Customers at the Sweetly Bakery & Cafe in Battle Ground, Washington, close to Portland, Oregon, appear to be feeling less giving recently.
A gratuity isn’t what it used to be with inflation at or near record levels and customers are more and more strapped for cash.
“Since everything got more expensive, we’ve seen a decline in tipping,” Irina Sirotkina, owner of Sweetly, said.
The bakery, like many other businesses, accepts payments through a contactless, digital system that asks you to give a tip when you do so. Each transaction has pre-set options with percentages ranging from 15% to 25%.
“We encourage people to tip but it’s not mandatory, obviously,” said Sirotkina.
Even though a tip at Sweetly would only be a few dollars on average (the average transaction is less than $20), fewer customers actually left any money at all.
“Only around 1 in 5 people tip,” Sirotkina made an estimate.
The most resistance to tipping occurs at the point of sale
Despite the fact that many Americans predicted they would leave larger tips once business operations restarted following the Covid epidemic, consumer behavior hasn’t really altered significantly.
According to etiquette experts, leaving 20% as a tip at a sit-down restaurant is still customary. However, there is less agreement when it comes to a take-out snack or coffee.
According to Toast’s most recent restaurant trends analysis, tipping at quick-service restaurants has generally remained unchanged. The average tip is 17%, almost the same as it was a year ago.
However, the restaurant software provider observed that when it comes to takeout, consumers are tipping less — currently down to 14.5%, on average, after rising earlier in the pandemic.
These kinds of tips have decreased over the past year, according to other payment software vendors. For instance, according to a story from The Wall Street Journal, Toast’s competitor Square discovered that from March 2021 to the end of February, the typical tip at quick-service restaurants—which includes cafés and coffee shops—dropped from 17.2% to 15.2%.
According to Eric Plam, founder and CEO of the San Francisco-based business Uptip, which wants to promote digital tipping, “part of it is tip fatigue.”
“During Covid, everyone was shell-shocked and feeling generous,” Plam stated. Now, “you are starting to see people pull back a little bit,” He made this argument in particular reference to point-of-sale tipping, which encourages clients to leave tips even before they have gotten the good or service.
“This point-of-sale tipping is what people resist the most,” he said, “compelling you to tip right there on the spot.”
The incomes of service workers are boosted by tips
However, because business transactions are becoming more cashless and because service industry employees typically make the minimum wage or less, Plam explained, having a system for leaving tips is essential.
In fact, the most recent statistics from the U.S. Bureau of Labor Statistics show that the average hourly pay for fast-food and counter workers is $14.34 for full-time personnel and $12.14 for part-time workers – including tips.
A historic measure in California intends to increase the minimum pay for fast-food and quick-service employees at businesses with more than 100 outlets nationwide to up to $22 per hour. The current minimum wage in California is $15.50 per hour.
Democratic politicians and President Joe Biden have advocated for a $15 minimum wage to be implemented nationwide. Since 2009, the federal minimum wage has stayed constant at $7.25 per hour.
“We are sympathetic but it doesn’t feel good,” regarding point-of-sale tipping, Plam remarked. “Now that the pandemic is essentially over, its starting to shake out now,” he added. “The good news is we’re rethinking it.”
