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News / Life / Lifestyles

How to navigate the new world of tipping

Confusion grows over where and how much

By Jessie Van Berkel, Star Tribune
Published: August 19, 2023, 5:48am

A.M. Roberts was paying for an hourlong paddleboard rental on the Chain of Lakes in Minneapolis when the screen flipped and she was faced with a familiar question.

Should she tip? How much?

Whether renting a paddleboard, buying movie theater snacks, using a self-service dog wash or grabbing takeout, consumers seem to be asked to tip for a growing number of far-flung services in addition to traditional dining — and are often forking over large sums.

Researchers, shoppers and local businesses see many reasons for the change. The proliferation of touch screens. A pandemic-inspired appreciation for customer service workers and local businesses. Strong U.S. spending. Social pressure. Guilt.

At Wheel Fun Rentals on the shore of Bde Maka Ska, Roberts selected 15 percent from the options of 8 percent, 15 percent, 20 percent and 25 percent.

“I did feel weird about it, I’m not going to lie,” she said. At restaurants she usually selects 20 percent, but said tipping for rental equipment felt different and unexpected.

It’s not the first time she’s been surprised by a tip request, noting that she ordered from a screen at an airport restaurant and was asked to tip before she ever saw the waitstaff.

She is not alone in wondering when to tip, how much and even where the money goes. Confusion — and, in some cases, frustration — over tipping has prompted academic studies, a flurry of news articles and umpteen social media posts.

Here’s what industry experts and researchers say about the changing tip culture in the U.S. and how to navigate it:

Why are we tipping more?

Touch screens and electronic payment systems have made it easier for businesses of all kinds to include a tip option, said Hospitality Minnesota President and CEO Angie Whitcomb.

Sometimes that’s the business’ choice, she said, and in other cases the tech company’s standard checkout process automatically adds a step for tipping.

“Small businesses in particular, they just get these platforms and they put it up on the counter and they don’t think about it,” said Nathan Warren, an assistant professor at BI Norwegian Business School in Oslo who has studied tipping. For business owners, he said the extra cash from tips “seems like a no-brainer — if you don’t think through the possible implications of frustrating your customers.”

Square, one of the most widely used payment-processing systems, can ask customers to select a $1, $2 or $3 tip on orders less than $10, Warren said, and it’s a hassle to enter an alternative amount.

“On a $2 cup of coffee, that’s a 50 percent, 100 percent, 150 percent tip,” he said. “You ask and some feel obligated. Some feel like they want to. … You feel bad about yourself if you hit ‘no tip.’ And so people pick the lowest amount, which is 50 percent. So they’ve blown the roof of any sort of norm of 15 percent.”

Seeing tip requests all over the place is leading to “tip fatigue,” Whitcomb said, though she hasn’t seen any evidence that it has translated to a drop in tips.

Toast, one of the common digital platforms used by restaurants, pointed to a recent report that shows customers across the country are continuing to tip well. The average tip was 19.6 percent at a full-service restaurant and 16.9 percent at quick-service restaurants, the report found, with people tipping notably more when dining in at an establishment compared with getting takeout or delivery.

Business owners said it’s not just tip screens contributing to a shift in tip culture.

Nate Houge has seen tips jump at the small St. Paul, Minn., bakery Brake Bread. He attributed that in part to increased credit card sales and “the ease of hitting a button,” but said people are being more generous, including giving more to their loaf-share donation program to address food insecurity.

Their staff has gone from receiving more than $1 an hour in tips, on average, to about $2 an hour since their retail location reopened after a pandemic closure, he said.

“Some of it I think is gratitude,” he said, as more people, having seen restaurants close, are aware of challenges facing small businesses. “People tip more because they want us to stick around the neighborhood.”

The pandemic shifted John Orrison’s tipping practices. The Minneapolis resident said he left the staff at Bde Maka Ska’s canoe rental a couple of dollars in cash and said he is generally tipping more than he used to.

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“Restaurants, since COVID, I’m doing 20 percent,” Orrison said. “I feel like people are underpaid.”

The standard tip in restaurants has shifted as consumers seem to understand the work necessary “to allow us to have fun,” Whitcomb said.

“What used to be 15 percent, 20 percent is now the starting point,” she said.

Where is the money going?

Where a tip ends up can depend on the circumstance. For the most part, the person serving a customer keeps the tip and employers are barred from requiring workers share tips with them or others.

However, businesses can divvy up money left in a tip jar — or its high-tech equivalent, a counter touch screen — among employees serving customers on the same shift, said Minnesota Department of Labor and Industry spokesman James Honerman. And state law allows employers to keep a percentage of a credit card tip to cover processing fees.

There aren’t any limits on the types of businesses that can ask for a tip, he noted.

“Technology has helped make it a lot easier for people to tip. But it should not change the responsibility of the employers to provide those tips to those who deserve them,” said Anthony Advincula of Restaurant Opportunities Centers United. The national nonprofit advocates for restaurant workers and has been training people to ensure they receive all of their electronic tips.

In Minnesota, more restaurants are shifting to a service or hospitality charge, often 20 percent, and some have added a wellness fee of around 3 percent to 5 percent to cover employee benefits. Unlike tips, a business can use the dollars for a wide variety of needs, such as boosting the pay for kitchen staff.

As practices are changing, advocates stressed that businesses need to be transparent with staff and customers about such fees and where the money is going.

When should I tip?

Moviegoer Laurie Hahn Ganser paused to reflect on her tipping practices last week before heading into “Barbie” at the Main Cinema in Minneapolis, where there are tip jars at the concession stand. She drew a common distinction.

“When it’s a purchase of a product, I pause,” she said. “I’m not going to pay 20 percent on an $18 bag of coffee beans. But I will pay over 20 percent for a $5 latte.”

For simple retail transactions it’s OK to skip the tip, said Juliet Mitchell, CEO of Life Etiquette Institute in the Twin Cities.

“Just say no,” she said, adding that people should not feel bullied as they select a tip option.

“There’s hovering and there’s just attentively waiting, and there’s a subtle difference,” Mitchell said. “Give them that privacy.”

Advincula agreed that it’s fine not to leave a tip in circumstances that traditionally have not warranted one, like buying a T-shirt. But he believes at least a 20 percent tip is appropriate at sit-down restaurants and said people should tip at counter service restaurants.

Sofia Cook, a Macalester College student working at the Main Cinema concession counter, previously had a job at a small St. Paul restaurant. She was the one flipping the touch screen and awaiting her tip fate.

Often people assumed they didn’t need to tip.

“To them it looks like I’m not really doing a lot of work. But to me, I’m packing up your order, I’m writing the orders down, answering the phone,” she said. “There’s a lot of things that go unseen that service workers are doing.”

Customers and industry workers alike said tipping is personal and people bring different logic and economic circumstances to their decision.

Warren, the assistant professor, noted that as a poor graduate student in Oregon he and his adviser had different philosophies on tipping — she was happy to and he was more judicious. However, he said they both would rather see people paid a living wage. Tips deepen social inequities, he said, as consumers base them on looks or leave cash for a barista but not someone doing a similar job at McDonalds.

And in the growing array of circumstances where people encounter tip requests, there is not always a clear answer for customers on whether, or how much, to tip. Or exactly who is getting their money.

“It’s not black and white,” Advincula said. “It’s not straightforward.”