Tipflation: Tipping is increasing, and not just in restaurants and rideshares

The fast-food drive-thru. The Subway sandwich counter. The Botox injection. Consumers are being prompted to tip when they never were before, and some are pushing back.
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Dianna “Mick” McDougall

· 4 min read

This is the second of two stories about the changing frequency and nature of tipping. Part 1 tackled restaurants’ “kitchen appreciation fees.”

tipflation: Noun (neologism) The phenomenon of tipping becoming both increasingly widespread and expensive (in terms of acceptable percentage) in society. Wiktionary

In 2022, TikTok user @antidietpilot posted a video from her car right after she’d bought chicken tenders and french fries from a local fast-food restaurant drive-thru.

“I’m sorry to say this, but tipping culture has gotten out of control,” she says in the video, which has been viewed 7.1 million times.

She explained she always tips 20% at full-service restaurants, but was taken aback when prompted to tip while behind the wheel, which she declined. “I just felt like, really uncomfortable, but, like, homegirl, what am I going to tip you for? I’m in the fucking drive-thru!”

TikTok user @katiuscia_maria was prompted on a payment tablet to enter a tip after a store clerk handed her a packaged cookie. “It aligns with this sense of expectation and entitlement that people believe that no matter what job you get, you are always owed a tip,” she said in a video posted on Jan. 18 that garnered 2.2 million views. “And I’m sorry, but that’s just not the way the world works.”

Except, maybe it kind of is?

Tipping has never been an exact science, but in the US, where there once was an expectation of 15%–20% for a service that required a certain amount of time and attention—like table service at a restaurant, a haircut, or a taxi—today that expectation is broadening.

From here to gratuity: During the Covid-19 pandemic, many wanted to show an extra measure of appreciation to restaurant workers who bravely went to their jobs while everyone else watched Squid Game in sweatpants.

“I definitely found myself overtipping because things were difficult, especially at the beginning of Covid,” Michael Prendergast, managing director of the consumer and retail group at Alvarez & Marsal, told us.

  • In March 2020, at the onset of the pandemic, tipping at restaurants surged to an average of more than 20% for on-premise orders and more than 16% for off-premise orders, according to data from Toast, a restaurant platform that includes ~68,000 restaurant locations.
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Pendergast said that during the pandemic he began tipping in situations when he hadn’t before, like for pick-up orders.

“It used to always be that you don’t tip on takeout at a restaurant,” he said. “You don’t have to. However, that changed.”

Meanwhile, contactless point-of-sale payment systems on touchscreens—both stationary and handheld— have gained popularity. And the choose-a-tip prompt increasingly migrated from full-service restaurants to other types of restaurants and, more and more, beyond restaurants—and that concerns Pendergast.

“To me, this sort of obligatory, ubiquitous approach of I go to a stationery store and I buy a pad of paper for $3.06 and then the screen turns around…and should you tip for that?” Pendergast said. “I don’t see that as a great strategy going forward, especially in an inflationary environment.”

Tipping the scales: Today, if customers are tipping—and how much—are being observed in real-time.

Bob Vergidis, the founder of The Point of Sale Cloud, said many restaurants choose to have the lowest option for a tip on servers’ handheld devices be 20%, and the others 25% or 30%. Under the watchful eye of the server, meanwhile, Vergidis told us, there’s “another button that says ‘custom.’ When you click on ‘custom,’ you’re gonna have to press five more buttons to pick whatever you want.”

Taking those extra steps to leave 18%, which once might have been considered a good tip, in this context might make the diner feel like a cheapskate going below the minimum suggestion.

Vergidis said some restaurant owners want to alleviate some awkwardness by having the tip screen programmed to instead have the options of 12%, 15%, or 20%, or to have no suggestions and a custom tip be the only option.

“But then it’s their staff that complains,” Vergidis said, adding that servers are well aware of other restaurants’ tipping suggestions and want to work for those that give them “the opportunity to collect more tips.”

One way to reverse the course of tipflation would be to start tweaking those tip-prompt screens.

But, Verdigis said, there’s “more than one stakeholder on those tip buttons.”

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.