Americans are asked to tip on digital screens for everything from a cup of coffee to grocery store self-checkouts, and many are frustrated by the new tipping culture.
Pizza chain Domino’s aims to exploit this exasperation. Not by eliminating tipping, though. Instead, Domino’s encourages tipping even more.
Domino’s has launched a promotion that rewards customers with $3 off a future online delivery order for every $3 or more they tip a Domino’s delivery driver. Domino’s “You Tip, We Tip” offer runs until mid-September.
“At Domino’s, we know there’s a lot of pressure to tip these days,” a narrator says in a cheeky new ad showing people being asked to tip at the grocery store, at the gym and even a wedding. “Domino’s wants to say ‘thanks for the tip’ by sending you a tip back.”
The promotional strategy serves several purposes for Domino’s.
First, the ad campaign is a “clever” way for the brand to interact with consumers, Kimberly Whitler, a marketing professor at the University of Virginia’s Darden School of Business, said in an email.
“When ads connect with consumers in a humorous way about a meaningful societal issue (the minister asking for a tip at the end of a wedding is smart), they may have a better chance of breaking through,” she said.
Second, the $3 promotion could help Domino’s increase its sales. Customers are looking for deals to save money after three years of rising prices largely due to the Covid-19 pandemic.
Third, the announcement is a workforce recruitment strategy, said RJ Hottovy, head of analytics research at data analytics firm Placer.ai.
“It has become more competitive to attract drivers,” he said. “Domino’s may see this as a way to recruit new drivers while keeping existing drivers happy.”
Domino’s did not respond to CNN’s requests for comment on the ad or its compensation.
Some surveys show that Americans tip less, even though they are asked to do so in more places. Tip fatigue is a problem both for Domino’s delivery drivers, who make a significant portion of their income from tips, and for Domino’s business model.
“Tips make up the majority of our pay and are extremely important to those who make deliveries,” said a Domino’s delivery driver in Florida who spoke on condition of anonymity because the worker was not authorized to speak to the media. “We are losing employees and experiencing frequent turnover due to low or no tips. »
But Saru Jayaraman, president of the advocacy group One Fair Wage, sees Domino’s campaign as a way for Domino’s to avoid paying its workers a traditional wage and shift most of their wages to customers in the form of tips.
Domino’s delivery drivers’ pay is linked to tips. Domino’s, like most companies in the restaurant and hospitality industry, pays its delivery drivers what’s known as the “lower wage” for tipped workers in 43 states, said Jayaraman, whose The organization advocates putting an end to this practice.
The federal minimum wage for tipped employees is $2.13 an hour – lower than the federal minimum of $7.25 for non-tipped workers – although many states require higher base wages for tipped employees. If a server’s tips don’t meet the federal minimum, the law says the employer must make up the difference. But this doesn’t always happen. Wage theft and other wage violations are common in the service sector.
Domino’s ad campaign is a way for the company to “encourage people to tip higher rather than paying their workers an actual minimum wage with tips on top of that,” she said.
But the Domino’s driver said he was “grateful” that the Domino’s promotional campaign existed and was concerned that work hours would be reduced or revenues would decline if Domino’s raised wages.
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