Business

    • Tipping fatigue: Expert says industry should proceed carefully

    As tipping prompts continue to rise, one marketing expert is warning the restaurant and service industry may "need to be a bit careful" about how high it sets its default tipping prompts, or risk alienating customers.

    "If you push this too far, you're going to end up biting the hand which feeds you. And I think there's a significant fraction of people now who are simply going to less restaurants, not just because of inflation, but because they don't actually like the tip culture," professor of marketing at the University of Toronto's Rotman School of Management David Soberman told CTVNews.ca.

    Tipping is an important social and cultural expectation in Canada, however, most Canadians appear to be fed up with the amount they are being prompted to tip when they go to pay, according to Angus Reid data from earlier this year.

    Meanwhile, workers who receive tips are typically not paid very high salaries—usually minimum wage or slightly more—and thus rely on tips to support themselves financially.

    "For them, the tip portion of their pay is actually quite important," Soberman explained.

    He said tipping practices in Canada have evolved over the last decade, facilitated in part by people largely shifting to paying by card rather than cash when they pay for a service. Soberman said this has led the amount people tip to become "a lot more visible."

    He added the suggested tipping amounts in those prompts appear to continue to increase.

    "I don't necessarily think that's a good practice, but that's what occurred, and that's another thing which has led to tip-flation," he said.

    Soberman said consumers likely feel pressured to select one of the default tipping options when they go to pay rather than taking the time to customize their gratuity.

    "It's almost like a form of shaming," Soberman said.

    "(Other countries) have an approach of simply paying people that work in restaurants a proper wage. So part of the problem may be the culture that we've had. (In Canada) people working in restaurants is sort of seen as a low grade job. And I think … in many other countries, it's not seen that way."

    Restaurants Canada officially recommends tipping between 15 to 18 per cent and encourages customers to tip based on their experience dining out. According to the most recent data from Restaurants Canada, Canadians tip on average about 17.6 per cent of their bill.

    Tracy MacGregor, Ontario vice-president at Restaurants Canada, told CTVNews.ca it's important to remember tipping is typically based on how happy you are with the service you've been given.

    MacGregor said people should be asking themselves how their outing went when deciding on how much to tip; "Was the service good? Was the food good? How was the overall experience?"

    "The whole purpose of those prompts is convenience … You know, people don't like to do the math, frankly, we just want to be out enjoying ourselves," she said, adding it's important to remember that you can always change the amount you tip.

    She said everyone has their own relationship with tipping, and although prompts have increased, "you don't have to feel obliged" to pick them.

    WHERE IS THE TIPPING POINT?

    MacGregor said it is likely tip-flation was also driven by COVID-19 lockdowns, because after the implementation of public health measures many people tended to tip higher amounts to support their favourite restaurants. She said it was something that Restaurants Canada saw quite a bit of, and attributed it to the industry having to close down so many times.

    "They knew the restaurants were struggling, the servers may have been off during those times as well, and I think they just really wanted to show their appreciation for being back out there," MacGregor said.

    She and Soberman both brought up the appearance of tipping prompts at non-traditional locations such as coffee shops as another factor contributing to tipping fatigue and tip-flation. Soberman said tipping prompts used to appear only at restaurants that offered table service, but he's seen them at takeout and fast food restaurants as well.

    "I think if you went into a supermarket and the person checking you out expected a tip, I don't think most of us would give that. But people in supermarkets work just as hard as people in restaurants.

    MacGregor said she has even seen some convenience stores prompt customers to tip when paying using the card reader.

    "Tips are showing up everywhere … I've been asked to comment on 'Should you tip in those situations?' and the reality is, is there aren't any expectations on that. So again, it should be up to the customer," she said.

    MacGregor added she expects restaurants to deliver good service and earn generous tips, however restaurants can also make sure that they're adjusting tipping prompts to match what customers usually tip.

    "I would hope and encourage them to look at adjusting those prompts to fit with their customers, because every restaurant is a little bit different, right?" she said. 

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