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Hospitality Leadership Through Learning
Faculty & Research

Exploring Consumer Reactions to Tipping Guidelines: Implications for Service Quality

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Vol 8 No 8
By:  Rohit Verma Ph.D., Kate Karniouchina, and Himanshu Mishra Ph.D

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Executive Summary: This study examines the relative effectiveness of using gratuity guidelines to encourage restaurant patrons to be more generous with wait staff. The study compared the effects on tips of an educational approach which informed guests about tip norms against an actual calculation printed on the check (as well as no guidelines at all). Using an internet simulation experiment, the study found that potential restaurant guests’ reaction to tip reminders depended in part on whether the restaurant’s service was excellent, average, or just plain shoddy. It’s clear that offering suggestions influenced tip amounts, but not always in the expected way. Offering educational guidelines tended to raise tips when service was adequate, but it reduced the highest tips when service was excellent. When service was poor, however, mentioning tip norms encouraged patrons to take revenge on the hapless server. Offering a calculation on the check improved tips under all service quality levels, although the increase in tip levels was not significant when service was poor. Since the study is a simulation, the authors encourage restaurant operators to contact them to engage in a real-life experiment of tipping guidelines.

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If this CHR Report made a positive impact on your management approach or business operations, we welcome your commentary. We would like to post your comments on our website. Please submit your comments to js372@sha.cornell.edu and rohit.verma@cornell.edu.

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Comments

I just found your report titled "Exploring Consumer Reactions to Tipping Guidelines: Implications for Service Quality".  It provided some very interesting facts for me since I have, in the past, worked in a restaurant that had a tipping guideline on the customer's receipt, and am now working for a restaurant that does not.

One item I found lacking in the study would be the public's education and knowledge about the pay scale for servers in their area and throughout the country, even the world.  For example, here in Georgia (and I know this to be true in North Carolina as well as of about three years ago), servers and wait staff are only paid $2.13/hour; these people rely on tips to pay their rent/mortgages, bills, gas, etc.  Most servers in this state receive paychecks for $0.00 because that money went to pay their taxes and these same servers end up owing huge amounts to both the federal and state governments every year when tax season rolls around.  All of these factors make tips the most important part of a server's financial well-being.

On the other hand, just because someone is a server, that does not guarantee them a tip if their service is sub-standard or non-existent.  I have noticed in the past couple of years, the attitude of some servers has declined and some have decided that they deserve a tip even when they don't do the work to warrant the tip.  But that's another study all together.

Again, thanks for this report.

Jamie Corriher
Manager
Sabroso Mexicano

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About Rohit Verma Ph.D.

Rohit Verma is an associate professor of service operations management at the School of Hotel Administration, and also serves as the Executive Director for the Center for Hospitality Research. Prior to his current appointment, he was the George Eccles Professor of Management, David Eccles School of Business at the University of Utah. He has also taught MBA and executive development classes at DePaul University, Chicago, IL, University of Sydney, Australia, Norwegian School of Logistics, Norway, Helsinki School of Economics, Finland, and Indian School of Business, India. His research interests include new product/service design, quality management and process improvement, supplier selection strategies, and operations/marketing interrelated issues. He has published over 40 articles in prestigious business journals such as California Management Review, the Cornell Hospitality Quarterly, Decision Sciences, Journal of Operations Management, Journal of Product Innovation Management, Journal of Service Research, MIT Sloan Management Review, Production and Operations Management, and other journals. His research has been sponsored by the Hospitality Sales Association International (HSMAI), United States Forest Service, Marketing Science Institute, and various corporations such as CSFB, First Chicago, NCR Knowledge Lab, General Growth Properties, Siemens, Mead Johnson, Kimberley Clarks, Hammerson and others. Verma has received several teaching and research awards including the "Skinner Award For Early Career Research Accomplishments" from the Production and Operations Management Society; "Spirit of Inquiry Award" the highest honor for scholarly activities within DePaul University; “Teaching Innovation Award” DePaul University; and “Doctoral faculty Teaching Award” University of Utah. He serves as the associate editor of Journal of Operations Management, and Decision Sciences; senior editor of Production and Operations Management; and editorial board member of Journal of Service Research, and the Cornell Hospitality Quarterly. He also served as guest editor for four issues of the Journal of Operations Management on topics related to effective management of service businesses.

For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=179