Recently, tipping has become outrageous. New services that previously did not require a tip, now suggest a tip. Recommended tipping amounts and expectations are now substantially higher. Online platforms and digital kiosks now peer pressure us to tip regardless of our experience. As a result, I find myself thinking more critically about my tipping approach. In the blog post below, we will discuss tipping trends, benchmarks and criteria that may inform more thoughtful tipping to prevent overpaying while maintaining good tipping etiquette. Specifically, we will focus on delivery services and to-go-coffee as examples.
Disclaimer: Please note that there is no correct or incorrect approach to tipping. Our intent is to share our opinions and mental models as we manage our budgets and emotional guilt. Our hope is that the information can either help with your choices or encourage you to develop your own criteria for tipping.
Delivery Services
Ordering food and services online has become a significant part of our everyday lives. But these services charge a significant markup for convenience, ranging from 7% to 91%, as detailed by Brian Chen’s article in the NYT. They also calculate tipping by bundling in taxes and fees resulting in a much higher tip. Sometimes, the amount is equal to the original cost of the order!
Percent of Order vs. Effort & Distance
Delivery platforms currently recommend 15%, 20% and 30% tipping options at checkout. However, I find myself considering tipping based on the effort and distance required to deliver the order. The compensation for the service should be separated from the actual order dollar amount. It is the same amount of work, regardless if the order is $15 or $100.
I might tip 10-15% if they only needed to travel 2-3 blocks vs. the default platform recommended 20%. My tipping amount may lean higher based on how far they need to travel, traffic patterns, and weather conditions. My challenge is why doesn’t the delivery service pay these independent contractors higher wages? Why don’t they reimburse them for their costs (e.g., gas, mileage) so less financial burden falls on us?
Gig economy workers have cited a minimum tip of $3 for lunch orders and $5 for dinner orders. If drivers are delivering the order outside of a 5-mile radius, they expect $1 per mile in addition to the minimum tip.
Following this logic, I compared the recommended tipping amounts vs. a minimum $3 tip for an example lunch order from Chick-fil-A for Seamless and DoorDash below:
This delivery distance is only 1.1 miles and requires ~8 minutes travel time. By applying the tip-by-distance approach, the tip amount would be 45% cheaper for DoorDash and 32% cheaper for Seamless. The total order amount would be 9% cheaper for DoorDash and 5% cheaper for Seamless. If delivery drivers travelled farther distances, experienced greater traffic, or experienced restaurant delays, I would err towards the percentage-of-order method (e.g., generally 20%).
The tips-by-distance method makes me feel more confident that I am not being ripped off by the platform. Also, by adhering to the minimum benchmarks, my tipped amount reflects the level of effort required for my delivery.
Paying for Convenience
Another metric that may influence tipping behavior is paying for convenience. If I use the delivery platform for delivery, then I am paying for on-demand service. However, if I am placing an order and picking-it-up myself, then I should not be obliged to tip for convenience. Right?
If we were to use Amazon Prime as an analog, Prime subscribers pay $14.99 per month and average 2-4 orders per month. This would suggest a convenience premium of $4.43 per order. According to Statista, US consumers spent an average of $33.94 per food delivery order on UberEats in 2022. If you were to pay $4.43 as a tip per order, this would equate to a 13% tip for convenience. (This amount falls within the $3 to $5 per order minimum expectation.)
However, some consumers even pay $0 in tips as seen in the delivery worker’s screenshot below. Is this poor tipping etiquette OR are they smart because the delivery worker received a similar total payout from other similar sized orders? Is this evidence on how these platform’s prey on our emotions to subsidize wages?
Personally, I struggle with paying $0 in tips. First, I do not want to experience any potential negative consequences (e.g., significantly delayed delivery, cold/soggy food). Second, even if the dollar amount of the order is small, the delivery worker still provided a service for me. The human side of me wants to show my appreciation.
Given these dynamics, would you still tip based on a percentage of the total order or consider tipping based on distance and effort or pay-for-convenience?
To-Go-Coffee
Many people struggle with tipping for to-go-coffee. Your initial reaction might be: why would I tip a barista if I’m picking it up myself? Let’s take a deeper look as there may be cases where tipping might be warranted.
Size of Order
Current and former baristas have often cited that they should get tipped, especially if it is a large order. Their logic is that they should get compensated for doing more than the average customer order. More drinks should translate to more tips. Otherwise, the barista misses out on the tip per cup opportunity cost. Had they filled the same number of cups across different customers, they would have earned more tips. Additionally, filling large orders have a higher degree of difficulty since there is a high likelihood that not all of the drinks are the same.
Do you agree with this logic?
Even if this makes sense, I struggled with using the size of the order to inform my tip amount. To me, whether it is a small or large order, this is part of their job. What are they doing that’s extra on my behalf? What additional service am I getting? As a consumer, I feel that I should not have to tip based on a barista’s opportunity cost. Would I probably tip them more on a large order than a small order? Most likely because I might not even tip on a small order.
Difficulty of Drink
While I only order black drip-coffee, fancy or highly customized drinks might warrant a tip. Baristas have cited that they need to extend more effort than their standard orders. Additionally, the more difficult the drink, the higher the skill required. Therefore, a better way of thinking about this is that your tip is compensating them for their skills. For a good laugh, here are some of the most difficult drinks cited by previous Starbucks baristas. P.S. Don’t order the S’mores Frappuccino.
Outside of extreme drink customization, I would not calculate my tip amount based on the difficulty of drink. I would expect baristas to customize a customers’ drink as part of the Cafe’s core service. To me, this notion of tipping based on difficult drinks is like expecting to be compensated for a “pain premium”. Ultimately, I believe the company is already pricing in the premium in specialty or seasonal drinks. The challenge is they are not awarding higher wages to baristas that fill the most number of these custom requests. I am already picking up the tab since I am paying a higher price for this coffee.
Regular vs. One-Time Customer
Usually as an infrequent or one-time customer, I feel less pressure to tip when I buy coffee. However, if I am a regular customer at a local café, I would feel compelled to tip. As a regular, I appreciate the quality of the product and service and feel that the employees are the ones responsible for my experience. Danny Meyer recently mentioned that customers shouldn’t need to feel obligated to tip for take-out or to-go orders because it’s a transaction. Do you agree? Several baristas from a recent interview from Food & Wine magazine disagree with Danny and they definitely notice.
With regards to how much to tip, according to a survey by Business Insider, the tip amount varies greatly as seen below:
Based on the survey results, tipping based on spare change when paying in cash remains the most popular tipping amount. Since I use a credit card for nearly all my purchases, I usually tip 10% for drip-coffee. Next time, when you are ordering coffee, what factors are most influential when deciding your tip amount? (e.g., size of order, difficulty of drink, your status as a regular vs. one-time customer)
Final Thoughts
Tipping continues to be highly subjective and varies greatly depending on the service and metrics that inform how we tip. To prevent overpaying while still maintaining a respectable tipping etiquette, we as consumers need to adopt a more thoughtful tipping approach. As tipping becomes more expensive and a greater part of our annual expenses, we would love to hear about your personal criteria on how you inform tipping in the comments below.
Are you interested in hearing our recent perspective on ways to save money in other areas? Check out our recent posts below: