Paying Tips Through Payroll

Paying tips through payroll can be a simple way for employers to distribute tips they collect on employees’ behalf. It eases the burden on both employers and employees by ensuring tips are appropriately taxed and recorded. However, it’s also much more involved than paying tips instantly, as we’ll explain below.

What Is a Tipped Employee?

A tipped employee is any employee who regularly and customarily receives at least $30 in monthly tips from customers. These employees often work in industries where gratuities are common, including restaurants, bars, hotels, and other hospitality or service businesses. Many tips employees interact directly with customers who provide tips as a reward for good service.

In many cases, tipped employees receive lower base hourly wages than non-tipped employees, expecting their tips to supplement their income to at least meet the federal minimum wage. This lower direct wage and the tips received constitute the employee’s total earnings.

How Do Employee Tips Work?

Employee tips function as a direct, voluntary payment to service workers by customers in appreciation for the service they receive. Customers typically determine the tip amount based on the service quality, and it is often a percentage of the total bill. In many industries, customers usually tip 10% to 20% of their total bill to reward employees for good service.

The process of handling tips varies by industry and by business. In some cases – including cash businesses – employees often keep their tips individually. In other cases, tips are pooled and then divided among the staff, including servers, bartenders, and back-of-the-house workers. 

Most often, when employees receive cash tips, they’re entitled to keep those tips (minus any portion they’ve agreed before to share with support staff). Additionally, employers are responsible for distributing tips they collect on behalf of employees, including through credit or debit card transactions.

What Is a Tip Credit?

A tip credit is a provision in the Fair Labor Standards Act (FLSA) that allows employers to count a portion of their tipped employees’ gratuities as a component of their total wages. This means that in states where tip credits are allowed employers can pay tipped employees a lower direct wage if the amount of tips received is sufficient to bring the employee’s total earnings to at least the federal minimum wage.

Paying Tips Instantly vs Through Payroll

In most businesses, employees receive their tips instantly in cash at the end of their shift. This immediate form of payment gives employees instant access to their earnings. Still, it can also lead to management headaches and potential inaccuracies in record-keeping. Handling large amounts of cash can pose risks to a business, and reconciling tips reported by employees with sales data can be a time-consuming task. 

Paying tips through payroll involves collecting the tips earned by employees and adding them to their regular paychecks. While this method ensures accurate tracking and reporting of tip income, it will delay employees’ access to their earnings. Over time, employees can also grow skeptical that tip calculations are accurate.

This is where Kickfin comes into play. Kickfin is a platform that solves these challenges by enabling instant tip payments directly to employees’ bank accounts. This eliminates the risks and hassles associated with handling cash and ensures accurate, real-time tracking and reporting of tips. Employees benefit from immediate access to their earnings, improving financial security and job satisfaction.

How To Pay Tips Through Payroll

Collecting and tracking tips throughout a pay period can be a headache, but it also ensures accurate reporting and tracking of tip income for employees. In this section, we will walk through the basic steps of how to pay tips through payroll.

1. Collect Non-Cash Tips on Behalf of Employees

Non-cash tips, such as credit and debit card tips, are typically included in the customer’s bill at the point of sale (POS). To collect these tips, businesses must integrate a tipping option into their POS system. That way, when a customer pays with a card, they can add a tip to their total bill amount. Most modern POS systems offer an option to add a tip to the bill. 

Collect the total amount of non-cash tips from the POS system at the end of each shift or business day. This should be a simple matter of running a report or checking each employee’s accumulated tips in your POS system. Add the collected tips to each employee’s payroll for that period. In some cases, you might be able to integrate your POS system with your payroll system to automate this step.

2. Transfer Funds from Merchant Account to Payroll Account

Once customer transactions for a given shift settle and funds are deposited into your merchant account, transfer money from your merchant account to your payroll account to ensure you have the funds necessary to cover employee payroll. 

Keep in mind that transfers may not be instantaneous, depending on your bank’s policies and procedures. Therefore, scheduling these transfers well before your payroll processing days is recommended to ensure the funds are available when needed. 

