How Much Should You Tip? New Jersey Coffee Shop Owner and Customers Discuss
The owner of Iconic Coffee in Hackensack and customers discuss tipping practices on Tuesday, Dec. 5, 2023.
“Who exactly should I tip?”
It was reply to reddit user’s photo who titled the post: “It finally happened. I was asked for a tip at the self-service check-in desk at the airport.”
Indeed, a photo from Newark Liberty International Airport shows a chicken Caesar sandwich, coconut water, and a message on a tablet screen: “Would you like to leave a tip?”
Anyone who has been to their local coffee shop has seen it. Wherever you go, it seems like tipping has simply become a part of everyday life.
Tipping used to be limited mostly to taxi rides and sit-down restaurants. Maybe you’d throw a few bucks at the valet or baggage handler. Now we’re seeing tip prompts at every business with a rotating touchscreen. Not to mention fast food restaurants. Food trucks. Delivery apps. Ride-sharing services.
Even self-service checkouts.
The last study The Pew Research Center, which surveyed 12,000 people, found that most Americans believe tips are expected more often than they were five years ago, a trend known as “tipflation.”
And about seven in 10 American adults say tipping is more common today than it was five years ago, according to the Pew study.
Data from earlier this year shared with USA TODAY by Square, the maker of many of the iPad-based checkout terminals you see in local restaurants and coffee shops, shows that total tips received in the fourth quarter of 2022 increased 16.5% from a year earlier at full-service restaurants and 15.9% at quick-service restaurants.
How COVID Changed the Culture of Tipping
Parul Jain, a professor of finance and economics at Rutgers Business School, said the popularity of tipping has increased significantly during the COVID-19 pandemic.
People used to tip based on performance, she said. Now, the near-ubiquity of touchscreens in places where we might never have thought about tipping before is putting in a lot of pressure.
“You feel guilty or unhappy,” Jain said, adding that tipping 30% was not uncommon during the COVID pandemic, when many eateries were struggling.
2023 Tipping Guide: How much to tip the mailman (and others) during the holidays
The problem is that expectations have remained high. “Tipping standards have gone up,” she said. In addition, restaurants, already struggling with rising food costs, have come to rely on increased tips to pay their workers.
Shubhranshu Singh, who teaches marketing at Johns Hopkins Carey Business School, said the change in tips is the result of new “technological changes.”
“Many places are using the new payment interface, which offers the option to ask for a tip, and it is available by default,” he added.
Many companies, hit by higher labor, material and procurement costs, have found tipping to be just another way to pass on extra costs to consumers, Singh said.
How much should you tip? Opinions vary
In June, the financial service Bankrate a survey was published which found that about two-thirds of Americans have a negative view of tipping. Thirty percent of respondents believe the tipping culture is “out of control.”
“Inflation and general economic anxiety are making Americans stingier about tipping, yet we’re getting more invitations to tip than ever before,” said Ted Rossman, senior industry analyst at Bankrate.
TikTok user “twoguystakeonrealestate” published on the web trying to argue that tenants should tip the landlord when paying rent.
At least for the holidays, 15% of Americans said they plan to tip more this year, 44% plan to tip the same as last year, and 13% plan to tip less. BankRate Found.
Rossman said many of the beneficiaries of larger year-end tips are people we “interact with regularly,” such as garbage collectors, postmen, hairdressers, babysitters, nannies and landscapers.
Louise Ford, a mother of two from Montclair who moved to the United States from the United Kingdom seven years ago, believes there is a “pressure to tip” that “makes you hesitate to give a little extra.”
“Tips really should only be given by people who work hard and are very polite,” Ford said. “But now you feel more obligated to tip everyone, even if they’re just putting your food away and not even being polite.”
Kristina Lecaros, an employee at Let’s Yo, a frozen yogurt shop in Montclair, said the average tip is $1 to $2.
“People tend to tip minimally, and sometimes not at all. But if we go out of our way to give them samples, or extra attention and good service, they tip even more,” Lecaros said.
The same approach was prevalent at Local Coffee in downtown Hackensack: Better service means more tips, owner Levar Thomas said. And out of 100 customers, about half would tip, he estimates, about 10% to 15%.
“Customers see that we take the time and effort to make sure every drink is made perfectly, so I think they tip for that kind of service.”
Jaimin Patel of Edison said they only tip at restaurants where “service is provided.”
“Other than that, I don’t tip. I just have to be assertive,” said Patel, who described the prevalence of tipping as an “epidemic.”
At BAM Desserts in Somerset, about 25% of customers tip, though they can be as little as $1 or $2, said owner Melissa Jenkins.
Orders of cake pops, macarons and cookies, sold by the dozen, can run $30 to $60, though people tend to tip more for custom orders, Jenkins said.
“I try to keep my prices as low as possible, even though we’ve seen some of our ingredients double or triple in price, so tips help,” Jenkins added.
Tipping at restaurants: 2% say they won’t tip at all
The Pew study found that 57% of American diners tip 15% or less for a sit-down meal, including “2% of people who say they would leave no tip at all.” Pew found that only about 22% of people said they would tip 20% or more.
As Americans are increasingly asked to tip, a negative reaction may emerge due to tipping fatigue.
Union advocates say that creates a problem for tipped restaurant workers who earn below the minimum wage and rely on tips to make up the difference.
“The decline in tip amounts means that many workers can no longer rely on tips to make ends meet,” said Saru Jayaraman, director of the Food Labor Institute at the University of California, Berkeley, and a national labor activist.
In New Jersey, the minimum wage for tipped workers is $5.26 an hour. Tips must cover the rest or the employer must make up the difference to bring the wage up to the state minimum wage of $14.13 an hour — which will increase to $15.13 an hour on Jan. 1.
But such a system is unsustainable, said Jayaraman, founder of the group One Fair Wage, whose mission is to abolish the minimum wage.
“It’s hard to track every hour, how much tips are coming in and whether they’re making up the difference for every employee every day, every shift,” she said. “And the reason it’s hard is the same reason it doesn’t work for employees, which is that tips fluctuate wildly, they fluctuate from hour to hour, month to month, shift to shift, season to season.”
Singh, the Johns Hopkins University professor, said that as people tip less, the responsibility for making up the difference may increasingly fall on restaurants.
“Someone will have to cover this, so either consumers will have to pay directly because prices will go up, or businesses will not survive this pressure, prices will not go up or tips will go down,” he said.
‘Tipflation’ is a fact, says expert
People may tip less, go out less, or not spend as much as they used to.
“A lot of people say it’s getting expensive,” said Jain, the Rutgers professor. “They’re not willing to go out to dinner as quickly.”
An additional factor that overlaps with tips is the trend toward charging 3% for credit card use. That also drives up costs. As people continue to venture out after the long lockdown, Jain could see people cutting back on spending because of the cost.
She added that tip fatigue is a real phenomenon, like “tipflation,” and it affects all sectors: restaurants, foodservice, takeout and even ride-sharing companies like Uber and Lyft.
Singh said businesses could eventually limit the amount of tips they expect from customers, who currently manually enter lower amounts rather than opting for automatic tips of 22% or 25%.
“Setting defaults at more reasonable levels could make consumers more comfortable with tipping at default levels, which could result in higher overall tip amounts,” he said.
Matt Fagan, Jenna Intersimone and Kara VanDooijeweert contributed to this article.
Daniel Munoz covers business, consumer affairs, jobs and the economy for NorthJersey.com and The Record.
