“How much should we leave as a tip?” – the awkward question on the lips of every diner as they conclude their restaurant meal.
Unfortunately, the COVID-19 pandemic has introduced an additional dimension to the complex issue of gratuities.
Following long periods of leave and/or unemployment for the long-awaited re-opening of restaurants allowed servers to return to the workplace gratefully. However, this coincided with a significantly increased exposure to the virus and a heightened responsibility for maintaining and improving hygiene regulations.
To make matters worse, restaurateur’s profit margins have been shaved as they now have to account for an increase in food and labour costs following a long period of closure.
Essentially, restaurant servers are now working harder in a more hazardous environment, and restaurateurs can’t afford to pay them more.
These ‘new’ problems within the restaurant industry have exacerbated existing ‘old’ problems. Many studies have noted that racial inequalities experienced within North America are reflected within gratuities, with white servers earning between 16-48% more than their counterparts. Secondly, gratuities can often invoke a strong sense of servitude between diners & servers, worsening sexual harassment experienced by female servers and placing servers at the financial whim of their customer. Emma Herrera, head chef at Burdock Brewery, highlighted this when speaking in 2020 when she exclaimed that servers [paid mainly on a gratuity basis, are reliant on customer tips] “to make sure they can pay their rent.”
The amalgamation of these factors has boiled over to form a rather distasteful dish that has left the gratuity system & the restaurant industry at a tipping point.
Do diners now feel obliged to tip more?
A recent study conducted by the Agri-Food Analytics Lab (AAL) investigated the attitudes and perceptions of Canadian tipping habits throughout the pandemic. Of the 990 Canadians interviewed, only 20% had intentions to tip more following the pandemic; nearly half (48%) of consumers felt a social obligation to tip well during the pandemic.
Essentially, the study found that half of the consumers felt as if they should increase their gratuity payments as a result of the strain of the pandemic. Still, only 20% of consumers reported that they would increase tipping payments.
In a seemingly drastic shift away from traditions, should the gratuity system be scrapped altogether by adopting a ‘no-tipping policy?
Toronto’s Avelo, Burdock Brewery, Richmond Station & Ten have recently adopted a gratuity-free, ‘no-tipping policy, likely in response to the ever-growing list of problems that the gratuity system poses.
But, is it the right solution?
The AAL study reported ‘little support’ for a no-tipping policy, with participants citing that they believe gratuities help motivate workers and make the job’ worth doing.’ Only 17% of those interviewed stated it should be prohibited, and only 36% exhibited negative feelings towards gratuities.
Moreover, consumers are said to experience “a warm glow of giving” from tipping, as they believe it to be a form of “pro-social” spending, where they feel rewarded for benefiting their server.
From these investigations into consumer attitudes, we expect the concept of gratuity payments to be a mainstay in the future of the restaurant industry due to diners’ strong affinity toward them.
Should the gratuity system be placed under some form of regulation?
The AAL study reported that nearly 1 in 5 participants expressed a desire for gratuities to be regulated in some form; however, introducing regulation towards gratuities would only serve to ask more questions than it would answer. Who would regulate it? How would it be regulated? Would regulations differ between different areas of Canada? The answers to these questions would require a highly complex analysis of various sociology-economic factors, making the process more problematic than beneficial.
The future….
The gratuity system is not perfect, and the restaurant industry will have to modify its services to prepare for the future. But, we don’t expect to see gratuities to tip of the edge in the foreseeable future.
Looking to discuss your next venture? CHI Real Estate can help. Our team of business specialists can help you navigate the real estate process and help you roadmap the steps needed to create a profitable business. Contact us today by calling 647 347 9723 or fill in our contact form and we will contact you!