Has tip-flation reached its peak?

Grabbing that lunchtime coffee and sandwich is likely costing you a little more these days as Canadians contend with what’s been dubbed ‘tip-flation.’

Not only are tip expectations higher, the tip prompt screens seem to be popping up more often and in unexpected places. But according to one University of Victoria professor who has conducted research on tipping practices, the tide could be turning.

“In the last few years we’ve seen a big shift in where and how we tip in Canada and I think that’s given rise to a lot of reflection among people about what role tipping should play when we compensate people in our country,” said Simon Pek, Associate Professor at the Gustavson School of Business.

Earlier this year, an Angus-Reid poll found that the majority of Canadians (59 per cent) would prefer to do away with tipping altogether in favour of a ‘service-included’ model and higher base wages for employees. It is a significant change, according to Pek, who says this perspective has historically been the minority.

But how did tipping get so out of control in the first place?

“In light of the pandemic people were looking for a way to give something extra to those doing essential work,” explained Pek.

“More recently businesses have been in a labour crunch and have been looking for ways to give extra value to their workers and tipping was a relatively attractive way of giving more compensation by passing on the responsibility for that to consumers.”

He added that payment systems like Square have made it easy even for smaller businesses to make tipping a simple turn of a screen. It is a practice that even an etiquette expert does not find very polite.

“I almost perceive it as intimidation,” Julie Blais Comeau, told CityNews. “Right away it’s suggesting [a tip amount] to you and that is done after taxes. Probably a lot of our viewers have experienced being rated for how much they’re giving.”

In a battle against the phenomenon, some restaurants, like Bampot in Toronto, have now chosen to go ‘tip free’.

“We make sure that it’s known that there’s no obligation,” said front of house manager, Shaela Nathan-Turner.

“We do earn a liveable wage. The starting pay here is 25 dollars an hour with benefits.”

The casual tea and board game spot implemented the policy last fall around the same time the business went under new management.

“With people in Toronto not being able to afford a lot of things, it shouldn’t be on the customer to be paying our wages,” she explained.

She said she also appreciates the fact that the policy gets rid of one of the downsides of tipping culture – the fact that in the service industry, it can negatively influence a server’s perception of a customer who does not tip or tips a smaller amount than is custom.

Pek added that there are even more problematic consequences of tipping culture.

“People get different amount of tips based on factors that aren’t always related to their work performance. It could be their gender or their attractiveness, for example,” he said. “It also creates an uncomfortable power dynamic between consumers and workers and sometimes makes [workers] tolerate behaviour that they normally wouldn’t want to because they’re dependent on those tips.”

Bampot has not had to increase its food and drink prices to compensate for the new policy but some ‘no tip’ restaurants have.

Pek argues that establishments that want to go against the grain can be successful in attracting customers so long as they are effective in communicating why their policies are important to them.

He also says that governments have a role to play in bringing down tip-flation by exploring different compensation models for service industries or even enacting rules around how tips are solicited and the ranges that are permitted.