Tip-flation has restaurants asking for up to 30% tips | Radio Canada

The amount Canadians are asked to tip when paying with credit or debit cards is increasing, industry watchers say, and it could encourage Canadians to be more generous with tips.

A survey conducted by Restaurants Canada in April 2022 found that when dining at a table-service restaurant, 44% of 1,500 Canadians surveyed said their tips were higher than before the COVID-19 pandemic.

Suggested tips are also increasing, according to CBC Calgary restaurant critic Elizabeth Carson, who noted that guests on credit card machines that previously asked for 10-20% tips have now jumped to 18, 20 or 25 %.

Carson was also asked to tip up to 30% and said she finds the higher invites annoying. This leads to a general feeling that could be called tip-flation.

A payment machine asking for a 30% tip is displayed next to a stack of receipts on a table.
This POS terminal in a Toronto restaurant asks for tips ranging from 18-30% by default. (Anis Heydari/CBC)

“Because food and wages cost more, the bill is now 10% higher than before. So that still equates to a really big tip because the bill is so high,” Carson said.

The restaurant critic, who typically eats three to six times a week, began noticing this trend during the first COVID-19 lockdown.

“Restaurants couldn’t do anything but takeout. People felt very bad for restaurant workers, and so people were leaving much higher percentages than suggested tip levels,” Carson said.

Carson suggested restaurants noticed customers were willing to tip more, so they started asking for more.

How your choices are shaped

While a customer’s choice may appear to be their own, decisions such as how much to tip can be influenced by a theory called “choice architecture,” or the way choices are presented to us.

Simon Pek of the University of Victoria’s Gustavson School of Business examines these influences in his research on tipping practices.

If these numbers are higher, it makes us think that a higher tip is more appropriate.– Simon Pek, Associate Professor, University of Victoria

Predefined choices for tipping at the end of your restaurant’s transaction are an example of choice architecture, according to Pek.

“When you see the point-of-sale device, the message that goes to you is that tipping is expected or is a norm in that particular setting,” he said.

Simon Pek researches tipping at the University of Victoria and says that when higher tipping percentages are presented, customers may feel they should tip more. (UVic Photo Services)

“The first number you see, or the range you see in front of you, influences people’s decisions and perceptions about what is the right advice to do in that particular context.”

“So if those numbers are higher, that makes us think a higher tip is more appropriate in that context.”

It’s unclear how often 30% tips occur

Fintech companies such as Square or Moneris do not share data on how often Canadians choose the 30% tip option.

However, Square has confirmed that it is up to sellers and retailers to enable and customize tipping settings on POS terminals.

Some restaurateurs have said increasing tipping options for customers who pay by debit or credit card could backfire, including Jacquie Titherington, waitress and manager of the Blue Star Diner in Calgary.

“I feel like it’s pushing something that’s not necessarily going to work in favor of the employees because I think when people see that it can be a bit of a detour because it seems excessive,” Titherington said. , who is 26 years old. experience in the catering industry.

Zoe Smith, who recently quit her job at a pub in Victoria to go on a trip, says she can’t afford to tip 30% when dining out – so she doesn’t expect to neither do customers.

“I think when I do a good job, I don’t expect more than 18%. And if I get more than that, I’m happy and grateful, but…we’re all struggling here, like everyone is trying to make ends meet,” Smith said.

Between July 2020 and July 2022, Square tracked how much Canadians donate on in-person transactions. Average gratification hovered around 17% nationally, 1% higher than before the pandemic.

Provincially, British Columbians left the lowest tips — an average of 16.7%, compared to Newfoundlanders who tip the most in Canada according to Square data, with an average tip of 18.6%.

Tipping distribution may vary by province

In Canada, the employee or the employer can control the distribution of tips.

In restaurants where servers collect all tips from customers, they often pass on a percentage of that revenue to their co-workers such as hosts and hostesses, busses, dishwashers, and cooks.

When tips are controlled by the employer, they may be pooled and distributed to staff as part of a tip-sharing arrangement provided for in an employment contract.

It’s up to sellers to enable and customize the tipping setting on POS terminals, according to financial technology company Square. (Danielle Nerman/CBC)

In some cases, restaurateurs are included in this arrangement and take what is called the house cut. However, this practice is illegal in Ontario, Quebec and New Brunswick and a gray area in many other jurisdictions, including Alberta.

When Sean Gandossi worked at a take-out pizza counter in Calgary, he never saw any of his advice.

“We had a tip option on the [point-of-sale] machine there…and we made a lot of money in tips, like some nights it was over $1,000, but none of that money went to us at all,” Gandossi said.

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The owners told him they were reinvesting those tips into the business and Gandossi, who was 17 at the time, did not dispute the arrangement because he was earning $17.50 an hour.

“When you’re a little bit younger too, you know, you think, okay, well, I make more than minimum wage… so, you know, I haven’t complained about it much because I don’t. I just didn’t really know much better,” he told CBC Radio. Cost of life.

Ask who gets your tip, regardless of the percentage

Gandossi said he thought most customers were unaware that their tips went to the restaurant owners and not the staff.

“You’re the one giving them the machine, right? You’re the only one asking for the tip selection or the tip option,” Gandossi said.

Tips you give restaurant staff through POS machines like this don’t always have to go through restaurant staff, former servers say. (Steve Bruce/CBC)

“It’s kind of like when you have a tip jar. You’re going to assume that if you put money in the tip jar, the person you see, that’s going to be the one getting the tip.”

Experts such as tip researcher Simon Pek say that if a customer wants to know where their tip is going, they should ask.

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