How to manage the POS “tip ask” so it’s not awkward for customers

Tipping has traditionally been one way waitstaff augments earnings without costing the restaurant more in wages, and many employees rely on tip income. Technology, however, has had an impact both on how employees are tipped and customers’ attitudes toward tipping.

Digital wallets, POS touchscreens and ordering kiosks have reduced the number of cash transactions in restaurants. And while technology has made payment easier for customers, it’s also made tipping a bit more complex.

Tipping is the voluntary contribution a customer makes for good service. Today, however, many POS terminals won’t let customers easily complete a transaction without indicating a set tip amount (in a percentage or dollar amount) or the option to choose no tip.

Instead of opting in, customers sometimes have to find a way to opt out of the tip choices they’re given; at times, that action is awkward if the system doesn’t easily allow for customizing a tip amount, the options offered are deemed too high by the customer, or the system doesn’t allow one to opt out of tipping.

These types of digital transactions have cropped up in so many venues—including those where customers were unaccustomed to being asked for gratuities—that customers are developing “tipping fatigue.”

A 2023 Forbes magazine study says nearly one in three people feels pressured to leave tips, more than a quarter feel overwhelmed when making the decision whether and how much to tip, and 23% say they feel embarrassed or guilty when asked to leave tips. This is a quick way to sour an otherwise positive dining experience. 

The good news is that digital technology does prompt people to tip. Most people (95%) tip when it’s expected, according to the Forbes study, with the majority saying they tip an average of 11% to 20%. And nearly two-thirds of customers tip at least 11% more when they tip digitally.

So, how do you maximize tip earnings for your staff without alienating your customers? Here are a few “tips.”

Understand why your customers tip. People tip for a variety of reasons, including generosity and gratitude for service; gaining approval or avoiding disapproval from observers and servers; and helping the business succeed.

Clearly communicate your tipping policy to patrons. Let customers know if tips are pooled and who shares the gratuities. This can be communicated on the screen or on the paper receipt, much in the same way some operations provide customers with tip recommendations in percentages and what they represent in dollar amounts.

Decide whether to use a dollar amount or a percentage when you suggest tip amounts on a POS. Quickservice restaurants, coffee shops or operations that charge small amounts—under $10—usually suggest dollar amounts (e.g., $1, $2, $3).

For larger bills, you may want to suggest percentages. Base them on how much service you provide. Customers don’t expect to tip a lot for coffee or a quick service item; the range in a coffee shop or QSR might start at 10% and go up from there. Some caveats:

• Don’t lead with your highest amount or percentage; customers won’t be happy if they feel tricked into hitting the “30%” box.
• Always Include a “no tip” option and a custom option, and don’t hide it or make it difficult for customers to use.
• Make your suggestions reasonable. We’ve all seen and been annoyed by “50%” tip boxes for items like a T-shirt or hot dog at a stadium.
• Calculate your tip percentages on the total for food and beverage only; customers shouldn’t pay tips on taxes.
• Do the math for your customers. If you suggest percentages, tell them how much it is in dollars and cents.
• Use a combination of strategies if it makes sense. If you sell low-ticket items at lunch and more expensive items at dinner, use dollar amount tip suggestions at lunch and percentages at dinner. Or use a write-in tip on tableservice checks and either dollar amount or percentage tip suggestions on takeout or counter-service transactions.
• Make sure your POS provider can customize your system to offer the choices you want for your customers.

Deliver excellent service, every time. Create a service culture in your restaurant and train your staff members appropriately. Teach your employees that attentiveness, kindness, even a simple smile can dramatically affect the size of their tips. Great service can help give them autonomy over their own earnings, and result in repeat business for your restaurant.