Tips Are Good for Everyone

February 17, 2015

Service industry employees need gratuities to survive, and when the tips are flowing, the customers are probably happy.

As a Starbuck’s barista, a Lyft driver, and a talented busking musician, Ryan Miller of Nashville, TN, relies largely on tips. At Starbucks, Miller says the tips are pooled at the end of each week and divided up between the employees based on the hours they worked. “If everyone tips a little, it can make the difference of several more dollars an hour.” 

Miller shared some other things about his experience with tips at Starbucks that maybe you didn’t know. First of all, the change matters! While some customers may think that dropping their change into the tip box at the counter is more insulting than giving nothing, Miller says every little bit counts. But unfortunately, a few months ago Starbucks raised some prices. In particular, the popular latte size went from $3.50 to $3.99. This had a significant impact on the employees’ tips because of the difference in change in coins received. So while the price increase may be good for the company’s profits, it comes at the expense of the employees. 

This story is not about teaching consumers how to properly tip by Emily Post guidelines, or even cultural guidelines. This story is about using Tips as a way to create mutual respect between the customer and the employee, which can translate into increased loyalty to a business from both sides. 

We are living in a time where concerns are growing and debates are heating up around the wages of hourly workers particularly in the food service and retail industries. While business owners are battling higher production costs, employees are struggling to make a reasonable living on low wages. And at the same time, shoppers are becoming more interested in the ethics of the businesses and brands they support, sometimes willing to pay more if they are impressed by moves made to provide fair opportunities and positive work environments for their employees. And anyone who has ever shopped at Trader Joe’s knows that happy, positive work environments are good for the employees, which is good for the company - and even more importantly good for the customers and the shopping experience they walk away with.

So what do tips have to do with this? Gratuities offer an opportunity for a business to put on display how much they care about their employees by encouraging tipping without being pushy and making it uncomfortable for the customer. Here are some ideas to consider:

1. Soulful, simple signage with an easily accessible tip jar - Messages near the register, on chalkboards, menus or on receipts can make a world of difference. And make that tip jar accessible. (Ryan Miller told us that people are surprisingly generous in the drive-through when the tip jar is easily accessible form their car window.) Keep it simple and don’t be pushy. Be respectful. Here are some suggestions: 

“We think a lot of our employees, and we hope you do too.”

“Tipping is not required, but very much appreciated by the management, as we care a lot about our employees.” 

“Every little bit counts. Small amounts can make a big difference.”

“Our employees work hard. Smiles and/or tips are a great way to say thank you!”

2. You spend more, we give more - Think about the case of the Starbucks latte price change. What if a business offered with daily specials or higher priced menu items an automatic tip for the employee? For example, order our specialty beverage of the day for $4.50, and we will give $.50 to our employees. Customers might be more motivated to order that item if they know it goes towards a great employee, and the fact that the business cares so much about their employees will leave a lasting impression on the customer. Employees will also want to push sales of those items.

3. Follow the European model - It is a cultural norm across Europe for service to be included on menus, and if it isn’t, tips are usually expected between 5-10 percent, perhaps because wages are more substantial. Some businesses in the U.S. already follow this model. If this is the route your business goes, a clear and compassionate message to customers about the tip policy can go along way. For example, “We care about our employees, so to ensure they are able to make a reasonable living, we are including gratuities orders over $25. We are certain you will be pleased with your service.” 

4. Do the math for them - More and more small business are using technology for tablets like Square. Often times the customer is given tip level choices when adding and signing their bill. This may make some customers feel uncomfortable, as if someone is staring them down while they decide what to tip. But how about messaging that used humor to motivate both employee and customer. Do the math automatically for them, but then also suggest what tip levels mean, and be creative! 

25% - The service blew my mind!

20% - The service was amazing!

15% - The service was great!