The Tipping Point: Tech Tipping Causing Tension

Half of customers felt manipulated or tricked into leaving a tip at checkout, according to Capterra’s June 2023 survey, which was conducted to learn more about how the overuse of tablet tip screens is changing the way consumers approach tipping culture. 

Among the insights:

• Over-asking for tips is alienating customers: 50 percent have felt manipulated or tricked into leaving a tip or tipping more than they intended to.
• Tipflation has changed tipping behavior at restaurants: 77 percent tip more due to rising costs for workers while 37 percent tip less because of rising costs for consumers. 
• Restaurants have increased tip expectations: 58 percent of consumers believe that restaurants have increased their minimum suggested tip.
• Consumers don’t expect to tip at QSRs but are inundated with requests: 82 percent have seen tip screens at QSRs, but only 11 percent say tips here should be mandatory.

The traditional belief that tipping should be limited to table service restaurants, delivery services, salons, and other similar establishments, is being challenged by the rise of tip screens at checkout. This fundamental disconnect with tipping could erode customer loyalty and lead to financial losses. In order to address this, Capterra says  businesses should reassess their POS software, leverage insights to better understand what customers think is appropriate, and use these learnings to customize the shopping experience. 

To understand what restaurant owners and operators can learn from these findings to better run their businesses, Modern Restaurant Management (MRM) magazine quizzed Molly Burke, senior restaurant analyst at Capterra.

When did tech tipping “tip the scales” into aggravating customers?

While our study focused on tipping over the past 12 months, it’s safe to assume that, with the rise of both inflation and tech tipping from 2020 onward, consumers have felt frustrated since well before last June. Consumers are dealing with the sticker shock caused by inflated menu prices, which in turn drive up gratuity. They have also noticed restaurants bumping up their minimum suggested tip percentages over the past year. 

What may bother consumers even more than upwardly-climbing tip prompts at restaurants is the fact that they are now being asked to tip at a host of businesses in and outside of the restaurant industry where they feel tips are not earned. Checkout tablets are now ubiquitous at fast-food and quick serve restaurants, though only 43 percent of surveyed consumers are willing to tip for counter service. Very few consumers are willing to tip for takeout and drive-thru orders. 

Within the past year, over half of consumers have encountered tip screens at businesses that hadn’t previously asked for tips, like retail stores, gas stations, and even ticket counters. The majority were even prompted to tip at unmanned self-checkout kiosks (and a third of that group actually left a tip).   

The bottom line is that most customers are frustrated about being asked more money–and in more venues–than a year ago.

All this is not to say that customers don’t sympathize with tipped workers. The majority of our survey respondents feel motivated to tip out of a desire to support workers. Many respondents expressed frustration at the idea that they’re being guilted into paying workers a fair wage, when that responsibility should rest on the employer.

What can restaurants do to make guests feel more comfortable about tech tipping?

First and foremost, restaurants should take note that the majority of customers are only willing to tip for table service or food delivery. For any level of service below that, including self-pickup takeout, drive-thrus, and counter service, far fewer than half of consumers are willing to tip. While that doesn’t mean these types of restaurants shouldn’t ask for tips, it does mean they should expect to receive less than the industry-standard 20 percent from every customer.

Second, businesses need to take seriously consumers’ concern that minimum suggested tips will continue to rise. Consumers still want to feel like their tip was earned, not that they’re being hustled out of more money because it’s trendy for businesses to push for bigger tips with screens. 

Third, it’s important to give your customers privacy while using tip screens. Consumers don’t want to feel watched and judged while they decide whether or how much to tip. Our data shows that consumers are just as likely to tip when they’re the only ones who can see the screen, as when the worker they’re tipping is looking on. It doesn’t take much to give customers a few moments of peace and quiet to check out on a screen.   

What are the ramifications if tech tipping continues?

If tech tipping continues, we will likely see a backlash from consumers. That could mean that more consumers will opt out of tipping, or will tip less money. Consumers may even avoid businesses that ask for tips when they feel it’s not appropriate. 

The most important thing to note here is which consumers are most affected by tip fatigue: wealthy consumers who tend to leave the largest tips. Surveyed consumers earning six-figure incomes and above are much more likely than lower earners to tip 20 percent or more. These wealthy consumers are also significantly more likely to have felt manipulated into tipping on a screen recently, to feel pressured to tip for poor service, and to say they’re being asked for tips too often. Businesses need to consider whether it’s worth losing their highest-paying customers over tipping fatigue. 

How do you expect the tipping structure to evolve over the next few years? Will customers just get used to on-screen tipping?

It’s unlikely that tip screens and checkout tablets will disappear, given the convenience they offer to businesses and customers alike. Previous research from Capterra shows that in 2019, 65 percent of consumers found it easy to use tip screens. 

But while I do think customers will continue to get used to on-screen tipping, I don’t think tipping outside the restaurant and services industries will become the status quo. Customers will continue to tip on screen where they feel it’s appropriate, but given the frustration we’re seeing with tip creep and tipflation, I think it’s unlikely that they’ll start tipping regularly at places like retail stores. 

Capterra’s 2023 Tipping Fatigue Survey was conducted in June of 2023 among 782 U.S. consumers to learn more about how tipping culture and tip screens on tablets and mobile devices are changing consumers’ approach to tipping at restaurants and other businesses. Respondents are regular users of tip screens on tablets or mobile devices at restaurants: they have all used a tip screen in the past month, and on average use tip screens at checkout at least once per week.