The Rise of Tipflation: Understanding the Surge in Tipping Practices at Restaurants, Cafes, and Businesses

Last Updated on April 3, 2024 by Robert C. Hoopes

The Rise of “Tipflation” in the United States: A Growing Trend That’s Making Customers Uneasy

Professor Ismail Karabas from Murray State University has shed light on the phenomenon of “tipflation” in the United States, attributing its rise to the increase in digital payment processes during the pandemic. Companies like Square, Toast, and PayPal have played a significant role in the surge of tipping prompts appearing at the end of customer interactions, a trend that has expanded beyond traditional sectors like restaurants to other industries like cafes and chain restaurants.

While businesses may benefit from increased tips as their employees earn more in salary, resulting in lower turnover rates and happier employees, excessive tipping prompts can irritate customers and decrease their likelihood of returning to these establishments. Karabas predicts that tipping prompts may continue to expand unless there is government intervention or regulation.

A recent study found that over three-quarters of Americans surveyed believe tipping expectations have become excessive, particularly in self-service kiosks and convenience stores. Many customers are growing tired of tipping expectations, with a majority believing that gratuity requests have “gone too far.” Some may choose to pay with cash to avoid being prompted to tip and to navigate around the issue.

As the trend of “tipflation” continues to cause unease among customers, it remains to be seen how businesses and policymakers will address this growing concern in the United States. Stay tuned for further updates on this developing story on My MBA Career.