Curious Iowa: How much are you supposed to tip at restaurants, and why are you being asked to tip more often?

At the end of a meal in a full-service restaurant, Americans know the drill: pay the bill and leave a tip for the wait staff.

But in recent years, a new situation has emerged. After ordering a coffee, sandwich or salad at the counter, an iPad or touch screen tablet is turned to customers paying by card for their signature.

That, and their answer to one question: how much they’d like to tip.

The rapid rise of new technology at coffee shops, cafes, bakeries and even car washes has posed an old question in new settings. With new technology rolled out over the last decade and evolving norms partly driven by the pandemic, one thing is clear: customers are feeling overwhelmed by tipping requests.

A study by PlayUSA surveying 1,000 Americans of all ages reported that 63 percent felt overwhelmed by tipping requests. Nearly half tipped in situations where they normally wouldn’t because an iPad or tablet asked them to, and 2 in 3 said they felt pressured to tip.

Nearly three-quarters of those surveyed said they noticed higher than typical tip options presented on the screens, and 87 percent believe more businesses are asking for tips than in the past.

With so much uncertainty around tipping these days, one curious Iowan wondered how expectations have changed. How much are you supposed to tip? And why are we being asked to tip more often.

Curious Iowa is a series from The Gazette that seeks to answer Iowans’ questions about the state, its culture and the people who live here. This week, we dig into tipping etiquette.

Why am I being asked to tip more often?

Ten years ago, many restaurants and businesses used card terminals behind the counter. Customers paying by credit or debit card handed their card over for a swipe, signed a paper receipt with a nondescript line for tips and went on their way.

In the last five years, point of sale systems used to help businesses process transactions have evolved to what customers see today at many casual dining establishments: iPads or touch screen tablets that turn around to be signed by your finger.

That trend was sparked by two factors: the increase in customers using cards for daily transactions and the decrease in the cost of new technology for businesses.

“For our industry, cash has been on the decline,” said Steve Casteel, founder and president of Payteeva, an Iowa-based credit card processing company.

About nine years ago, cash was dethroned as king by cards. Since then, it’s become a smaller minority — today, Casteel estimated that only about 15 percent of all restaurant payments are made with cash.

Meanwhile, tablet-based and handheld point of sale systems have “exploded” in the last four years. Systems that would cost restaurants upward of $40,000 a decade ago became dramatically cheaper to produce.

Many payment processors and point of sale system companies started giving equipment to restaurants for free or at minimal cost in exchange for processing fees with each transaction. Built into these systems are automatic questions for tips, typically with three calculated options to choose from.

Restaurants, which saved hours of labor with the automation of tips, were hard-pressed to turn down the technology.

“Historically, you’d have to write the tip down. At the end of the night, servers have to hand key in each one,” Casteel said. “We have restaurants that do 200 transactions in a night. It could take two hours to (process) tips.”

In many cases, reducing mental math work and putting a convenient button in front of customers has increased the average tip. In others, it’s created confusion and incredulous stares at checkout in businesses where staff don’t rely on tips to earn most of their paychecks.

“You can see that by making it easy for people, they’re more likely to tip on that tablet,” said Jessica Dunker, president and CEO of the Iowa Restaurant Association.

How much should I be tipping?

A 2023 report by Toast, a common payment processing platform for restaurants, shows that Iowans tend to tip well. The state ranks 16th in the country.

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On average, Iowans tip just over 20 percent at full-service restaurants and 18 percent at quick-service restaurants. For excellent service at a full-service restaurant, Dunker said tipping 25 percent to 30 percent is becoming more common.

Those conventions don’t always make sense in coffee or sandwich shops with smaller transactions. Sometimes, tablets will prompt customers for flat tips ranging from $1 to $3, Other times, they’ll offer standard percentage options.

“When people talk about tipping fatigue and ask me ‘do I have to tip,’ the answer to that questions is always no, because a tip is something done free from compulsion. Otherwise, it is not a tip,” said Dunker. “But if someone has done something specifically for you, and it’s created in a way that’s individualized, then tipping is not outside the realm of what would be considered appropriate.”

Abby Ochs, owner of Coffee Emporium locations across Johnson County, said average tips have nearly doubled as her business switched to tablet-based cash registers. Her screens offer customers pre-calculated tips at 18 percent, 20 percent and 22 percent in the center of the screen, with smaller buttons underneath to enter a custom amount or decline tipping.

Today, the average tip there is $1 to $2 per purchase. Coffee shop data from Payteeva shows a similar trend — average tips ranging from 7 percent to almost 13 percent.

Quick-service restaurants, like food vendors at NewBo City Market in Cedar Rapids, may see a slightly lower average tip than coffee shops. Midnight Smoker BBQ has seen a slight dip since opening about a year ago — from roughly 12 percent to 9 percent, on average.

“People are starting to be more cautious with their money,” said Greg Stoll, owner. “It’s not that they’re not spending it, they’re just holding it a little tighter to the vest.”

But in any case, he said the tip question on screens across restaurants has made people feel “more obligated than they used to.”

PlayUSA’s 2022 survey on tipping reported that 49 percent of diners do not tip at all in restaurants without table service. Two in five surveyed said they tip for coffee purchases.

Etiquette experts tell CNBC that tipping is a nice gesture for good service at counter service restaurants, but not a requirement.

Most sit-down restaurants in data from Payteeva showed average tips from 16 percent to over 21 percent in 2023.

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The new role of tipping

Until recently, tipping at restaurants was mostly reserved for servers and bartenders who make less than a standard hourly wage. In Iowa, that’s currently $2.90 per hour. The state’s minimum wage is $7.25.

While many business owners didn’t deliberately implement the on-screen feature to prompt more tips at their establishments, keeping the built-in feature was a no-brainer. In a tight labor market, the convenience posed by the system makes tipping a tool to retain employees.

“I’ve had team members willing to come in at a lower hourly wage because they know they’ll be making good tip money,” Ochs said. “If you have a good work culture … customers remember that experience. They show that in transactions.”

Employees at Coffee Emporium’s slowest store in Tiffin average $6 an hour in tips on top of their wage, which starts at $9.50 an hour. Employees at her Iowa City location average $10 an hour in tips, doubling the entry-level wage.

But restaurateurs and industry leaders are hoping that tipping fatigue doesn’t weigh down a culture that has traditionally supported career servers well.

“Fifty-four percent feel pressured to tip when employees turn that iPad. That’s worrisome for the full-service restaurant industry,” Dunker said. “We have career servers who make not just a good wage but a livable wage … because they make so much money delivering great service and restaurant experiences.

“If people are feeling like everyone wants a tip … it can affect how (customers) feel in what has always been the traditional tipping model.”

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Comments: Features reporter Elijah Decious can be reached at (319) 398-8340 or elijah.decious@thegazette.com.