What’s Wrong with Guilt Tipping?

The digital age and an increasingly cashless society has brought a new focus on a standard practice for restaurant patrons—tipping.

Devices such as the Square Reader and iPad are replacing the old cash register and tip jar combo, turning a charitable decision such as leaving a tip into an act of coercion – that might be a little strong but stay with me.

Now, whenever a patron swipes their debit or credit card, they are prompted with a screen asking if they’d like to leave a tip. Some ask for 15, 20, or even 25 percent. Others ask for even more, seriously? Still, some don’t give the patron the option of leaving ‘no tip’ without doing it through the custom portal. 

Customers are growing wise to these schemes. And in some cases, it’s at the expense of the employees serving them.

Software Advice, a company that helps businesses find the right software for their needs, released a study in 2015 in which 29 percent of respondents said they were more likely to leave a tip if the suggested tip screen gives them a “no tip” option.

Other respondents said that the proximity to an employee makes them more likely to tip because of “increased social pressure”, according to one respondent.

This tipping technology is being used increasingly in places like flower shops, grab-and-go, and even in food trucks. But, this has muddied the water on the etiquette of tipping in general.

Most customers leave tips for employees who don’t make the minimum wage. These are often servers, bartenders, and other service industry and hospitality personnel. However, creating a more widespread tipping culture can actually have a positive impact on earnings for those who make above minimum wage.

Research from the University of Chicago’s Booth School of Business has found that customers are more likely to pick the middle amount of a suggested tip, even if it is above 20 percent. Other retailers have noticed their tips increasing because people are willing to leave a larger tip on a credit card, especially when they are short on cash.

But, there are drawbacks to “guilt tipping”. For one, it can create the perception that your business doesn’t pay employees above the minimum wage. This can create an aura of cheapness in your business if it is not done well.

Another drawback is that you might create a disincentive for customers to return to your business. If someone can’t handle the social pressure of turning a tablet screen back to an employee after pressing “no tip”, they might choose to go to another store the next time.

As a restaurant owner, you need to be aware of how new technology can affect your business.  New point-of-sale technology can make your life easier by creating a user-friendly, and interactive check-out experience. But, it can also take a toll on your employees.

Be sure to actively engage with your employees, especially those who rely on tips as a part of their income, to make sure your business processes don’t interfere with your ability to retain talent.


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