Businesses in the hospitality sector are reportedly experiencing a backlash as consumers, grappling with inflation, curtail spending and reduce their tipping habits.
What Happened: A Bankrate poll revealed that approximately 60% of participants expressed dissatisfaction with the growing requests for tips, a trend now known as ‘tipflation,’ reported Inc. About 35% viewed the increasing rate of solicitations as entirely excessive. As a result, 37% of the respondents suggested that businesses should enhance their employee wages rather than relying heavily on tips.
A distinct survey by mobile payment firm SpotOn disclosed that a substantial segment of hospitality workers depends on tips for their income. However, the increasing number of businesses suggesting tipping amounts has led to a decrease in tips received, as customers increasingly resist the pressure.
Bankrate’s senior industry analyst, Ted Rossman, characterized the situation as a “hidden tax,” with businesses soliciting tips as a way to inflate prices subtly. The poll also found that 14% of respondents were willing to pay higher prices to eliminate the need for tipping.
The propensity to tip was found to decrease with the respondents’ age, with only 35% of Gen-Zers always tipping restaurant servers, compared to 86% of Boomers. This may suggest a strategy by younger consumers to pressure employers into raising base wages.
Why It Matters: The issue of ‘tipflation’ has been a growing concern. In May 2023, Benzinga reported on the rise of self-checkout kiosks guilt-tripping customers into tipping, even without human interaction. This has left many customers confused and frustrated.
By next year, the tipping debate had intensified. A report from May highlighted a Reddit post where a millennial user expressed frustration with the tipping culture, stating that he would only tip for sit-down meals and personal services like haircuts, and only if the restaurant does not charge a service fee.
These incidents highlight the growing consumer resistance to ‘tipflation’, a trend that businesses will need to address to maintain customer satisfaction and loyalty.
This story was generated using Benzinga Neuro and edited by Shivdeep Dhaliwal
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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