‘Tipping culture is out of control’ — even some businesses agree

“Honestly, I think the prompt irritates most people,” said Lyn James, the owner of Flowers & Cappuccino by Lasting Visions in Bowman, North Dakota.James said that’s why she opted out of the tip screen when she implemented her store’s contactless point-of-sale system. Although gratuity can vary greatly, “most folks will leave at least a dollar on a latte,” she said.”If the customer is happy, they are generous with their tips.”Tip fatigue and tip creep ‘may be understating it’In most cases, consumers face more opportunities to tip for a wider range of services than ever before, a trend also referred to as “tip creep.” But recent surveys show shoppers are experiencing “tip fatigue” and starting to tip less — while resenting tipping prompts even more.”The terms may be understating it,” said Michael Lynn, a professor of consumer behavior and marketing at the Cornell University School of Hotel Administration. “It’s more than fatigue, it’s irritation. “It’s not tip creep, it’s tip gallop,” he added.More from Personal Finance:Americans push back against ‘tip creep’Who does inflation hit hardest? Experts weigh in3 reasons it can be smarter to rent, even if you can buyTwo-thirds of Americans have a negative view about tipping, according to a recent report by Bankrate, particularly when it comes to contactless and digital payment prompts with pre-determined options that can range between 15% and 35% for each transaction — and 30% said “tipping culture has gotten out of control.””You have to go out of your way to not tip, and that’s what a lot of people resent,” said Ted Rossman, Bankrate’s senior industry analyst.Many feel the pressure to tip has increased over the last year, NerdWallet’s consumer budgeting report also found.You have to go out of your way to not tip, and that’s what a lot of people resent.Ted Rossmansenior industry analyst at Bankrate”We’ve had the option of tipping for a long time because of tip jars, but you could kind of ignore it,” Cornell’s Lynn said. “The technology is making it harder to say no, and it’s making it harder to tip a small amount.”However, fewer consumers now say they “always” tip when dining out compared with last year, according to Bankrate, or for other services, such as ride-shares, haircuts, food delivery, housekeeping and home repairs. “During the pandemic, there was a groundswell of feeling thankful; now, a lot of people are saying ‘enough,'” Rossman said.Some business owners opt out of tipsLyn James is the owner of Flowers & Cappuccino by Lasting Visions in Bowman, North DakotaAs a negative sentiment takes hold, more business owners like James may scale back on suggested tip amounts or eliminate tip prompts entirely to appease customers, according to Molly Burke, senior analyst at Capterra, covering retail and restaurants. “Small businesses can deactivate the tip screen or customize the amounts they show on the tip screen or just ask customers to skip it,” she said.Matt Vizcaino, owner of Tortugas Homemade Pizza in Birmingham, Alabama, said he and his staff voted to forgo tipping prompts. “I understand some people’s frustrations,” he said. “I do also understand tips are not ‘needed’ in all situations.”Now diners leave an average of 25% when they dine in, he said, but only about a third tip on carry out, and when they do, the tips average 5% to 10%.How much the experts tipTipping 20% at a sit-down restaurant is still the standard, etiquette experts say. But there’s less consensus about gratuity for carryout or other transactions that didn’t involve a tip at all in the past.”I often get asked how much I tip, and I don’t,” Lynn said of most point-of-sale tip prompts. “Sometimes you tip to reward good service but only at restaurants do I tip out of obligation.””Outside of restaurants, I tip for delivery and if I’ve had a good experience,” he added.  “You should feel free but it’s still Ok not to tip,” according to Jaime Peters, Maryville University’s assistant dean of accounting, finance and economics. “It really is a tip; it is not obligatory.”Peters said he primarily tips 20% in a sit-down restaurant, but less for other transactions.While tipping at full-service restaurants has held steady, tips at quick-service restaurants by guests fell to a five-year low of 16.7% in the first quarter of 2023, according to Toast’s most recent restaurant trends report.Subscribe to CNBC on YouTube.

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