Tipping, in this economy? How tipping culture is evolving

Toronto local Teagan Batista said she used to be asked to tip 12 to 15 per cent, but nowadays restaurants and other businesses are asking for 18 or 20 per cent.

With the cost of living increasing, she said she understands the pressure businesses feel to get more tips — but that puts pressure on customers who are also feeling the heat.

"The restaurant industry is hard and … money is not great for everybody right now. So I get it," she said.

"But it's also a little bit off-putting when I feel like I just spent all this money and now I have to pay you extra, kind of, for doing your job."

Underscoring locals' ability to enjoy their summer is their ability to tip amid high inflation. 

Industry stakeholders say government intervention is needed, though one expert says the market may be forced to adapt before politicians step in. 

"Once again, the tipping culture has become where it's just expected, regardless of the level of service," said Wayne Smith, a professor and the director at the Institute for Hospitality and Tourism Research at Toronto Metropolitan University (TMU).

"I could see very, very close in the future, you're going to have serving and non-serve sections," he said.

Smith said stores in the United States are starting to split their dining space into two sections, with those in the non-serve area receiving minimal service in exchange for a cheaper bill. 

Since technology, such as tablets and robots, can now take people's orders and can replace some servers, he said it's only a matter of time before the market adapts to models where tipping as we know it is reformed.

"That's when it puts the control back in the customers hands," he said. 

How government can change tipping culture

Ontario's biggest restaurant association says the current tipping system is an aspect of North American culture that's hard to kick — even for businesses that want to try.

Tony Elenis, president and CEO of the Ontario Restaurant Hotel & Motel Association, said they encourage their members a no-tipping model when possible — which often involves raising prices to pay for wage increases and benefits — but it usually isn't financially viable, saying those who try often switch back to tipping systems.

"Not too many want to take the risk," he said. "That's the issue."

Elenis also says that industries outside of hospitality have started to take on the tipping model, leading to consumer fatigue.

"It's not fair to the restaurant staff," he said.

Elenis said businesses that offer tips, on top of minimum wage, are more competitive when it comes to recruiting potential employees. 

If the government wants to help even the playing field, Elenis said it could reverse its 2022 move that made liquor servers eligible for minimum wage, which would help remove tension between servers that make tips and support staff who don't.

But one restaurateur who switched to the no-tip scheme said that's the wrong direction to go in.

Tips unfairly subsidize wages: restaurateur

David Neinstein owns the Barque Smokehouse in the Roncesvalles Village. He said he upped the restaurant's prices two years ago to eliminate the pressure to tip and ensure a stable and fair income for his employees.

"Tips are a way to subsidize the wage compensation from the employer's perspective, which is just not fair," he said.

While it hasn't been easy, particularly coming out of the COVID-19 pandemic and amid high inflation, he said it's supported by his customers.

"When we hand over a credit card terminal and there is no prompt for tip ... the palpable relief that we see on people's faces is amazing."

But to ensure fairness across the board, he said governments should raise the minimum wage well above $20 an hour for everyone. 

The Ministry of Labour, Immigration, Training and Skills Development didn't respond to specific questions about the separate wage class for liquor servers, but a spokesperson said via email that it "will continue to take bold steps to support workers and keep costs down for everyday Ontarians struggling with the rising cost of living." 

"I wish everyone did this," Neinstein said. "But I don't think it's going to be realistic for small businesses to take this giant risk without the government."

Wayne Smith from TMU said that until tipping culture changes, people will be left to choose what works for them. For TMU student Nakeiro Ayudo, that means trying her best to tip whenever she can, but being OK with choosing not to — even if she feels empathetic to workers on the other side.

"I feel like it's not on the rest of us to try and fill that gap," she said.

"In a lot of cases, I'm in the same financial position as the person that I'm tipping."