Starbucks’s Tip Jar Just Went Digital: Will You Pay Up?
You always see the tip jar sitting on the counter of your regular Starbucks (NASDAQ:SBUX), but how many times do you actually contribute to it? Glassdoor data shows not enough, considering baristas who earn an average hourly wage of $8.80 only make only about $1,300 in tips per year, and that’s why the company is now updating its mobile app to make it easier for customers to tip their baristas and give them the thanks they deserve. According to CNN Money, Starbucks updated its popular app last month, and effectively made it more convenient for its 10 million active users to tip their baristas digitally. Now, the question is, will they take advantage of it?
The problem with companies that allow their customers to tip, such as Starbucks, is that they take that into consideration when they determine how to pay their employees. Those companies who have tip jars generally pay their workers less, assuming that tips will compensate for the reduction in pay; however, as is the case with Starbucks, a lot of the time customers’ tips don’t make up the difference, and employees end up getting shortchanged.
CNN Money highlighted a study in its report from Trefis that further supports this argument. Trefis found that Starbucks stores average 618 customers per day, and the customer service at these stores is typically adequate. However, baristas still don’t earn a sufficient number of tips, because we’ve already learned from Glassdoor that they make about $1,300 a year in gratuities, and a minimum tip of 50 cents applied to the yearly average of $1,300 per barista means that only 2,600 customers tipped. CNN Money’s Sanjay Sanghoee did the math and found that even if baristas only work three days a week, they still encounter more than 100,000 customers a year, and that means only 3 percent of customers bother to tip at all. That’s a disconcerting figure for Starbucks baristas who are known to exercise impressive customer service.
But maybe now that customers can tip digitally, they’ll take advantage of the new update on the mobile app. CNN Money reported that the minimum gratuity option on the app is 50 cents, and after that, patrons can tip as much as they want. Starbucks is hoping that the 10 million active users that have the Starbucks app on their phone will now consider making a few extra swipes to reward employees, especially because it has been shown that customers are typically more generous when paying electronically.
Baristas need all the help they can get, considering many of them operate under the state Court of Appeals ruling last year that requires them to share their tips with shift supervisors, further reducing the pool of tips available for sharing in the first place, as highlighted by CNN Money, and because they work so fast behind the counters, some believe that that takes away from customers’ recognition of how hard they work. CNN Money said that the more efficient the system, the less customers tend to be aware of the hard work that goes into coffee making, and that translates into the number of tips baristas receive. Case in point: don’t forget to tip those perfecting your money cup of joe, and if you feel inclined, feel free to do so via your mobile phone.