The point is, that isn't how coffee shops typically operate in the United States, which is what makes it interesting. Operating a coffee shop without tips has special and unique considerations in the United States - chiefly, how to retain talent and employees when conventional wisdom would say it is better paying to get a job at a traditional tip-based coffee shop, which again, are plentiful in the United States. I would say managing employees is the #1 issue when running a small business like this, so the concern is especially relevant (and unique) to the United States market.
It is kind of like how, if a company was trying to tackle health care in the United States, they might attempt to build a system which reconciles many different hospital systems across the country. In other countries, with Universal Single Payer healthcare, this might not be interesting, but in the context of the United States, a system like this could have huge implications.
The market itself is inseparable from what makes a venture like this interesting. It is interesting precisely because of where it is located.
Former American here...grew up in Ohio but haven't lived in the country for a while (2007).
When did coffee shops in the US start asking for tips? It must be a relatively new thing. Never saw tips asked for at coffee shops when visiting until the ipad checkout thing (square?) appeared. Is it a nationwide thing now or just confined to certain regions (coastal metro areas?)?
I'm from Ontario, Canada, which has a similar but maybe not exact tipping culture.
Tipping at nicer coffee places (i.e. where they offer espresso-based drinks to order) has been a thing for a very, very long time. I can't recall ever not seeing a tip jar and have been going to places like that for probably 25 years, although if you told me the expectation was stronger nowadays that wouldn't surprise me.
The low end places (Tim Horton's up here, I guess Dunkin Donuts would be the comparison), don't expect tips or put out jars / enable them on their terminals, but Tim Horton's has always had a charity jar at the counter anyway so I would think most people would prefer that one.
Yes it started with the upgrade to smart payment terminals, where you insert your card and interact with the screen. It's nationwide now. It got a lot worse during COVID, at which point it became normalized to pay the usual tips even for takeout.
I'm living in Ohio and visit two coffee shops on the regular with electronic iPad checkout. One has a tip in the checkout process while the other does not. In the tip included location I've seen people in front of me tip 20 to 30% on a regular basis for everything from drip coffee to the coffee milkshakes that everyone seems to be overindulging on these days. So people are willingly paying $8 to $10 of Ohio money for a coffee milkshake, or $5 for drip!
The Pulp Fiction shake quote always comes to mind for me:
Vincent: "I gotta know what a five dollar shake tastes like"
Totally off topic but my buddy ran a coffeeshop for a number of years so I'd go in there when he opened to hang out and start my day. It always blew my mind how many people ordered the 24oz "wake-n-shake" at 7am! The drink is just a vanilla shake with a strizzle of chocolate around the cup and a few shots of espresso in it. Sometimes even with whipped cream on top!
Caffe Nero is a chain in the Boston area (and elsewhere) which has no tipping when using a credit card. Most locations have a tip jar for cash, bud no option to tip. It certainly helps me think that they’re getting paid a decent wage since they’re not prompting me to tip automatically. And the employees generally seem happy, and payment goes faster since there’s no stuttering and thinking over the tip step.
The same simple credit card machines are used at Qdoba, but there they ask for a tip, even when coming in to get a bowl and doing takeout. Not unreasonable, but the difference in experience and expectation is pretty wild: coffee sometimes takes as long as it does to put a burrito bowl together, yet one expects a tip and one does not.
But again, it's not that simple, because everyone coming into your coffee shop is going to be expecting to have to tip, so you need to properly manage those expectations. How the owner is planning to do that, and the results of those efforts, is interesting.
Edit: and while per the other replies many people don't claim (all of) their cash tips, you are supposed to claim them as income.
Customers will tend to be price sensitive more to the listed price than the actual price they pay, particularly when it comes to tips since they're "choosing" to give the tip.
This would earn you the reputation of being especially expensive, even if customers aren't actually paying you more.
It always was illegal, but hard for the IRS to prove so most got away with tax evasion. These days most people pay with a credit card which means there is an electronic record that the IRS can demand of the employer. With cash tips the waitress was collecting the cash themself and the manager didn't have a good way to get the correct number. If you report zero tips in the cash system someone will notice, but if you report everyone only gave you half what they really did there is no way to know.
I grew up in New England where Dunkin Donuts is almost a religion, right up there with the New England Patriots. I wasn't excited about Krispy Kreme at all because I grew up with good donuts.
One of the first things I remember as a kid in the 1970s was reading the "no tipping" sign at Dunkin's and asking my parents about it. So it has been a policy there for a long, long time.
(Funny they put a Dunkin's in on my side of town a few years ago, I don't know how many people know the supermarket across the street makes better donuts, which is truly unusual.)
We had a Starbucks in Collegetown which went to only taking mobile orders during the pandemic which meant I pretty much quit drinking coffee there. Not long after Starbucks closed the location to bust the union that was forming there. In my mind that area is a "coffee desert", I mean you can get coffee but so far as I can tell the best coffee is at 7-11 and everything else is much worse.
It is kind of like how, if a company was trying to tackle health care in the United States, they might attempt to build a system which reconciles many different hospital systems across the country. In other countries, with Universal Single Payer healthcare, this might not be interesting, but in the context of the United States, a system like this could have huge implications.
The market itself is inseparable from what makes a venture like this interesting. It is interesting precisely because of where it is located.