TORONTO--(BUSINESS WIRE)--As discussions around tipping and "tipflation" gain momentum both in Canada and globally, Atlas, a leader in hospitality automation and tip management software, has released The 2024 Hospitality Tipping Trends Survey in partnership with Angus Reid, to gain national insights from Canadian hospitality operators. While 71% of respondents say tipping is important (50% call it very important), 34% prefer a higher base over tips, and 42% remain indifferent as long as overall compensation is fair. The survey also reveals insights into tipping transparency, distribution, taxation, and more.

Key highlights from the survey include:

• A staggering 91% of Canadian hospitality operators believe that tipping practices should be clear and transparent for both employees and customers, with 21% of respondents having no idea how much of the tip reaches the intended recipient.
• Majority (66%) of respondents want tips to be exempt from income and payroll taxes, and 41% of hospitality operators are looking for clearer regulations on tipping practices.
• As rising living costs continue to affect Canadians, over the last two years, tipping practices have decreased for 39% of operators.
• Half (50%) of respondents see an increase in tips around the holidays, with 29% seeing a 10% increase.

“This survey makes it clear that hospitality workers are calling for fair and more transparent compensation models,” said Afshin Mousavian, CEO and co-founder of Atlas. “At Atlas, we remain committed to supporting the industry through innovative automation tools and advocating for policies that foster fairness and respect for all hospitality professionals. Together, we can create a more equitable environment for everyone in the hospitality industry.”

Tipping Preferences & Trends

The importance of tipping within the hospitality industry is evident, however, the survey reveals that Canadian hospitality operators are looking for a balance in how they make their money. The survey findings reveal that:

• 71% of respondents believe tipping is important, and 50% consider it very important, with the highest emphasis on tipping observed among those aged 55 and older (52%) and in Ontario (57%).
• When it comes to how tipping decisions should be made, 47% of participants advocate for tipping as a voluntary gesture from the customer, particularly favored by 67% of respondents in Saskatchewan. Additionally, 37% believe tipping should be based on the quality of service provided.
• A notable 42% of hospitality operators express no preference for their work environment, as long as compensation is fair. Meanwhile, 34% prefer a no-tip environment with higher base pay, especially prominent in Quebec (58%). Only 25% indicated a preference for a work environment that includes tipping, highlighting a significant shift toward valuing fair wages over gratuities in the industry.
• In terms of holiday tipping, 50% of respondents report a net increase during the holiday season, with the most significant increases observed in Manitoba (73%). While 45% indicate no change in their tipping habits, 29% report that tips typically increase by 10% during holidays, particularly in Manitoba (55%), Saskatchewan (33%), and Atlantic Canada (33%).

Tipping Transparency

Awareness surrounding the final amount of tips that reach their intended recipients is a crucial aspect of transparency in the hospitality industry. According to the survey results:

• A concerning 47% of respondents do not fully know how their tips are distributed, with those the least aware in Alberta (38%).
• Additionally, 21% of participants have no idea how much of their tip reaches the service provider.
• When it comes to the clarity of tipping policies, a staggering 91% agree that these policies should be clear and transparent for both employees and customers, with 70% strongly agreeing. This sentiment is particularly pronounced among those aged 55 and older (74%) and is most strongly expressed in Saskatchewan (83%).

Economic Impact on Tipping Practices

In the past two years, economic conditions have significantly influenced tipping practices within the hospitality industry.

• 39% of respondents report a decrease in tipping, particularly in Saskatchewan (42%). Conversely, 36% have experienced an increase, with Quebec seeing the highest rise at 42%.
• Among the hospitality operators surveyed, 27% indicated a moderate decrease in tips, while 25% reported no impact at all. Additionally, 21% noted a moderate increase, with Atlantic Canada following Quebec with 28%. A smaller portion—15%—experienced significant increases, especially in Ontario and Manitoba, where increases reached 18%.

Tipping Policies

As tipping practices evolve, respondents have voiced specific desires for changes in government policies regarding tipping and hospitality operations.

• The primary request, supported by 41% of respondents, is for clearer regulations on tipping, with the highest support in Alberta (54%) and Quebec (50%). Additionally, 40% advocate for more support for hospitality operations, with strong agreement in Atlantic Canada (56%) and Ontario (43%). Furthermore, 29% are in favor of tax incentives or relief, with support highest in British Columbia (38%) and Manitoba (36%). There are also calls for adjustments to labor laws (27%).

In light of recent proposals in the U.S. presidential campaign regarding tax exemptions for tips, Canadian hospitality operators were asked their thoughts on how Canada should follow suit.

• In response, 66% of respondents believe the Canadian government should exempt tips from income and payroll taxes. Support for this idea is particularly strong in British Columbia (74%), Atlantic Canada (72%), Manitoba (73%), and Ontario (73%). Only 24% feel that tips should continue to be taxed, with Alberta (42%) showing the most agreement with this stance. Additionally, 11% support exempting tips only from income tax, not payroll tax, with significant support in Quebec (50%).

These survey results may reflect some misunderstandings about payroll taxes. It is important to remember that if tips were included on payroll, employers would face additional costs — around $13,680 for every $1 million in sales due to required contributions to CPP and EI.

For more information about Atlas, please visit https://atlasrms.com/.

About Atlas

Atlas is dedicated to improving the operational experience for restaurant teams through tools like Atlas Direct Tips and Atlas Operations. Atlas Direct Tips automates tip division, distribution, and compliance, providing CPP and EI exemptions, saving thousands for employers and employees, while reducing cash management risks. Atlas Operations automates daily reports, sales forecasts, shift notes, and labor optimization, saving time and money. These solutions enhance efficiency, productivity, and focus on delivering exceptional customer experiences. For more information about Atlas, visit https://atlasrms.com.

Survey Methodology

These findings are from a survey conducted by Atlas from September 27th to October 2nd, 2024, among 207 current Canadian restaurant owners / operators, or hospitality professionals who are members of the Angus Reid Forum. The survey was conducted in English and French.