“Tip-flation” in the Takeout Industry
Written by Anastasia Barbuzzi
As Canadians brace for a rough economic recession, “tipflation” has become a hot-button topic, with entire Reddit threads dedicated to the subject and headlines like “Canada’s tipping culture is flawed and there’s no clear fix in sight.” Though frustrations are running high, and Canadians’ wallets are hurting from eating out and ordering in, convenience is still king and takeout isn’t going anywhere.
Research from McKinsey revealed that the global food delivery market has tripled in size since 2017, valuing more than $150 billion. At the height of the Covid-19 pandemic, the market more than doubled. With the rising cost of living, tipping behaviour is evolving.
Restaurants Canada found that, on average, 44 per cent of Canadians are leaving higher gratuities than they did before the pandemic started. The increase could be at least partially attributed to the pre-programmed tip options on card terminals. Tip percentages have continued to increase with many dine-in restaurants programming options between 18 and 25 per cent.
Ontarians are “generous” tippers, leaving 18.9 percent of their bill on average. B.C., Alberta, and Quebec locals leave between 17 and 17.5 per cent, and Atlantic Canadians leave 16.9 percent. People in Saskatchewan and Manitoba are prone to leaving 14.9 percent as a gratuity.
In a recent interview with CTV, University of Victoria Marketing Professor Brock Smith said that 70 per cent of customers are more likely to choose the middle option from a mandatory tipping prompt. Many Canadians in the tipflation conversation feel that mandatory tipping is a way for restaurant owners and food businesses to get away with paying their staff less than a living wage.
For couriers, tips are also a lifeline. Gig Workers United, an organizing group for gig-economy workers, has said that tips can make up between 40 and 70 per cent of delivery people’s wages. How much you tip through a delivery app can change the priority of your order since higher paying fares with a generous tip pay couriers the most. However, couriers can be penalized for declining orders on some apps and even removed from platforms altogether.
Currently, consumer confusion and curiosity about tipping pervade articles like “The Ultimate Guide to Gratuity.” With inflation at an all-time high and restaurant and corporation owners slow or unwilling to increase wages, many gig workers have to rely on people’s generosity to help make ends meet.