3. Separate Tips by Employee

Once you have money in your payroll account, process payroll as you would normally – by multiplying each employee’s hourly wage by the number of hours they worked in that pay period. Then, add the calculated tips to the corresponding employee’s payroll. If you process payroll manually, this could mean adding the tip amount to the employee’s regular wage for that pay period. If you’re using a digital payroll system, there may be a specific field or feature where you can input the tip amount. 

At this point, you should ensure that each employee’s pay meets state and federal minimum wage requirements. If one or more employees’ total compensation (wages plus tips) does not meet minimum wage, you’ll need to supplement their wages for that pay period to compensate for any shortfall. (Note: This would only apply in states that allow restaurant operators to take a tip credit.)

4. Incorporate Tips into Scheduled Payroll

Once you add each employee’s tips to their pay amount for a given pay period, you’ll need to calculate taxes and other deductions based on their total income. Typically, both federal and state income taxes, along with the employee’s share of social security and Medicare taxes (FICA), are calculated and withheld from this total income. Any other deductions or withholdings that the employee has authorized should also be deducted.

Remember to clearly itemize each of these deductions on the employee’s payslip, showing the specific amounts deducted for each category. This helps employees understand how their total income, including tips, is calculated and where their money is going. 

5. Pay Out Tips as Part of Payroll

After calculating each employee’s income (including tips) and deductions, process payroll – paying out net wages and providing employees with copies of their paystubs for that pay period. Most payroll systems generate these statements automatically. Otherwise, you’ll need to generate itemized pay stubs manually.

What Is the Difference Between Cash Tips and Paycheck Tips?

Cash tips and paycheck tips represent two different methods of tipping in the hospitality industry. Cash tips are the traditional and most common form of tipping. They are given directly to the service provider, often immediately after service has been rendered. This method allows service staff to receive gratuity instantly, providing immediate access to their earnings. 

Paycheck tips, on the other hand, are tips that are added to an employee’s regular paycheck. This method involves collecting non-cash tips (credit and debit card tips) through a POS system and adding them to payroll for distribution. Paycheck tips provide more accurate tracking of tip income for tax purposes but also delay employees’ access to their earnings.

Do Employees Have to Pool Tips?

Pooling tips, also known as “tip pooling” or “tip sharing,” is a common practice in the hospitality industry. It involves combining all or a portion of employees’ tips into a shared pool, which is then divided among a group of employees. The aim of tip pooling is to promote a collaborative work environment where all staff members share in the business’s success. 

In the U.S., an employer can require employees to participate in a tip pool or share tips with other employees. However, this is only allowed among employees who customarily and regularly receive tips, such as servers and bartenders. Back-of-house staff, such as cooks and dishwashers, can’t be forced to participate in a tip pool unless the employer pays the full minimum wage and doesn’t take a tip credit. 

If you’re thinking about having employees pool tips, first familiarize yourself with local laws to ensure your tip pooling policies are compliant. You need to create a written tip-pooling policy, make employees aware of this policy from the outset, and effectively communicate any changes.

Digital Tip Jars: What They Are & How They Can Help Your Business

Digital tip jar

A digital tip jar is a cashless tipping solution that enables customers to give staff gratuities without using cash. In an increasingly cashless economy, many business owners struggle with how to reward staff members with tips when fewer and fewer customers carry currency.

What Is a Digital Tip Jar?

A digital tip jar is an app or online platform that lets customers give gratuities – often to entertainment or hospitality workers like musicians, baristas, or valets – without the need for physical cash. Digital tip jars offer a seamless, cashless tipping experience that aligns with the growing trend toward digital payments. They can be utilized through various methods such as QR codes, links, or embedded buttons on websites, making them convenient, safe, and efficient for customers.

How Do Digital Tip Jars Work?

In practice, a digital tip jar works very similarly to tip jars of old. However, instead of dropping in spare change or bills, customers can send tips electronically either through a payment app or a dedicated digital tipping platform. These platforms – including ours – support various payment methods, including credit/debit cards and mobile wallets. They let business owners generate QR codes or links that can be shared with customers, making it easy to scan or click to tip.

