Tipping prompts are everywhere, and the default numbers on the screen are getting higher. This increase in default tip prompt suggestions has started affecting customer behaviour in many ways.
The custom of tipping started in the US during Prohibition in the 1920s to early 1930s. Prohibition massively affected the restaurant industry, and people started tipping to ease some of the financial difficulties the restaurants and workers were facing. From there, tipping caught on all over the US, spread to Canada, and has not stopped since!
While the original thought behind tipping was meaningful and helped a lot of people out, the current tipping culture is starting to hurt consumers instead. An Angus Reid Institute study shows that 78% of Canadians believe tipping does not work as intended anymore, with 73% believing that tipping is a way for employers to underpay their employees. Tipping in Canada is not just about food service or a living wage, it has become an expectation that is taking a toll on Canadians.
What has changed about tipping culture?
Ever since the pandemic started, tipping culture has slowly but steadily been growing. During the pandemic, people wanted to help each other out. This naturally extended to people in service sector positions, as many of them were considered essential workers. Out of compassion, people were more willing to tip generously.
This was bolstered by the fact that people had more disposable income. Since people were staying home more often, they had more money available to spend as they pleased. Many chose to divert through tips or other forms of generosity.
Human rights and effects on servers
Tipping has been a way to supplement wages for restaurant industry workers for a long time. Through tips, customers are responsible for making sure that servers can make a living wage. This creates a power imbalance between the customer and server, that can lead to precarious working conditions due to sexual harassment.
The restaurant industry, as a whole, faces many precarious work environment issues. Many offer unstable work schedules, low wages, no paid sick days, and a power imbalance within the industry between the owners and staff. A decrease in tips means staff would face more financial and mental health issues. Many forget that what customers tip is not solely for the server. Servers are required to tip out to the back-of-house staff. This means that they pool the tips together to share with the rest of the employees. Thankfully, in Canada, servers make at least the regular provincial minimum wage, so there is more security and stability in their finances. This means tips are now more of a “bonus” amount that helps all employees make more of a living wage.
What is a good tipping rule now?
There was a time when a 15% tip was considered a standard, but those days are starting to feel long gone. Now, 15% has quickly risen to the minimum tipping percentage. Some card readers now start their tipping prompts at 18%. Some even go up to 30% or higher.
Naturally, people feel the pressure and start to wonder what is an appropriate amount to tip. For context, Ontario’s minimum wage is currently $16.55 per hour and is anticipated to increase to $17.20 per hour in October 2024. Unlike before, when there used to be a separate server minimum wage, this increase is applicable to servers and bartenders. That previous standard practice was abolished in 2022, Canada-wide. Now, all servers make at least the provincial minimum wage.
Since servers are now making minimum. wage, many wonder why they are expected to tip a minimum of 18% on top of that. If servers are legally required to make a living wage, customers may find that the high tipping percentages only lead to more money out of their own pockets.
Until now, most places expected a minimum of 15%, that standard has now increased to 18% in many places. Stick to the rule if you’re trying to follow the current tipping guidelines. That being said, don’t feel pressured to tip higher numbers, especially if you cannot afford it. In that case, it’s better to stick to your budget.
What is tipping fatigue?
Recently, there have been studies focused on the experience of the Canadian consumer as it relates to tipping. Many Canadians express feeling pressured or obligated by increasingly high tipping prompts. They end up tipping more than they intended to, or worse, tip more than they can afford to.
Many of those polled, believe tipping is no longer about thanking the person for providing good customer service. They believe, instead, that it’s simply an expectation they feel pressured to respond to. In fact, according to the Angus Reid Institute study, 83% think too many places ask for tips these days.
The sheer number of prompts at so many different places has led to tipping fatigue. So much so, that 42% of respondents reported not going out as much as they used to due to the extra cost of tipping. Add this to the high cost of living, ballooning rents, and rising inflation – it is no wonder that people are opting out of purchases they can avoid making.
When is it okay to not tip?
We tend to tip by default at restaurants, cafes and bars. With new venues adding tipping prompts to their card readers, new doubts have surfaced about where to tip. For example, getting a meal from a fast food place or picking up a takeaway coffee used to be a straightforward transaction. However, card readers at such places have also started prompting people to tip. This leaves many confused. We don’t really know the tipping etiquette for these places. Often, people choose not to tip anyway, especially if prompted at places like gift shops, convenience stores, or dry cleaners. Even though it’s not considered customary etiquette to tip in such places, not doing so, still leaves many with feelings of guilt.
Apart from these situations, some people feel that higher tipping should remain as it was originally intended, a bonus for good service. While this approach does take the pressure off of calculations, there may still be an expectation of a standard tip, irrespective of the level of service provided.
An important consideration is those who make minimum wage in non-tipping industries They may find it difficult to afford high tips in all these situations. If you’re on a tight budget, or trying to pay off your debt, it’s okay to tip what you can afford, guilt-free.
How much should I tip?
In a way, tipping costs have now increased threefold:
- Inflation pushes the cost of goods up. Consequently, it increases the tip amounts, as tips are based on a percentage of the total cost.
If your bill used to be $50, and you would tip 15%, your tip amount would be $7.50.
If your bill increases to $60 due to inflation, you would now have to tip $9 for the same 15%. This is in addition to the extra $10 you’re already paying as inflation costs. - Higher suggested tip prompts have pushed minimum expectations up to 18%, and even go up to 30% or higher. This creates an expectation and the customer feels pressured to go with that option.
- Many card readers calculate tips based on the after-tax amount, including any other charges or additional costs. Essentially, these machines calculate your tip as a percentage of the final bill, which is a departure from tipping tradition. Tips used to be calculated on the amount before taxes and charges were applied afterwards.
- All these, albeit small incremental, cost differences quickly add up.
Recommendations
With all the changes in expectations, it may be tough to figure out what is a good percentage to tip. Here are some recommendations, but remember – don’t feel pressured to tip more than you can afford. If increased tipping is going to make you spend more than you budgeted for, tip what you can afford. These are just guidelines and not something you should feel obliged to do if it’s going to hurt you financially.
- Restaurants and bars – expected 15%, increase for good service
- Restaurant takeaways – expected 15%
- Grocery delivery drivers – expected $5
- Ubereats/Doordash/food delivery drivers – expected $5
- Uber/Lyft/taxi services – expected 10% to 15%
- Hairdressers/stylists/barbers/massages – cultural expectation of 10% to 15%
- For many other places, like a coffee shop or convenience store, tipping is optional, depending on service.
What’s next for tipping?
Some restaurants in Canada are now becoming tip–free. They are taking on the responsibility of ensuring a living wage for their employees. Some may choose to include a service charge in the price of the item. Eliminating the need to tip extra after the fact. Their mindset is to provide for their employees without depending on customers to cover their wages. This is a great approach, especially since Canada’s minimum wage rules cover restaurant industry workers now. With restaurants now paying their employees a livable wage, it’s a win-win situation for everyone.
While these restaurants are in the minority, the approach seems to be catching on. According to the Angus Reid survey responses, many more people are in favour of a service-included model now than they were just a few years ago.
Source: Angus Reid Institute
The current experience of people being asked for tips everywhere is taking a toll. Tipping fatigue has officially set in. Even so, card readers show no signs of slowing down. This is why old-fashioned ways, in the form of tip jars, have become fashionable again.
To avoid being pressured, many have started carrying cash instead of swiping a card. This way, they get to avoid the guilt of seeing tip prompts they may not be able to afford. Carrying cash is also a good way to stick to your budget, irrespective of what it means for tipping.
