip was for good service, now the minimum suggested is often 18% going up to 25% (some have seen even more).  Tipping is also appearing in places where nobody is giving you personal attention - if you line up and get a coffee from the counter, the barista is just handing over a product.  Asking for tips in that situation is unpleasant to customers - even if it isn't "required", the question being asked still feels like pressure.

[StudioSkyn]

I own and operate my own skin care studio, so I am in a similar situation as @HairByBobby.  I have amazing clients who understand that as a service based business the prices of my services are what they are and they still happily tip. I do offer a "No Tip" option which has been used about 8 or 9 times in the past 3 years. My clients tend to leave leave tips anywhere between 20% and 60% of the service prices.

As a customer when I dine out I always leave a tip to some degree, even if the service isn't the best, I understand it's not always the server's fault. I worked in the hospitality industry for 15 years as a server, barista, and bartender so I fully understand how the food and beverage sector operates. I will gladly tip 20-30% when I'm dining-in and being serviced.

When I'm ordering take-out/pick-up from a restaurant that offers dining-in, I will tip $1 per item. I'm not interacting with anyone other than being handed my food and the dollar per item should be more than enough. There is nothing special about having someone boxing up food, placing it in a bag and handing it to you compared to having someone interacting with you (off and on) for 30-60 minutes.  Servers continuously check back with you, provide refills, ensure your dining experience is pleasant and caters to your dining needs, which is a lot of work (for those who have never served). 

I personally feel that if I'm going to a place like Five Guys I probably won't tip at all, unless there is something special about the service like someone behind the counter who remembers who I am and what I like to order. They are making at least $15/hr (in my area they make $17/hr) and they don't provide any other direct services other than taking my order and calling my number when it's ready. Some may say, "well they are cleaning the dining room, taking out the trash and keeping things stocked." - Yes, but they are also being paid $17/hr to do those tasks, so any tips are bonus to them. I've noticed since the minimum wage jumped to $15/hr a lot more places in the Quick Service sector have begun asking for tips to off-set their labor cost. You going to tip your typical McDonald's worker who can't even get your drink right, even though it's automated now?