• Home
  • News
  • Fortune 500
  • Tech
  • Finance
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Starbucks’ new digital tip jar won’t benefit baristas

By
Sanjay Sanghoee
Sanjay Sanghoee
Down Arrow Button Icon
By
Sanjay Sanghoee
Sanjay Sanghoee
Down Arrow Button Icon
March 20, 2014, 2:54 PM ET

FORTUNE – Starting this week, customers at Starbucks Corp (SBUX) can tip baristas with a few swipes on their mobile phone. The Seattle-based coffee chain on Wednesday updated its popular mobile app, giving its 10 million active users the convenience of tipping their baristas digitally.  While the move is well-intentioned, and will likely make some baristas extra eager to please customers, the tipping app may not necessarily help Starbucks workers solve the problem of low tips.

Starbucks baristas, who earn an average hourly wage of $8.80, make only about $1,300 in tips per year, according to Glassdoor. The hope is that the growing popularity of mobile payments and the introduction of digital tipping will increase tipping.  Electronic payments are easy to execute; inevitably, it feels less burdensome than parting with hard cash.  But these factors alone won’t automatically change customer behavior, not to mention that this option is only available in 64% of Starbucks stores in the U.S.

MORE: Quiznos and Potbelly: A tale of two sandwich chains

Given that Starbucks stores average 618 customers per day, according to a study by Trefis, and customer service across the chain is generally good, the yearly tip number seems inadequate. By my own estimates, a minimum gratuity of 50 cents (which is the least you can tip through the mobile app and also a reasonable amount by experience) applied to the yearly average of $1,300 per barista, implies that 2,600 customers tipped.  But even if you assume that baristas (being part-timers) only work 3 days a week, they would still encounter more than 100,000 customers a year. That means only 3% of customers bothered to tip at all, and that is a low number by any standard.  It’s worth noting that some customers probably tip higher than 50 cents, which would suggest that a fewer share of customers tip.

A likely, if surprising, reason for this is that the staff at Starbucks may be too efficient.

Walk into any Starbucks at most times and you will encounter a long line of customers waiting for coffee or food, and a team of baristas rushing to serve them as quickly as possible.  It’s a very efficient assembly-line system, but the irony is the more efficient the system, the less customers are aware of the hard work that goes into your cup of joe.  The speed with which customers are served and physical detachment from the barista (behind the counter) detracts from perceived value – unlike, for instance, at a restaurant, where customers feel that they are really being ‘served’ by a waiter.

MORE:MCDonald’s wage theft suits: Just the tip of the iceberg

Making the earnings of a Starbucks barista worse, at least in New York, is the state Court of Appeals ruling last year that requires them to share their tips with shift supervisors (who, to be fair, do some of the same work as the baristas), further diluting the meager pool of tips available for sharing in the first place. And since companies that enable employees to receive tips also typically pay lower salaries, this situation can actually wind up shortchanging Starbucks employees.

To be fair to its workers, Starbucks should analyze the actual tips received and correlate that with the salaries it pays. That will help to ensure that the chain keeps its employees happy and maintains its high quality of service in the future.  It also wouldn’t hurt for customers to recognize that the best service is sometimes one you don’t even notice.

Sanjay Sanghoee is a political and business commentator. He has worked at investment banks Lazard Freres and Dresdner Kleinwort Wasserstein, as well as at hedge fund Ramius. Sanghoee sits on the Board of Davidson Media Group, a mid-market radio station operator. He has an MBA from Columbia Business School and is also the author of two thriller novels. Follow him @sanghoee. 

About the Author
By Sanjay Sanghoee
See full bioRight Arrow Button Icon

Latest in

Future of WorkBrainstorm Design
The workplace needs to be designed like an ‘experience,’ says Gensler’s Ray Yuen, as employees resist the return to office
By Angelica AngDecember 5, 2025
32 minutes ago
Four years ago, BKV started buying up the two Temple power plants in Texas—located between Austin and Dallas—which now total 1.5 gigawatts of electricity generation capacity—enough to power more than 1.1 million homes, or a major data center campus. There is room to expand.
Energypower
How a Texas gas producer plans to exploit the ‘mega trend’ of power plants for AI hyperscalers
By Jordan BlumDecember 5, 2025
32 minutes ago
Personal Financemortgages
Current mortgage rates report for Dec. 5, 2025: Rates remain relatively stable
By Glen Luke FlanaganDecember 5, 2025
40 minutes ago
Personal FinanceReal Estate
Current ARM mortgage rates report for Dec. 5, 2025
By Glen Luke FlanaganDecember 5, 2025
40 minutes ago
Personal FinanceReal Estate
Current refi mortgage rates report for Dec. 5, 2025
By Glen Luke FlanaganDecember 5, 2025
40 minutes ago
Travel & LeisureBrainstorm Design
Luxury hotels need to have ‘a point of view’ to attract visitors hungry for experiences, says designer André Fu
By Nicholas GordonDecember 4, 2025
6 hours ago

Most Popular

placeholder alt text
Economy
Two months into the new fiscal year and the U.S. government is already spending more than $10 billion a week servicing national debt
By Eleanor PringleDecember 4, 2025
21 hours ago
placeholder alt text
Success
‘Godfather of AI’ says Bill Gates and Elon Musk are right about the future of work—but he predicts mass unemployment is on its way
By Preston ForeDecember 4, 2025
16 hours ago
placeholder alt text
Success
Nvidia CEO Jensen Huang admits he works 7 days a week, including holidays, in a constant 'state of anxiety' out of fear of going bankrupt
By Jessica CoacciDecember 4, 2025
16 hours ago
placeholder alt text
Success
Nearly 4 million new manufacturing jobs are coming to America as boomers retire—but it's the one trade job Gen Z doesn't want
By Emma BurleighDecember 4, 2025
17 hours ago
placeholder alt text
North America
Jeff Bezos and Lauren Sánchez Bezos commit $102.5 million to organizations combating homelessness across the U.S.: ‘This is just the beginning’
By Sydney LakeDecember 2, 2025
3 days ago
placeholder alt text
Health
Bill Gates decries ‘significant reversal in child deaths’ as nearly 5 million kids will die before they turn 5 this year
By Nick LichtenbergDecember 4, 2025
1 day ago
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • Future 50
  • World’s Most Admired Companies
  • See All Rankings
Sections
  • Finance
  • Leadership
  • Success
  • Tech
  • Asia
  • Europe
  • Environment
  • Fortune Crypto
  • Health
  • Retail
  • Lifestyle
  • Politics
  • Newsletters
  • Magazine
  • Features
  • Commentary
  • Mpw
  • CEO Initiative
  • Conferences
  • Personal Finance
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
About Us
  • About Us
  • Editorial Calendar
  • Press Center
  • Work At Fortune
  • Diversity And Inclusion
  • Terms And Conditions
  • Site Map

© 2025 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.