Digital Tipping in Starbucks (NASDAQ:SBUX)

Starbucks (NASDAQ:SBUX) takes on a new digital technology to tip the employees. People mostly like to use their credit or debit cards to buy products, but transactions made through credit card or Starbucks (NASDAQ:SBUX) Card takes away the right of the employee to a tip; costing employees a considerable portion of their wages. It seems that Starbucks (NASDAQ:SBUX) has found a way around the glitch.

Starbucks (NASDAQ:SBUX) claims that today’s fast paced environment makes it a necessity to keep up with latest technologies. This latest application can be downloaded and accessed through Starbucks (NASDAQ:SBUX) application on iPhone and Android. This new technology has been received with enthusiasm by the Starbucks (NASDAQ:SBUX) customers, who feel that it has now become easier to show their appreciation for customer service received at the coffee house.

Another positive factor is a new and innovative payment method for the employees who receive the least wages being paid in the U.S. currently. Although, the Arizona State University programs provide certain health care and full tuition fee waiver benefits, these usually do not cover up for the minimum wages. This new application is a great way to give the credit where it is due.

After the activation of the mobile application since Wednesday, millions of users have the convenience to tip digitally. It is quite easy to use and is being regarded a user-friendly application. But, this alone may not be able to change individual consumer behavior. Another reason that may restrict customers to use this application is its availability in 64% of Starbucks (NASDAQ:SBUX) stores in the United States.

A quick calculations of statistics show that given the earning rate verses the expected tip, the raise in salary for Starbucks (NASDAQ:SBUX) employees is still as low as 3%.

A surprising conclusion that was derived through this was that maybe the reason for low or no tip is the inefficiency of the Starbucks (NASDAQ:SBUX) workers. Most of the times, when customers walk into a store like Starbucks (NASDAQ:SBUX), they are welcomed by long queues and waiters running around serving or cleaning. Moreover rush hours results in more work for the waiters who cannot pay full attention to each and every customer resulting in bad customer experience. Although, employees give the best available service under such circumstances, their efforts go unnoticed – people do not understand the burden of work waiters have to deal with. Even a slight misstep from the waiters can result in angry customers who leave the stores without any tip or very little tip for the waiter.

To make matters worse, in New York, waiters are obliged by Court of Appeals to share their tips with shift supervisors. This takes away the employee motivation to give exemplary customer services and in turn makes the situation a whole lot worse for Starbucks (NASDAQ:SBUX) employees.

A fair approach to the scenario would be that Starbucks (NASDAQ:SBUX) calculates the tips received and compare them with salaries received. That wouldn’t only keep the employees happy but also ensure high quality of service in the long run.