Too many tip prompts? Blame business owners and unfair wages

Corey Mintz is the author of The Next Supper: The End of Restaurants As We Knew Them.

Things used to be simple at my bagel place here in Winnipeg. Its payment tablet had a tip prompt with straightforward percentage options: 15 per cent, 20 per cent or 25 per cent. But then, recently, the shop got a new machine, and I found myself being asked to tip on my $8.50 breakfast bagel in whole-dollar amounts between $1 and $4.

I’ve spent a big chunk of my career writing about the practice of tipping, and I wanted to know what precipitated this change. But before I could do the math – I have always tipped 20 per cent, regardless of quality or service, but I couldn’t immediately figure out which of these whole numbers was closest – the cashier quickly demurred: You can bypass on the bottom if you wish.

As I waited 3½ minutes for my sandwich, two more customers placed their orders, and were told the same thing, word for word, with the same friendly expediency.

Later, I talked to the shop owner, who said the tip screen was a mistake. The week before, they had suffered a break-in. Under the new payment terminal’s default settings, sales under $10 elicited numerical tip prompts, while sales over $10 got percentage prompts. This whole-number rounding is yet another way to game the system, to extract higher tips from customers. But my response to the shop’s new prompts – to just accept the higher tip – and the cashier’s clear discomfort were both emblematic of our collective surrender to the march of tip creep.

We’re being asked to tip everyone, everywhere, all the time and in ever-increasing amounts. In the early months of the COVID-19 pandemic, customers tipped lavishly when efforts to save local restaurants during lockdowns became a civic duty among those who could afford regular takeout. Though the social pressures that fuelled that boom faded, there has been a hangover; the payment-terminal software company Square said the average Canadian in-person tip went from 16.6 per cent before the pandemic to 17.9 per cent in the first three months of 2022. Now, with the pandemic all but eliminating our use of cash, and digital payment options making it easy to add gratuity, those tip prompts have expanded into bakeries, cafés, fast food and general retail settings. I was even asked to tip recently at a fancy grocery store where I bought dried fettuccine and sourdough bread.

I understand the outrage: Why are customers now expected to add 20 per cent in more and more places, while our monthly bills get even more out of control? But there are even worse outrages behind tip creep: that subminimum and unlivable wages for workers will continue to sprawl out from the restaurant industry, where they are all too common, and that these tips are being used to offset businesses’ staffing costs.

The practice of tipping became popular in the United States after the Civil War. Under the previous system – which is to say, slavery – businesses hadn’t needed to pay many workers anything. But by the early 1900s, some Americans had adopted the custom, fashionable amongst European aristocracy, of bestowing monetary gifts as a generous-seeming reward for good service, which also allowed business owners to avoid paying reasonable wages to formerly enslaved people. This caught on in the dining and railway industries, which took on many newly emancipated Black women and men.

In the 20th century, labour and tax laws in both Canada and the U.S. further codified and bolstered employers’ ability to pay tipped workers a wage that was lower than the legal minimum. So while adding gratuity has become standard practice in a handful of other occupations, including among cab drivers and hair stylists, it is only in the restaurant industry that it’s typical for the majority of a worker’s earnings – upward of 70 per cent – to come through tips.

This has created conflicts, and both enables and incentivizes discrimination and abuse of all kinds. Among the worst kind of customers, tipping emboldens a desire to hold power over workers; for others, it creates discomfort, as the bill becomes a reflection of a person’s past and future generosity. Tips are also usually distributed among restaurant workers nebulously, behind the scenes, and often inequitably between front- and back-of-house staff.

Is tipping getting out of control? Many U.S. consumers say yes

Restaurants have long depended on cultural norms to encourage tipping. Growing up, I was told it was 15 per cent. Later, working in the restaurant industry, I was told it should be 20 per cent. But now, most payment terminals let businesses set their own options, redefining these norms. As a result, those digital tip prompts have moved from the 12 per cent to 20 per cent range, to the 20 per cent to 30 per cent range, or even higher. (While some experts call these increases “tipflation,” I’d argue they’re a distinct form of tip creep, to distinguish from the other tipflation that’s also happening: Food and labour costs have led menu prices to increase across the board, and most payment terminals are calculating tips on the after-tax price instead of the more traditional pretax one.)

The longstanding expectation that diners will voluntarily tip more has proven to be an essential tool in allowing restaurants to spend less on wages in order to maintain the illusion of lower menu prices; they can depend on tips, rather than revenue, to compensate workers. After all, why raise prices and risk driving away business, when stores can pay workers a substandard wage that they can rely on their customers to offset? That thinking has apparently become appealing to all the non-restaurant businesses adopting tipping.

I know that’s a lot to think about in the split-second we’re given to decide how much we should tip, especially with the pressure of an impatient queue waiting behind us. Still, we need to push back against this expanding trend.

At bedtime in our home, when our daughter pretends that she needs half a peanut, a fresh tissue or to have her stuffies rearranged, we call that flimflam (I had to find a non-curse word for BS, given how much of it we encounter). Mommy and daddy aren’t stupid; we know that what she really wants is to extend the time before lights out, and that these requests are just a smokescreen to that end. Customers aren’t stupid, either. When businesses add tip prompts, the subtext is usually that they’re asking you to subsidize their workers’ unlivable wages to hide the true cost of running a business.

Indeed, the real problem with tip creep, particularly in Canada, is that it advances a very American philosophy: that individual, private charity should perform the responsibility of properly compensating workers, rather than broader policy solutions. Why should governments mandate a living wage when diners can be trusted take care of workers with tips? Why reform broken industries if customers can be Band-Aids? This should be a moment for us to take a step back from the moral abyss of believing the working class should depend on generosity, rather than being supported by regulatory protections.

It might make you feel better to know that even the experts are divided about how to navigate our new tipping culture. Over the years, my go-to academic sources to discuss tipping have been Bruce McAdams and Mike von Massow, two professors at the University of Guelph, and Michael Lynn, a professor of consumer behaviour and marketing at the Cornell University School of Hotel Administration. Prof. McAdams, who has concluded that the conversation is cyclical, won’t talk about tipping any more. Prof. von Massow recently wrote an opinion piece urging customers to resist the pressure of higher tip percentages and enter their own custom tip amount. And last month, Prof. Lynn told CNN: “I don’t know how much you’re supposed to tip and I study this.”

But when you see that new tip prompt, or the ask for ever-higher amounts, here is what I advise: Pay whatever percentage you want. Don’t ask questions that put workers on the spot or inconvenience the people waiting behind you – until later. Then contact the business owner and ask them if they pay their staff a living wage, a number that varies by city and region. If they do, then continue to tip whatever you want, as a genuine act of generosity, knowing it’s an authentic gratuity. If they don’t (or won’t answer), don’t go back. A business that won’t pay their staff what it costs to live in their city, or requires customers to subsidize their labour expense under the pretense of generosity, doesn’t deserve to exist.

Alternately? As the bagel shop cashier told me, you can bypass on the bottom if you wish.