Canada’s tipping culture is flawed and there is no clear solution in sight: the experts

1:53:00Full Episode: What’s Your Tipping Story?

From an oil change to prepared food, tipping is quickly becoming an “established societal norm” in Canada, according to food economist Mike von Massu.

Card payment machines have made it easy for businesses to claim the tipping option, even in industries where tipping was previously not part of the cost or conversation. Data from Canadian trade associations shows that the average percentage of tipping for dining in restaurants has risen since the pandemic began.

Von Massu, who is also a professor at the University of Guelph, says the outlook for Canadians Increase the amount of their tips Spiraling out of control, it became a hot issue across the country.

“I went to my local brewery the other day, just to the bottle shop, to pick up a couple of my favorite cans,” said Von Massu. “When I was paying in there, someone actually took the beer out of the fridge and gave it to me and I was asked to tip in the envelope.”

He calls it a “double whammy” for consumers, whereby more businesses tip while raising their prices at the same time.

“You know, I’m starting to wonder if I’m giving a particularly good lecture, should I put a jar at the front of the lecture hall at the end, and when they apply? Maybe they can put some bills in there for me too, I mean where does it stop?”

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Kate Malcolm moved to Port Perry, in 2017 from the UK, where tipping is not uncommon.

Five years later, she said she still had a hard time dealing with the Canadian tipping culture.

“There is no way in England to give $10, $20 and $30 to a hairdresser,” she said. “Styling your hair as it is is too expensive, and then you have to tend it too? It’s a foreign concept.”

Malcolm, who runs a podcast geared toward newcomers, included her reaction to Canada’s unwritten rules for gratuities in Tik Tok video Define her “culture shock”.

Screenshot of Kate Malcolm in a TikTok video including her reaction to Canada’s unwritten rules for gratuities. (Kate Malcolm/Tik Tok)

She says that when her parents first came to visit, it was also unclear what expectations were for tipping in Canada, which led to an awkward exchange at a restaurant.

“They just threw some kind of coin on the table, maybe like two dollars and a change, and they were like, ‘That’s all we do, right? ‘I was swaying because of it, I’m fine, it’s probably more insulting than not doing it [tipping]. “

Malcolm lived and worked as a servant in Australia as well, where tipping is not the norm either.

She said the pay was much higher than in Canada, and without the expectation of tipping, she felt less pressure to be “very friendly” all the time.

Some customers angered by tip prompt

Dough Bakeshop in Toronto has added a tip option to its card machines after introducing employees and customers.

Co-owner Oonagh Butterfield says he’s always had a tip bowl of cash at the counter but has seen a huge tip increase when customers were given the option of a debit or credit card to do so.

“I’ve been on the program since we implemented it, and to be as clear as I can say it’s unexpected,” she said.

A headshot of Oonagh Butterfield, co-owner of Dough Bakeshop in Toronto, Ontario.
Oonagh Butterfield, co-owner of Dough Bakeshop in Toronto, says some customers have expressed anger about being asked to provide information even with signs posted in the store saying the tips were unexpected. (Photo by Dylan Jarries)

Despite posting banners like “To bypass the tipping option, please press green” Butterfield says some customers are still questioning the e-reward option.

“Sometimes there is a little anger, I will say, about the fact that they have been asked, ‘Would you like to tip? “Especially if they only buy bread, and that, again, is why I try to communicate with people, it’s not a necessity.”

Although there is currently an option for tipping for customers, Butterfield says it supports a move away from Canada’s current tipping culture, “so that everyone can be guaranteed a living wage.”

There is no tip equal to raising prices to give employees a living wage

In July 2020, a Richmond station restaurant in Toronto ditched tipping, opting instead to raise its rates to pay more employees.

Co-owner Karl Heinrich describes Canada’s tipping culture as “an unfair way of paying employees”.

The shutdown forced his company to start offering a takeout service — a service that has historically not generated much advice, he says.

“Anytime you adjust someone’s pay or salary, or their livelihood, there are a lot of necessary connections,” Heinrich said. “Because there was no blueprint for this new system, there was a lot of work. And frankly, two years later, it’s still working.”

Headshot of Karl Heinrich, co-owner of Richmond Station Restaurant in Toronto, Ontario.
Karl Heinrich is the co-owner of the Richmond Station Restaurant in Toronto. He says they ditched the tips in July 2020. Instead, they chose to raise their rates to pay more employees. (Photo by Sarah Brownlee)

There is no single flat rate of living wage for employees at Richmond Station. He added that wages vary according to a person’s performance, experience and position.

“Dishwashers earn a living wage. Servers earn a living wage. But our best servers certainly pay more than less experienced servers. That wasn’t possible in the previous system.”

In a perfect world, there would be no heart. It is a disaster for human rights. But it is deeply entrenched. I think we are stuck with it.Mark Mintzer is a professor of business at the University of Saskatchewan

Aside from “ultra-upscale” restaurants, where customers may not be sensitive about how much they are spending, says University of Saskatchewan business professor Mark Mintzer, many companies that replace tipping with service fees don’t work.

He adds that customers like the illusion of controlling the server and that the server likes the illusion of controlling how much they earn.

“In an ideal world, there would be no tipping. It’s a human rights disaster. But it’s deeply entrenched. I think we’re stuck with it.”

Imagine Mark Montzer sitting at a table with a drink next to him.
Mark Mintzer is a Professor at the Edwards School of Business at the University of Saskatchewan. He says the card reader for electronic payment has changed expectations about how much to tip, when to tip, and what. (Provided by Mark Mentzer)

Mintzer added that large percentage tips pre-programmed on chip card machines can “scare people into tipping at a higher rate than they previously thought.”

“Everyone complains about tipping, but given the choice between a restaurant with a tip and a restaurant with a service fee, I’m not sure how customers would make that choice. I think customers might actually prefer the tipping approach if given the choice.”

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