The tipping point: Why the cost of appreciating restaurant staff is rising

What you need to know about "tip creep"

In Canada, tipping at bars and restaurants is so commonplace that most of us don’t even stop to think about it. But if you’ve noticed the suggested percentages on your local point-of-sale machines creeping upward in recent years, you aren’t mistaken. A 2022 survey conducted by Restaurants Canada found that the average tip was around 15%, pre-pandemic. Now, it has climbed to roughly 17.6%.

Susan Lauder, a NAIT Hospitality Management instructor, refers to this phenomenon as “tip creep.” And it has multiple causes.

First is life under COVID-19, which squeezed the restaurant industry particularly hard, and inspired the public to up their gratuities as a show of appreciation – a phenomenon The Atlantic magazine has called the Great Pandemic Tipping Boom of 2020.

Another factor is the ubiquity of paying with credit cards or through third-party apps. Lauder says people are less likely to count every penny when the transaction occurs digitally, without any actual cash changing hands.

There’s also a parallel creep in which establishments ask for tips, with fast-food joints and coffee shops alike offering tip options without providing table service.

All of this can leave customers more uncertain than ever. Should you tip more depending on the type of establishment? Are tips now a de facto way of subsidizing workers’ wages, regardless of how you’re treated? And, overall, what does the current trajectory of tipping mean to staff and customers alike?

A tip to the past

server at ernest's, nait's on campus fine dining restaurant

Tipping has a long and complicated history.

The practice originated in Tudor England, and by the 1700s was a common courtesy in the manor houses of England and France. It was a way for visiting guests to show their appreciation to the staff, especially after long stays.

The practice migrated to the United States in the 19th century, but became controversial within the young democracy. In the early 1900s, six American states even passed laws banning tipping, viewing the practice as an aristocratic way of reinforcing class differences.

Today, tipping is not required or even expected in many European countries. In Canada, however, it’s not just established practice, but an expectation – so much so that there’s legislation around it. In Alberta, tips are legally required to be counted separately from wages, which begin at $15 per hour.

Researchers have identified a variety of reasons why people tip, from expressing thanks for good service to a sense of duty to straight-up showing off. But the automatic nature of the transaction can still leave customers feeling uneasy – either because they don’t feel they’ve received service that merits an extra payment, or because they don’t know where their tip money is actually going.

The automatic nature of the transaction can leave customers feeling uneasy.

In fact, when it comes to how the restaurant industry handles tips, Lauder has one word to describe it. “Tipping is corrupt,” she says, “and this is speaking as someone who relied on them.”

A server herself in the 1970s and ’80s, Lauder went on to write her master’s thesis on how tips get distributed in Canadian restaurants, and the effect it has on the industry.

The fundamental problem, she says, is that it isn't clear to customers how their tips are divvied up, making them unaware of the impact they may have in leaving one amount versus another.

Most servers “tip out,” or share their tips, with their fellow staff members. However, Lauder says, many restaurants calculate that number not based on actual tips received, but as a percentage of sales, potentially putting staff at a disadvantage on a slow day.

For example, say a server doesn’t pull in enough tips on a given evening to cover that percentage. In a way, says Lauder, the shortcoming could come out of their pocket. If tips are pooled over time and periodically redistributed, the difference will effectively be taken out of the tips earned on a busier night.  This can put an important portion of a server's income at risk.

Some restaurants even force servers to tip out to the business itself – a legal gray area that wage legislation doesn’t cover.

In addition to being unfair to the server, both practices put customers in an uncomfortable situation.

Even the province’s mandated $15 minimum wage doesn’t come close to a true living wage, which in Edmonton was estimated to be $21.40 in 2022. By withholding tips, customers may end up preventing restaurant staff from achieving that amount. And yet if the only alternative is blindly paying tips in larger and larger percentages, they can end up perpetuating a model that many feel is broken.

That uncertainty is borne out in how Canadians actually tip now. Another 2022 poll found a wide range of opinion on what counts as an acceptable percentage for a tip, and that it depended on several factors, including how busy the restaurant was, quality of the service, and what kind of establishment the person was at.

A majority of respondents, meanwhile, agreed with the following statement: “If the salaries of food servers were better, there would be no need to tip servers.”

A complicated reality

steven brochu, nait culinary arts grad, chef and owner at MilkCrate cafe

Those currently in the industry also struggle with both the ethics and logistics that come with tipping.

“Personally,” says Steven Brochu (Culinary Arts ’06), owner of MilkCrate, a café/caterer in downtown Edmonton, “I would like to live in a world where we don’t tip, and where people earn a lot more money.”

Instead, at MilkCrate tips are evenly distributed among its six full-time staff members every two weeks. Brochu says he “inherited” this more traditional tipping system from the space’s previous owners, and that customers are so used to tipping this way that it would be a shock to suddenly change it now.

“If people come in and want to give us an extra dollar for their cup of coffee, we’re not going to stop them,” Brochu says. Customers are more comfortable paying a lower price and then tipping, he notes, rather than paying one higher price that has the same tip amount already built in.

How tips get distributed among staff is also top of mind for Michelle McDonald (Culinary Arts ’16), owner of Tryst Wine and Small Plates in St. Albert.

“There’s always a division between front of house and back of house, and part of that is the tipping,” she says.

At Tryst, McDonald makes a similar point of having all tips shared equally among her servers and kitchen staff. Overseeing a staff of 16, each of whom works a different number of hours per week, requires McDonald to maintain a dedicated spreadsheet just to make sure tips are pooled and distributed fairly.

This system adds to her workload, McDonald admits, but she believes it helps create an atmosphere where coworkers view each other as teammates, rather than competition.

“There’s no jealousy, where someone made better tips because they had better tables,” she says. “It’s all based on the hours you work, not the luck of the draw.”

McDonald’s experience aligns with the research that tipping fluctuates wildly. She says that a given table at Tryst might tip anywhere between 10% and 30%, but finds that has more to do with the temperament of the customer than it does the actual quality of service being provided.

“It’s such an engrained habit in patrons to tip, but nobody stops to think about why they’re tipping,” McDonald says. “If I had my druthers, there’d be no tipping, just like they do in Europe. But you’d be paying your staff a living wage.”

The future of tipping

person dropping money into tip jar at cafe

With so much confusion and dissatisfaction surrounding tipping, why not move to abolish it entirely?

Brochu, McDonald and Lauder all have the same answer: in this part of the world, at least, the habit is simply too far entrenched. Canadians, they agree, are too self-conscious to suddenly change their behaviour and withhold much-needed income from their servers in the hopes of somehow forcing the industry to abandon the practice altogether.

Lauder also points out that every few years, a new restaurant arrives on the scene with a no-tip policy, where wages – and prices – are accordingly higher. This business model is meant to guarantee workers something closer to a living wage, and more accurately reflect the true costs of preparing and serving food. But, Lauder says, those restaurants inevitably fail, or end up reverting to the status quo.

So when it comes to deciding how much to tip your delivery driver, barista or sommelier, there are no easy answers – only that, to some extent, the livelihood of a restaurant staff member rests in a customer’s willingness to pay extra. Tip creep may be real, but few agree on what the ideal percentage should be.

And short of an aggressive structural change, such as government legislation or industry-wide policy, tipping as a practice is here to stay.

 “At the end of the day, people in North America want the choice to give their money to you,” Brochu says.

“But putting it on the guest to pay for the staff that you employ is not fair. You can raise your prices, but are [customers] willing to pay $30 for a Caesar salad?”

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