By John Shapiro
On the subject of tipping, there are passionate arguments to be made on both sides of the fence. Tipping has always been a topic for debate, but it becomes even more volatile when Canadians are dealing with consistent pressures on their wallet. In a continuously evolving industry and society, dealing with interest rates, cost of living and more, where does tipping fall in the list of priorities? Tipping is a clear delineation of a positive customer experience, but how much is too much? Many have noticed the recent change in the minimum amount at the point of payment shifting from 18 to 20 per cent, compared to the previous standard of 15 per cent at most. Have we reached a tipping point?
Our recent study surveyed over 7,500 respondents globally, with 1,500 of whom were in Canada. Our data found that in a world of rising expenses, tipping and dining trends are evolving quite significantly. Over 67 per cent of Canadians feel pressured to tip, while 54 per cent say that inflation affects their ability to do so. In a society with high living expenses, deciding to skip the tip after a slightly negative experience is an easy way to save dollars at the end of the month without cutting out your dining experience altogether. This can mean a big change in the way customers interact with hospitality staff since 74 per cent of Canadians are still dining out once a month or more, including both sit-down and order-in experiences.
So, let’s ask ourselves where we stand, and why we have hit this tipping point. The overall dining experience is constantly changing. Guests have had to adapt to changes like QR codes for digital menus (while more than 85 per cent said they preferred a physical menu), tipping expectations rising to an average of 18 per cent minimum, overcrowded locations leading to rushed experiences or long wait times, shrinkflation on their meals sizes, and more. This can result in an unimpressed customer, and leave them wondering why they would tip at such a high rate when their overall customer experience is not as positive as it once was. And that may be the underlying issue. If a customer doesn’t perceive sufficient value, they will not tip accordingly.
Canadians, despite often being referred to as a kind and open population, particularly feel this tipping pain and frustration, with 25 per cent confirming that they are cutting back on tipping amounts. Canadians also felt the most strongly about eliminating the need for tipping altogether when compared to consumers in other global regions.
But let’s be realistic: in today’s ever-changing economic landscape, where interest rates and the cost of living are in flux, tipping has remained a key aspect of the hospitality industry. There are very few scenarios where it is likely that tipping will be eliminated altogether, despite the pushback from consumers. Tipping not only reflects the quality of customer service overall but provides guests with personal agency to express when they’ve had an exceptional experience. Canadians, like many others around the world, are trying to navigate the modern complexities of tipping amidst rising expenses.
In order to get ahead of any potential customer dissatisfaction around tipping, restaurants need to focus on the guest experience and ensure a high standard of service is provided consistently. This doesn’t just mean being “nice” to the customer; variables that can heavily impact tipping are things like speed of service, quality of food, server attitude, and atmosphere. For some of these, implementing better back-end technology can improve the guest experience by reducing friction points, increasing the speed of service, and ultimately allowing staff to spend more time interacting with the guests and ensuring their service is exceptional.
RELATED: Canadian diners continue to put value first
At its core, tipping can become contentious when it feels more like an obligation than a choice. This highlights the need to balance customer satisfaction with genuine choice in tipping practices, ensuring that the hospitality experience stays positive and respects consumer agency in an increasingly automated world.
As the industry continues to evolve, understanding and responding to these dynamics can help maintain customer loyalty and achieve operational success.
John Shapiro is Lightspeed‘s Chief Product and Technology Officer. He is responsible for leading global Product and Technology team and driving product strategy to bring technology and insight to the innovators who are elevating their industries. In his previous role as SVP, Retail Technology, he worked to help integrate the Supplier Network into our core retail platform across POS, eCommerce, and B2B.