Though still relatively new, digital tip jars can be a boon – particularly to staff in the hospitality and entertainment industries. These apps offer an easy, low-cost way to collect tips and can be particularly beneficial in businesses with multiple service layers or those with a significant delivery component. Customers, who increasingly favor cashless transactions, appreciate the convenience and simplicity of digital tipping. They can show their appreciation for good service with just a few taps on their smartphone.

Digital Tip Jar Fee Structure

Digital tip jars typically charge a percentage fee on each tip received – often around 8.9% – plus a flat fee – usually $0.30 per transaction. In contrast, Kickfin provides a digital tip jar service for a 5% fee, plus $0.20 per transaction. This fee is primarily used to cover the operational costs of the platform, including transaction processing fees.

It’s important to note that while some platforms might not charge the businesses directly, they may charge the customer a surcharge. However, this is prohibited or restricted by many payment processors, including Visa.

Benefits of a Digital Tip Jar

Digital tip jars aren’t just a trend – they’re a solution to a modern business challenge. They provide a seamless and hassle-free way for customers to show their appreciation for excellent service. But their advantages go beyond convenience. Digital tip jars can significantly impact your business’s bottom line, boost employee morale, and improve customer service.

Increased Tips

Digital tip jars often lead to an increase in tips. With more and more people going cashless, having a digital gratuity option allows more customers to tip, and the ease of tipping digitally often results in larger tip amounts.

This benefit is particularly advantageous for businesses in the service industry where tips contribute significantly to staff income. Higher tips can lead to happier staff and less employee turnover. 

Improved Customer Experience

In many industries, tipping forms part of the overall customer experience. When customers find every aspect of their interaction with your business easy and convenient, it contributes to their overall satisfaction and increases their likelihood of returning.

Increased Transparency

When you set up a digital tip jar for your employees, all tips are tracked and recorded, eliminating any disputes or confusion about how much was received. It also eliminates the chances of tip theft or discrepancies and the need for you to stock a cash drawer to help employees make change for tips.

Having a clear record of tips can also help with managing employee performance. By tracking the amount and frequency of tips, businesses can identify their top-performing employees and reward them accordingly.

What Kinds of Businesses Should Use Digital Tip Jars

Digital tip jars are a game-changer for any business where employees rely on tips as a significant portion of their income. Here’s a look at what types of businesses can benefit from incorporating digital tip jars:

  • Bars/Restaurants: Servers and bartenders at bars and restaurants often rely heavily on tips. Digital tip jars make it easy for customers to tip, even if they are paying with a card or mobile payment. They also ensure that employees receive their tips immediately, rather than having to wait for cash-outs or paychecks.
  • Hotels: Hotel employees like bellboys, housekeepers, and concierge staff often receive tips as a token of guest appreciation. A digital tip jar allows guests to tip without the need for spare change or cash.
  • Valets: A digital tip jar makes the process of tipping valets seamless, eliminating the awkwardness when customers don’t have cash on hand.
  • Pet Groomers: Many pet owners appreciate the services of pet groomers, and a digital tip jar allows them to reward good service easily.
  • Car Washes: Employees at car washes often go the extra mile to ensure cars are spotless, making them prime candidates for tip-based income. Digital tip jars streamline this process.
  • Tours/Events: Tour guides and event staff often provide exceptional service that warrants a tip. A digital tip jar allows customers to tip these individuals easily, regardless of the payment method they used for the tour or event.

How to Get the Most from Using a Digital Tip Jar

  • Promote Digital Tipping: A digital tip jar won’t do much if nobody knows about it. Start by communicating its presence to your customers. Use signage, menu mentions, or verbal reminders from staff to encourage customers to tip digitally.
  • Train Your Staff: Your employees are on the front lines of promoting a digital tip jar to customers. Make sure they know how it works and the benefits it offers, so they can confidently explain the system to customers.
  • Offer Multiple Payment Options: Different customers are comfortable with different modes of payment. Ensure your digital tip jar accepts a wide variety of payment methods, from credit cards to mobile payment apps, to cater to all your customers’ preferences.
  • Ensure Compliance: Make sure your digital tip jar system is not surcharging customers as this can lead to problems with payment processors. Regularly review your compliance status to avoid unforeseen issues.

