‘Tip-flation’: As suggested tips increase, business practices under scrutiny

File image: A payment terminal displays tip options at a restaurant on Sept. 12, 2024. (THE CANADIAN PRESS/Ryan Remiorz)

By Isaac Phan Nay, Local Journalism Initiative Reporter, The Tyee

The moments after a server or barista hands over a credit card reader can be awkward. Will it offer tip options starting at 20 per cent? Will the server stare daggers at me if I don’t tip?

Tips used to be more private. Dropped in a cup, or calculated after the bill came.

Now suggested tips are on the rise, irking some Canadians — and raising big questions about business practices that make workers more dependent on tips and keep their wages low.

University of British Columbia sociologist Amy Hanser said tipping shifts the burden of servers’ wages off of employers onto customers and undercuts servers’ power to negotiate for fair pay.

“It’s a terrible practice,” Hanser said. “It shouldn’t be contingent on service — if you do your job, you should get paid.”

As restaurants and cafés reopened after pandemic closures, tipping prompts increased. In a 2022 survey by Restaurants Canada, customers reported being faced with higher tip suggestions.

A Research Co. survey published last month shows Canadians are growing irked by suggested tips.

“Canadians know that people in the food services industry don’t make a lot of money,” said Mario Canseco, Research Co. president. “We know that they depend on the tips to survive and to get ahead.

“It’s not like we’re against the concept of tipping, but when the venue is forcing me to make a choice, it becomes complicated.”

The survey found most consumers didn’t like facing a suggested tip when they paid.

But 68 per cent of respondents said they believed food servers need tips to get by, and 69 per cent said that if food servers had better salaries, there would be no need to tip them.

In British Columbia, employers are required to pay servers at least regular minimum wage — which rose to $17.85 per hour in June — before tips.

WorkBC data shows food and beverage servers make between minimum wage and $30 per hour before tips.

Ian Tostenson, who heads the British Columbia Restaurant and Foodservices Association, said tips make up a significant part of servers’ wages.

He said servers often work three- or four-hour shifts and rely on tips for a significant chunk of their income.

“It’s a bit of a big deal when we don’t leave a tip,” he said. “That’s why there’s incentive for the servers to provide good service, and generally that works quite well.”

Tostenson rejects the idea that restaurants can raise wages and eliminate tips.

The Vancouver restaurant Folke and café Cowdog have adopted that business model.

But Tostenson said most restaurants that try a no-tip model give up on it.

“They have a hard time getting people to work there because servers like the upside on gratuities, and guests don’t like it because they are paying higher prices,” he said. “In North America, we love to tip and we love to have the control of tipping.”

But UBC’s Hanser said putting servers’ pay into the hands of customers raises equity issues. Customers’ biases could impact servers’ pay — more attractive people might get higher tips.

The reliance on tips means servers have to tolerate negative or abusive behaviour to make sure they’re tipped, Hanser said.

Management should be ensuring staff are performing adequately — not customers, she added.

The reliance on tips makes restaurant goers effectively the employer and leaves workers perpetually subject to the judgment of customers, Hanser said.

The business owner also shifts the responsibility to pay workers onto customers, and that keeps base wages low and undercuts their ability to negotiate for more pay.

“People who are in typically tipped jobs can be paid a lower hourly wage,” she said. “That really does suggest that tipping can erode the ability to ask for more wages from your employer.”

Workers in the restaurant sector don’t traditionally have the union power to negotiate for higher hourly wages. Statistics Canada data shows that in 2024, 5.8 per cent of accommodation and food services workers had a collective agreement.

That includes workers at a Boston Pizza in New Westminster, who are represented by United Food and Commercial Workers Local 1518. The union declined to comment on tipping.

But its contract shows unionizing did not change tipping practices at that restaurant.

Before the agreement came into effect in 2021, employees at the restaurant pooled their tips. The collective agreement, which expired last year, kept that arrangement in place.

The union also organized workers at a Cartems Donuts in Vancouver. Their collective agreement required the employer to come up with a tip policy, to standardize the practice for workers.

Hanser said she doesn’t think Canadians are ready to give up tipping. She said that to pay servers fair wages without tips, restaurants would likely have to raise prices significantly.

Plus, she said, the practice is deeply entrenched in our behaviour.

“This is a really hard thing to change,” Hanser said. “This is about a culture as much as it is about anything else.”