15, 20, 30: Is Tipping Inflation Hurting Your Business?
When you last went to a restaurant, did it seem like the tip amounts suggested were a bit higher? Only 10 years ago, it was normal to see suggested tips range from 10 to 20 percent. Today, it seems to start at 15 percent, with some restaurants even starting their “bare minimums” at 20.
Those tips are supposed to help staff members get a living wage, and customers know that. However, there’s a flipside to this issue many business owners are starting to notice: customers are getting fed up with tip culture.
A Growing Problem
The inflation in tip suggestions is indicative of a growing problem with America’s working class. Wages have stayed relatively stagnant since the 1980s while the cost of living continued to skyrocket.
Waiters that work for tips are often at the highest risk of being unable to afford rent. Restaurants have very low profit margins, which means that paying waiters at a discount is often the only way to make ends meet.
When you can’t pay your waiters more, don’t want to raise your food prices too high, and also rely on customers to tip well, certain things happen. First, customers start to get nervous about the true cost of their night out. Second, waiters may start to leave if they can’t pay the bills.
Third, customers may start to feel pressured by the suggested tips, the pleading eyes from waiters, and the judgement they receive if they “only” tip 15 percent. All things considered, people are starting to get angry about being hit up for exorbitant tips.
Tip Overload
On social media sites like TikTok, users are complaining about the constant begging for tips—even when it comes to almost entirely automated services. Some are also starting to protest by refusing to tip anyone, including waiters who work their behinds off for below minimum wage.
Several companies have also come under fire for tip stealing or even asking for tips at a self-checkout. 41 percent of survey respondents say that employee wages should not be based on tips, and that they are the responsibility of the employers.
Tips are becoming a negative sign of a bad business in the eyes of American consumers, with the majority of them noting that excessive tip pleas are a part of a bad customer experience. In other words, asking for a tip that’s too large will put off your customers.
Step Up And Mind The Gap
There is something to be said about being able to go out for a meal without feeling pressed for money—or at the very least, just knowing what to expect. Customers prefer companies that are upfront about pricing and tips.
Ask most of them, and they’ll tell you that they prefer avoiding tips all-around. If you want to avoid upsetting guests but work in a tip-based industry, it may actually make more sense to keep the old-fashioned 10/15/20 prompt or even forgo tipping for a flat rate wage.
It’s worth considering, don’t you think?