Staying Compliant with a Digital Tip Jar

While digital tip jars offer a host of benefits, it’s important to use them properly.

Adherence to State Laws

Each state has its own set of laws pertaining to tips, including how tips are taxed, who can receive tips, and how tips can be distributed. It’s crucial to ensure your digital tip jar adheres to the specific laws of the state(s) in which your business operates.

Compliance with Payment Processor Rules

Digital tip jars are often facilitated by third-party payment processors. These processors usually have their own set of rules and requirements, which businesses need to abide by. Some processors may have specific policies about how tips are processed and recorded. For example, digital tip jars that surcharge customers on debit card transactions or more than 3% of the tip on credit transactions violate Visa network rules. As a result the merchants run a high risk of Visa turning them off their processing network.

Following Tax Regulations

Tip income is taxable. Digital tip jars track and record all tips, making it easier for businesses and employees to report tip income accurately. However, how this income is reported may vary depending on the tipping platform you use and the flow of funds from customers to staff. Check with your accountant to make sure you report tips properly.

Fair Labor Standards Act (FLSA)

Under the FLSA, tips are considered the sole property of the tipped employee. While tip pooling is permitted in some cases, employers must follow strict guidelines. A digital tip jar needs to be set up in such a way that it adheres to these regulations.

Using Kickfin as a Digital Tip Jar

We’re proud to say that we’re one of the most popular cashless tipping options available on the market. We offer a flexible platform for businesses to collect and manage employee tips, streamlining the process and ensuring that employees receive their tips quickly and easily.

Here are some things you should focus on when you’re looking for a digital tipping solution for your employees:

  • Easy Set-Up: We help business owners set up cashless tipping in minutes with no technical skills required. 
  • Multiple Payment Options: Customers should be able to tip using credit or debit cards, as well as popular mobile wallets like Apple Pay and Google Pay.
  • Instant Tip Distribution: Employees should receive their tips immediately after a transaction is processed, eliminating the need for cash-outs or waiting for paychecks.
  • Customizable Tipping Options: You should be able to set up custom tipping options, such as percentage or dollar amount.
  • Real-Time Reporting: A digital tip jar should track tips and let you view real-time reports on employee tips.
  • Secure Transactions: When you’re collecting tips for employees, security is paramount. Any platform you consider should ensure all transactions are safe and secure.

Digital tip jars offer a convenient and efficient way for businesses to manage employee tips, making it easier for customers to show their appreciation while also ensuring that employees receive their tips promptly. With platforms like Kickfin, implementing a digital tip jar has never been easier. Schedule a demo with our team to learn how digital tipping can motivate your employees and improve your customers’ experience.

FSTEC Recap: Tip Management 101 Forum

Restaurant operators and tech companies descended on Dallas to meet at FSTEC, the premier conference to learn about exciting new solutions for the quickly-automating restaurant industry. 

Our very own Brian Hassan, co-founder and co-CEO of Kickfin, joined a panel to talk about everything tip management — including employee buy-in, legal compliance, and profit growth. Brian discussed the importance of creating a tip management strategy and how to execute on it alongside Mike Manley (Senior IT Director, Dave & Busters), Ken McGarrie (Founder, Korgen Hospitality), and James Fessenden (Partner, Fisher Phillips). 

Watch the full video or check out our key takeaways from Brian’s conversation. 

Building a Tip Management Strategy

Things are changing in the restaurant industry — and fast. A unified tip management strategy should be a key component of your restaurant’s operations. 

Why?

  • Fewer cash transactions at restaurants 
  • Servers still want daily tip payouts 
  • Changing IRS policies for claiming tips 
  • Competition in the labor force 

Forward-thinking restaurateurs are already investing in tech to automate many aspects of their business, so your tip management strategy shouldn’t be left in the past. 

For restaurants looking to scale, having a single strategy across all your locations is the best way to simplify operations, ensure compliance with tip pooling laws, and prevent theft. You’re going to have growing pains, but paying employees efficiently should be priority number one.

So how do you create a tip management strategy? 

