Customers hate tipping before they're served – and asking makes them less likely to return
Nathan B. Warren, Ph.D. Candidate, Marketing, University of Oregon
Fri, December 24, 2021
Imagine you’re in line at a coffee shop. You order your usual cappuccino and swipe your credit card to pay. Then the cashier swivels a little screen that prompts you for a tip – before the espresso shot is pulled or a drop of milk steamed.
Do you tip more, perhaps hoping that it will lead to a better drink? Or less or none at all, peeved at being asked to reward service that hasn’t happened yet? Do you feel pressured into tipping the suggested amounts, which can equate to more than half the price of the drink?
This is a dilemma that most of us are increasingly facing in a variety of settings where previously you might have encountered a lone tip jar with change and crumpled dollar bills. Now we’re being asked to fork a over US tip for a coffee drink.
In a 2020 research study, we explored how this new pre-service tipping etiquette is affecting consumers – and what it meant for the baristas and other employees hoping for a reward for their efforts.
Long live the tip jar. Helen H. Richardson/The Denver Post via Getty Images
The pre-service tip invasion
Point of sale platforms such as Square and Clover are making it easier than ever for businesses large and small to seamlessly integrate tip requests into the service experience.
While most of us are used to filling out the tip line on a receipt at a full-service, sit-down restaurant, we are now seeing tip requests occur in many new environments, such as cafes and bakeries, fast-casual delis and food trucks, and even retail stores, flower shops and liquor stores.
Articles in the popular press about the trend suggest that some prefer the convenience of tipping when placing their order. Others say they feel that they are being guilted into tipping employees who have not yet provided a service – and who have done little more than type in an order and hand over a muffin.
How consumers really feel about it
To find out how people respond to differences in tip timing – before or after service – we conducted a series of experiments with fellow marketing professor Hong Yuan.
We looked at how it affected tip amounts, ratings and likelihood of returning to the business, controlling for variables that might affect tip amounts, most notably the effects of repeat customers or attractive workers.
The first study compared real tip amounts at two locations of a popular smoothie chain on the East Coast. At one location, tips were collected while ordering – before receiving the smoothie. At the other, gratuities were requested only after someone handed the customer her order. After analyzing 7,523 transactions, we found that tips were 75% higher on average at the location that asked for them only after people received their smoothie.
Next, to dive a little deeper into why, we conducted three experiments in which we recruited participants online and asked them to imagine themselves a customer in a scenario. In one, participants imagined ordering a drink and a sandwich at a cafe, while the other two involved getting a haircut at a salon. In all three, participants were randomly prompted to tip either before or after receiving service.
Then we asked them to fill out a scaled survey rating the experience in terms of how likely they’d be to return to the business and how they felt about the tip request. In the third study, we also asked participants to select how much they’d tip and and how they’d rate the service on Yelp.
In each study, we found that participants viewed pre-service tip requests as unfair and manipulative and reduced the likelihood that they would become repeat customers. In the third study, requests for tips before a haircut also led to lower gratuities and online ratings.
We also found that businesses that emphasize the convenience of tipping can offset some, but not all, of the other negative feelings.
Consumers prefer to drink their coffee before handing over a tip.
Tip benefits
Tipping trends are constantly shifting.
Some innovations include the introduction of recommended tip amounts on receipts and the proliferation of tip jars in the 1990s and most recently digital tip requests. Each has contributed to “tip creep,” which has pushed up the average tip from 10% in the 1940s to over 20% today, and made tipping the norm in more and more types of business.
Our findings, however, suggest that businesses should be careful when adopting new innovations. Customers, employees and owners all benefit if businesses stick to tradition – and request the tip only after the coffee is poured.
This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Nathan B. Warren, University of Oregon and Sara Hanson, University of Richmond.
Read more:
Why we should get rid of tipping
How the war on tipping harms customers
Are you a stingy tipper? You may have unresolved trust issues
Applebee’s server sparks debate with photo of customer’s low tip: ‘The nerve of some of y’all’
A TikToker has sparked debate on the platform after sharing an Applebee’s receipt exposing a customer’s substandard tip.
The user @kingj24__ posted footage of a receipt from a franchise location in Staten Island, N.Y., showing a $6.55 tip left for a server named Dana G. The total bill plus the tip is $80, meaning the cost of the meal was $73.45. The tip comes out to around 9% of the bill. That’s significantly less than the standard 20% tip, which would have been $13.49 in this instance.
It is unclear if the TikToker who shared the receipt is the server in question.
The customer also left a hand-written message on the receipt explaining the low tip.
“You [were] great,” they wrote. “Holidays are just rough right now.”
They added in an arrow pointing to the tip and a frowning face.
TikTokers were divided in the comments of the video, which has since racked up over 711,000 views. Some pointed out that the customer, who seemed to be going through some financial struggle, did at least leave a tip, albeit a small one.
"It's only $4.45 less than the typical 15% average tip," one user commented. "But at the same time, you don't know that family's struggle. [At] least they left you a tip."
"The nerve of some of y'all," wrote another. "Gatekeeping taking your family out to dinner for the financially blessed. What type of BS is 'stay home if you're broke.'"
"This makes me really not want to go to Applebee's," commented a third. "It's a low tip, but it's still a tip. Calling out customers like this is wrong."
Still, others believed that the customer shouldn't be dining out if they cannot tip fully, as waiters rely on their tips as a primary source of income.
"You can afford $73 and some change to feed yourself but not enough to tip?" commented one person. "Don’t eat out if you can’t afford the service.
"If I can't afford a 20% tip, then [I'm] not going out for an $80 meal," wrote another.
Some TikTokers turned the conversation around, noting that restaurants should be fairly compensating their employees so they do not have to live off of tips.
“Ban tipping,” one user wrote. “Force the restaurants to pay servers living wages.”
“Don’t blame the tipper, blame the establishment,” wrote another. “These people shouldn’t have to rely on tips to barely make ends meet.”
The federal minimum wage is $7.25 per hour.
However, as trial attorney Laura Lawless explains for The National Law Review, businesses that employ tipped workers are legally allowed to pay them as little as $2.13 per hour, though the number varies by state.
This is because employers can take a “tip credit” of up to $5.12 per hour against the $7.25 federal minimum wage obligation — meaning that as long as an employee’s hourly wage plus their tips equals $7.25 an hour or over, the low wage is considered legal.
According to tax and auditing firm Plante Moran, tip credits are meant to “give some relief to businesses that pay an employer’s share of employment taxes on tip income paid to their employees by someone else.”
But Lawless notes that the long-standing tip credit model “presumes that tipped employees receive a steady flow of tips and spend nearly all of their working hours engaged in tip-generating labor,” which does not “always align with reality.”
Many tipped employees, for instance, might be tasked with time-consuming duties for which they are not tipped, such as bookkeeping and cleaning, while receiving just $2.13 an hour for such labor.
On Oct. 28, the U.S. Department of Labor announced the “Final Rule,” which will require employers to pay the full federal minimum wage of $7.25 per hour to tipped workers who spend more than 20% of the workweek on tasks not directly engaged in tip-producing work.
The rule will go into effect on Dec. 28.
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