Coffee, plus mobile payments, equals tips.

That’s the takeaway so far for Dunn Bros., which has used an app-based loyalty program since last fall. (Starbucks got a bunch of press in March for adding tipping options to its mobile app.)

About 35 percent of the 15,000 customers using the Dunn Bros. Coffee app are tipping, said Laura Radewald, chief marketing officer for the Minneapolis-based coffee chain. On average, the app users are kicking in about 15 percent for the baristas.

“We don't know what percentage tipped before because it was mostly cash in a fishbowl," Radewald said. “But we think that’s a pretty healthy percentage and we see it growing."

Plus, she said, the company figures mobile-payment users are likely people who used to pay with credit or debit cards (customers unlikely to tip if there’s no receipt to sign).

“Research tells us that millenials like to reward servers for good service, but a lot of millenials just don't carry cash," Radewald said.

John Gifford, who owns three Dunn Bros. franchises in Minneapolis, agrees.

“People don’t carry cash,” he said. “If someone doesn’t have any money, they sort of fumble. Here [with the app] it’s all streamlined.”

The free app, available for Android and Apple devices, enrolls users in the Dunn Bros. loyalty program. It must be connected to a credit card, which is billed when the customer holds the phone up to a scanner at the coffee shop counter. When the payment clears, the scanner turns green.

“The customer reaction is varied. Some people get it and away they go," Gifford said. “Others just sort of keep the phone [in front of the scanner] and they're waiting for the barista to say we're done now."

Not surprising, since the concept of mobile wallets has been slow to catch on among consumers. But Dunn Bros. customers have been avid enough adopters that Radewald expects the app-based loyalty program to stick around.

“I think a lot of people maybe had the hypothesis that payments aren’t broken or we don’t need mobile payments,” she said. “It’s just a quick and easy way to pay.”

(Photo by Carlos Gonzalez)


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