Tipping Turmoil: The Debate Over Digital Tipping
Perhaps you’ve heard of “tipflation,” “tip creep” or “tipping fatigue.” Regardless of what you call it, Americans have taken to social media to complain that they’re feeling more pressure to tip more than “normal” – often via POS touch screens – for an ever-expanding set of industries. For example, while tipping workers in restaurants, hotels, salons/spas, and transportation has always been the norm, Americans are starting to see tipping prompts appear in the strangest of places, such as self-service kiosks, on retail websites, and even on GoFundMe. Additionally, the suggested baseline tip is often set to 18% or even higher.
With the current high cost of living, cash-strapped consumers are starting to resent these tipping prompts. In fact, according Bankrate, 66% of U.S. adults have a negative view of tipping and 30% feel that tipping culture has gotten out of control. (To see just how upset Americans are with tipping culture, checkout the photos in this BuzzFeed listicle.) The Bankrate survey also found that 32% of Americans are annoyed with pre-entered tip screens and 18% of respondents said they tend to tip less, or not at all, when presented with the screen.
Earlier this week, Domino's Pizza addressed the increased number of tip screens "everywhere you go" and "the pressure to tip. In response, Domino's launched its 'You Tip, We Tip' promotion that tips customers who tip their delivery drivers,
So, the question becomes, is the POS touch screen to blame? To find out, Hospitality Technology polled restauranteurs and point-of-sale vendors to get their point of view. Here is what we found.
Restaurants Weigh In
Of the restauranteurs profiled, 66% said they use software that automatically asks guests to tip and that they have the power to adjust the tipping screen to fit their business needs. In the last 12 months, 33% of restaurant respondents said more guests are tipping in larger amounts.
When asked if POS software automatically asking for tips has created an anti-tipping culture war, respondents felt it was certainly contributing to the frustration among consumers but weren’t convinced it was entirely the software’s problem. In fact, restauranteurs said that setting too high of a baseline tip or adding a default tip to the bill (and not making that clear to customers which leads to double tipping) were mistakes the restaurant made that had nothing to do with the POS software.
While restaurant respondents were in agreement that digital tipping is favored by employees, they disagreed over whether or not it offers a competitive advantage/leads to greater staff retention.
UPDATE: Tiphaus' Earned Tip Access Featured in RTN Town Hall
At MURTEC 2024, Tiphaus and its Earned Tip Access, won the inaugural Restaurant Technology Network (RTN) pitch slam, Ring of Fire. Attendees voted live to determine the winner.
During Restaurant Technology Network's Town Hall on May 29, Cory Lilliston, Chief Accounting Officer of Firebirds Wood Fire Grill, shared his experience with the solution. TipHaus President Steve Hooper responded to questions during the event.
If you're in hospitality and looking for a solution to streamline tip payouts, you don't want to miss this engaging, online event. You can watch a replay of the RTN Town Hall here.
Servers and other tipped employees who once depended on cash tips are now waiting days if not weeks for their tip payouts in their paychecks. With Tiphaus' Earned Tip Access tipped employees enjoy the ability to receive their tips after every shift, resulting in higher satisfaction and lower turnover of employees.
Watch Tiphaus' winning Ring of Fire pitch here: https://youtu.be/LoIzy00-OjU
POS Software Vendors Weigh In
Of the vendors profiled, 72% said that their software can automatically ask a guest to tip, 91% said restaurants can adjust the tipping amounts to fit their business needs, and 64% said their clients’ employees are receiving more tips due to the automatic ask from the POS software.
When asked if POS software that automatically asks for tips has created an anti-tipping culture war, respondents were very vocal. Here are a few of their comments:
“Yes and No. When the POS system automatically prompts customers to add a tip, it creates a sense of obligation to tip, even for service that may not warrant it. This pressure can lead to resentment among customers who feel compelled to tip regardless of the quality of service. But automatic tipping prompts offer convenience. Customers can quickly select a tip percentage or amount and complete their transaction without the hassle of calculating or leaving cash.”
“Yes, too many operators are using tips to offset increased labor costs in what was historically not considered tipped positions.”
“No, POS software with embedded tipping is a huge help for hospitality providers and consumers alike. Many patrons appreciate having the tip pre-calculated for them on a screen. Our customers enjoy having tips streamlined and also having their tipping data at their fingertips.”
“Yes, especially in the ‘to go’ segment. There are many conversations around the backlash tipping to-go orders has caused. Customers resent being asked to give more money to someone who is being paid already to put their items in a bag for THEM to pick up. Most feel if there is additional service offered, yes, tipping is acceptable. But for an "assembly line" function - NO.”
When asked what type of feedback POS vendors are getting from their clients that use the automatic tipping software, we found out:
“We have heard that many employees in the hospitality industry appreciate the stability that automatic tipping prompts can provide. It ensures that they receive tips even when customers may forget or choose not to tip in cash. Also, some POS systems can collect data on tipping trends, which can provide valuable insights for employers. This data can help in analyzing performance and making staffing decisions.”
“Employers see it as a way to offset increased labor costs, which they of course like. Most feel customers will eventually ‘get used to’ the additional tips and will reduce their complaints. Employees are just grateful for the extra cash with inflation continuing to decrease the value of their dollar, especially at lower income levels, which most service employees are.”
“Having installed numerous pay-at-table solutions, all have returned to check and credit slip presentation in the book, because -- in every instance -- server tips went down. Servers always lose with tip prompting.”
Final Thoughts
As the debate over tipping culture and the role of POS touch screens continues to evolve, it's clear that there are nuanced perspectives and complex dynamics at play. While blaming POS systems alone for America's tipping fatigue would be oversimplifying the issue, it's undeniable that the widespread adoption of digital tipping prompts across diverse industries has significantly contributed to the current tipping landscape. Ultimately, navigating the complexities of tipping culture in the digital age requires ongoing dialogue, adaptability, and a commitment to finding equitable solutions that benefit both consumers and service providers.