Businesses in the hospitality sector are reportedly experiencing a backlash as consumers, grappling with inflation, curtail spending and reduce their tipping habits.

A distinct survey by mobile payment firm SpotOn disclosed that a substantial segment of hospitality workers depends on tips for their income. However, the increasing number of businesses suggesting tipping amounts has led to a decrease in tips received, as customers increasingly resist the pressure.

Bankrate’s senior industry analyst, Ted Rossman, characterized the situation as a “hidden tax,” with businesses soliciting tips as a way to inflate prices subtly. The poll also found that 14% of respondents were willing to pay higher prices to eliminate the need for tipping.

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The propensity to tip was found to decrease with the respondents’ age, with only 35% of Gen-Zers always tipping restaurant servers, compared to 86% of Boomers. This may suggest a strategy by younger consumers to pressure employers into raising base wages.

Why It Matters: The issue of ‘tipflation’ has been a growing concern. In May 2023, Benzinga reported on the rise of self-checkout kiosks guilt-tripping customers into tipping, even without human interaction. This has left many customers confused and frustrated.

These incidents highlight the growing consumer resistance to ‘tipflation’, a trend that businesses will need to address to maintain customer satisfaction and loyalty.

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This story was generated using Benzinga Neuro and edited by Shivdeep Dhaliwal