Tipflation

Tipflation, that ever-so-clever word that means tipping is being offered in more places and the default starting point is higher, is a very real phenomenon. But where is it coming from? What’s driving it?

One key factor is technology in the form of new POS and payment terminals being deployed in more places than ever, particularly in quick-service locations and coffee shops — where tipping was never historically part of the transaction. Layered onto that this is the fact that in Canada, preset tips now typically start at 18% with a middle option of 20% and a high option of 25%.

Psychologically, the preset is nudging you toward the middle option — it feels like the lowest option represents poor to standard service, the middle is standard to good service, and the high is great service. But these numbers are much higher than the historical norm of 15%, being considered a good tip. Add to this that these are percentages of the rising costs of food, beverages, and meals and tipflation is a big deal in the foodservice industry.

So, is this likely to continue?

Yes, we’ll see more foodservice locations upgrade their technology to enable tipping and use high presets. But we may not see an increase in the percentages since we’re starting to notice a significant backlash against the technology-driven aspects of tipflation that will keep the numbers in check. This also means that as customers or guests of foodservice, we shouldn’t feel guilty about putting in our own tip numbers or skipping the tip entirely for certain quickservice settings where a tip has historically been for staff that truly went above and beyond.