The Red Lab unveils its new report on 'Issue of Tipping'

The Red Lab has launched a new report on the issue of tipping.

A once voluntary practice, once seen as a gratuity for satisfactory or good customer service, has now become almost a compulsory add-on to the food bill in most restaurants today with no correlation to service and no element of discretion. But before we read further about the issue, let’s first understand how did this custom of tipping start.

Some theories suggest that tipping dates as far back as the Roman era and is probably even older. Others claim that tipping may have begun in the late Middle Ages when a master or lord of the manor could give a little extra money to a servant or labourer, whether from appreciation of a good deed or from compassion. The system of tipping came into prominence in India with the arrival of the British. Usually called  baksheesh, the culture of tipping the restaurant workers, hotel staffs, chauffeurs and housekeeping staff is now pretty common across the country. But in the modern Western driven culture, tipping is almost a matter of right, and not tipping is seen to be bad etiquette.

The report further highlighted, “By 1895, the average tip in European restaurants was 5 percent of the bill, while in the United States a common tip was 10 percent. By the early 20th century, even though the tipping custom had only just arrived in the United States, there were already attempts to abolish it. Some states passed laws against tipping, starting with Washington in 1909, but these laws were repealed after several years. Over the years, the percentage tipped in the United States has gradually risen. Now the figure is moving toward 20 percent for excellent service. In ordinary family-style restaurants, 15 percent is still the norm. In Europe, where tipping originated and was already common hundreds of years ago, tipping is generally less common and in much smaller magnitudes than in the United States.”

The report also mentioned that it is extremely difficult to explain tipping behavior from the perspective of a purely self-interested consumer. “This motivation for tipping is irrelevant for customers without intentions to return to the same service provider. Future service is not a reason for tipping. Instead, psychological and social motivations seem more plausible reasons for tipping.”

The Red Lab consumer insights team at Rediffusion/ Everest ran a quick check on tipping motivations using the OH Azar Model of 2010: The sample size wasn’t very large – 147 respondents, almost equally male and female in Mumbai. But one can be reasonably sure that the feedback may not have been very different in a larger sample or larger geography. There was the last very important question that all respondents were asked that was the real clincher: fixed service charge or a discretionary tip – which do you prefer? An overwhelming 81% said they would prefer to tip rather than be subjected to a fixed charge. “By tipping I can show the waiter my gratitude for service,” was the near universal refrain.

When asked for the reasons they tipped more for better service, “The majority of respondents reported that it is fairer that tips will depend on service, and that they want to show their gratitude in proportion to how grateful they actually are. These responses can explain why tipping is preferred to service charges that do not depend on service quality. Customers prefer the control of choosing a tip and have a positive feeling that they are showing generosity,” revealed the report.