  1. Choose a tip pooling system 
  2. Decide how you’d like to pay out tips to employees 
  3. Monitor for compliance with tipping laws 

Tip Distribution Models

85% of our customers are currently sharing tips, one way or another, but there isn’t a one-size-fits-all tip distribution model. 

For QSRs, it’s pretty simple: pool tips and divide them by hours worked. At QSRs, you’re all working as a team to serve customers quickly, whether you’re running the cash register or manning the drive-thru window. It feels fair for employees to share tips based on how long each team member’s shift is.

Things start to get tricky when splitting tips at FSRs, especially in fine dining. Servers provide the majority of direct service to guests, but there are a lot of key people involved in the entire dining experience (hosts, runners, bartenders, and bussers). 

Many FSRs will use a “points” system to assign a share of the night’s tips based on their role, or servers will “tip out” the other supporting staff members based on a percentage of their sales. Beware: splitting by percentages can often veer into non-compliance without proper management. 

>> Learn more about tip distribution models here

Once you’ve chosen the right tip distribution model for your business, communication is key. Employees should be notified in writing about the tip pooling policy, but you should also be talking to them about why you have this policy and how it will work. 

Pay-out Methods

Once you’ve split up the tips, how are you going to pay them out to employees? 

Cash

Cash has ruled the restaurant industry for decades, and most servers have come to expect an envelope of dollar bills at the end of every shift. But does it still make sense?

While 90% of hospitality outlets are still paying out in cash, some restaurants are seeing as low as 1% of transactions paid in cash. This creates a logistical problem for restaurants who have to order cash deliveries or send a manager out to withdraw thousands of dollars just to pay servers. 

Cash also opens the door for theft. Servers leaving work with a wad of cash in their aprons are easy targets, putting their physical and financial safety at risk. Owners also run the risk of employee theft. Since cash isn’t traceable, that money is gone. 

Now that the IRS is planning to use POS data to estimate tips, cash could also cause major issues for servers at tax time. The POS data might show that a server likely earned $200 in tips (claimed or not), but it doesn’t account for how much a server had to tip out. If you’re only left with $150 after tip out, why would you want to be taxed on $200? 

Payroll

Putting tips on payroll is probably the easiest option for restaurant managers. It makes for straightforward compliance and takes much less time than counting cash. 

But (and it’s a big but), servers are used to an influx of cash on the daily — not every two weeks. You run a big risk of losing veteran servers and struggling to hire new staff when you move their tips onto payroll. 

Digital Tipping 

The innovative tech we mentioned earlier? This is it. Rather than cash or payroll, you can look into digital options that will free you from cash without alienating employees. 

But there are still options in the world of digital tip outs: Prepaid cards and instant, direct payouts. Prepaid cards were the earliest iteration of digital tip outs, offering employees their tips instantly on a card provided by their employer. They come with some major drawbacks though, including fees, restrictive ATM networks, and questionable legality. 

Direct digital payments send the tip right into employees’ bank accounts. No one needs to add another card to their wallet or spend time transferring funds from a prepaid card to their normal bank account. 

The Digital Tipping Landscape 

Ready to try digital tip outs? You have a lot of options — including Kickfin! 

When choosing a digital tipping partner, you have some things to consider. First and foremost, solve problems one at a time, in order of importance. Seek a solution that best fits your pain points without overcomplicating things. 

Here are some things to consider when choosing a digital tipping solution 

  • Does it send payment instantly? 
  • Does it have a payroll option for unbanked employees? 
  • What does the implementation and onboarding look like? 
  • Can it integrate with your POS? 
  • Does it manage compliance? 
  • Will it make employees’ experience better? 

If you choose wisely, the impact of your tip management system will go far beyond paying employees. For one, your employees will stick around for longer. Our survey found that Kickfin was the top reason that servers decided to stay at their current restaurant. And with more time on their hands, managers can do their most important job — creating more profitability for your restaurant. 

Compliance 

Remember: tipping laws are no joke. Here’s a quick refresher (but always ask an attorney for personalized legal advice). 

The Tip Credit

If your employees are earning more than $30 every month in tips, you are allowed to take the tip credit. According to federal law, you can pay employees $5.13 less than the state’s minimum wage per hour, as long as the employee is making up the difference in their tipped earnings. This only applies in states where the tip credit is legal (sorry, California restaurant owners). 

