By Linchi Kwok
In the old times, Americans typically tip 15 – 20% of the pre-tax bill in sit-down restaurants with wait staff. For hotel room service, tipping 10% is expected if gratuity is already included; otherwise, 20% or more should be added.
When tipping means more than gratitude
In California, tips do not count toward servers’ minimum wages. Accordingly, servers will earn the state’s or city’s minimum wage, plus tips. In some other states, servers make as little as $2 – $3 an hour because employers can count tips as part of their minimum wage. Still, tips have become an essential source of income for many service workers.
How have Americans changed their tipping habits since COVID?
Some consumers might appreciate the foodservice workers more during the pandemic for the extra work they performed. Studies showed that consumers tipped more to a pizza delivery driver and for many transactions at quick- and full-service restaurants, although tips for face-to-face transactions at full-service restaurants dropped one to two percentage points.
What is trending in tipping?
There have been a few noticeable changes in tripping since COVID. In this series, we will visit (a) what businesses and legislators are doing to encourage tipping and (b) how consumers react to such changes.
I. Businesses and Legislators Are Promoting Tipping Behaviors
McDonald’s is one of the few restaurant chains that do not let its crew members accept tips from customers. According to the company’s tipping policy published on the internet:
“Tips are not accepted as McDonald’s restaurants have a team environment which is not about rewarding individuals. If a customer would like to make a donation then they can do so in the RMHC boxes.”
More quick-service restaurants ask customers to add tips
Unlike McDonald’s, Starbucks is one of the quick-service restaurant chains that encourage customers to tip. The restaurant recently programmed its point-of-sale devices to ask for tips every time when a customer pays with a credit card. In most restaurants, consumers will be provided with five options:
- 15% (I have seen some starting from 18% or 20%)
- 18% (or higher)
- 20% (I have seen options of 30% or above)
- Custom tips (usually shown on the bottom)
- No tips (usually shown on the bottom if provided)
Clicking on either end of the alternative options is the easiest and fastest option most customers will do if they choose to add a tip or feel guilty for not tipping at all. Servers in sit-down restaurants may not need to share the tips they earned. Quick-service restaurants tend to put all tips into one pool and divide the money among their associates with a fair method/formula defined by the company.
Even machines and self-serve kiosks ask for tips now
Hopper, an online travel agent (OTA) like Expedia and Booking.com, also rolled out a new option to collect tips when travelers finish an online reservation on the website. The website states:
“In order to provide our customers with the best insights and maintain the accuracy of our notifications, there’s an option to add a Hopper Tip to your booking before you swipe to pay for your reservation!”
Usually, Hopper will add a flat fee of $5 or 15% of the transaction as tips. Customers have the option to opt-out.
Legislators want companies to change their non-tipping policy
A bill was just passed by both the Colorado State House and Senate in May and is now waiting for the state governor’s signature. When the bill takes effect, companies like McDonald’s and Walmart can no longer prohibit their employees from accepting tips. Do you think other states will follow suit?
When more businesses and even legislators want to promote tipping behaviors, are the consumers who pay tips from their pockets happy about that?
II. Consumer Reactions to the New Tipping Trends
Businesses like the automatic tipping options in kiosks because they can significantly increase gratuities, which help boost staff pay. Some legislators also believe that tips can help workers substantially improve their incomes.
What if a tip goes to the machines that provide the service?
Hopper, an online travel agent for flight and hotel reservations, was a good case in point. By the same token, consumers are now asked to tip in self-serve kiosks.
When fans get a drink from a self-serve beer fridge at San Diego’s Petco Park, they will be pinged for a tip. Some said they felt confused but still left 20% of tips. It has become very normal to see self-checkout machines at cafés, cupcake or cookie shops, stadiums, and airports to prompt customers to leave 20% tips.
Are you feeling “tipping fatigue” already? Has tipping become an “emotional blackmail”?
Some reports showed concerns about “tipping fatigue” among consumers; others called it “emotional blackmail.” Nevertheless, more businesses are joining the new tipping trend by asking for tips. For example, Maryland’s first unionized Apple store wanted customers to tip 3%, 5%, or a custom amount. A landlord made a case on TikTok that his tenants should add tips to the rent — he might do that as a joke, but he got the point.
When enough is enough?
Are you getting tired of being asked to tip for everything you buy? Some of us do. While tipping is an excellent method to increase revenue and/or employee pay, businesses must be careful not to push customers to the edge.
What tipping trends do you see? What do you think of today’s tipping culture?