Tip Pooling 

As we mentioned before, tip pools are a great way to reward FOH staff for their part in creating excellent guest experiences. But, when not carefully monitored, tip pools are one of the easiest ways to get in legal trouble for wage theft. 

Depending on your state, mandatory tip pools may not be legal, but employees are always welcome to create a voluntary tip pool. Where mandatory pools are legal, BOH employees and managers are not allowed to participate in the pool. 

As a general rule of thumb, California is leading the charge as tipping laws evolve. Look to their current laws as a blueprint for what other states will be putting in place in the near future. 

Tip Management Best Practices

As you’re creating (or recreating) your tip management system, follow these tips from the panelists. 

Keep It Simple 

There’s no need to have a complex tipping system if you don’t need it. Come up with a single system that will work at all of your locations. Same goes for your tech stack — don’t add tools that you don’t need. Only bring in technology that makes your life easier without overcomplicating it. 

Be Transparent 

You’re making changes to your employees’ livelihoods, so keep them in the loop. As you develop your tip management strategy, have an open-door policy where employees can come to you with concerns or with pain points they’d like a solution to. 

Also, always give written notice of your tip policy to your employees and have them sign it. This goes for changes to your use of the tip credit or for tip pooling. 

Know Your Market 

To retain staff as you make these changes, you need to know what other restaurants in your area are doing. If it’s common practice to pay tips on payroll (as it is in New York City), then you may not need to worry about losing employees to daily pay restaurants. But if your competitors are handing out cash daily, make sure you have a solution that is just as enticing for servers.

Thanks to FSTEC for giving us this opportunity — we can’t wait to see you all again there next year. In the meantime, if you’re looking for a first step to overhauling your tip management strategy, check out our FREE tip pooling templates.

Understanding Service Charges for Restaurant Owners

Service charges, a customary practice in numerous industries, have become far more common in the cost-intensive, low-margin restaurant business in recent years.

A service charge is a fee added to a customer’s bill to cover various aspects of service on top of the cost of goods (i.e., food and beverage). Service charges can serve multiple purposes depending on the restaurant’s policies, from supplementing staff wages to offsetting operational costs. 

While service charges are legal, they’re often misunderstood — and somewhat controversial. Diners don’t love being surprised at the end of a meal with an unexpected fee — especially if it’s not clear what the fee is actually for or where it’s going. Many assume it’s a tip (it’s not!), which can negatively impact employees’ take-home pay.

While service charges can be useful for operators who are fighting an uphill battle against inflation or staffing issues, it’s critical to understand exactly what a service charge is (and isn’t), how to implement one, and what to consider when it comes to compliance and reporting. 

What is a service charge in the restaurant industry?

In the restaurant industry, a service charge is a mandatory fee that gets added to a customer’s bill. This fee is typically a fixed percentage of the total bill amount and often ranges from 10% to 20%. 

It’s important to note that a service charge is not a tip or a gratuity, which are voluntary amounts left by customers in appreciation for service provided. Instead, a service charge is a mandatory charge, often used to cover the costs associated with providing the service, such as staff wages, maintenance, or administrative costs. These charges are common practice in many restaurants, particularly in fine dining or restaurants with large numbers of staff. 

As Beth Schroeder of Raines Feldman LLP explained in her recent Hot Tips & Takes interview, the proceeds of service charges are the property of the restaurant to do with as management sees fit.

Service charges for restaurant owners can help to:

  • Compensate for staff expenses: One of the primary reasons many restaurants implement a service charge is to help cover staff salaries and benefits. While tips can often supplement these costs, they are not always reliable and can fluctuate greatly. Service charges provide a more consistent and reliable revenue stream, ensuring that restaurant staff are compensated fairly for their work.
  • Maintain high service standards: Service charges can also be seen as a reflection of the superior service offered by the establishment, as they’re often found in high-end restaurants where exceptional service is part of the dining experience. Funds generated through service charges can be used to invest in training and development programs for the staff, helping to maintain high service standards.
  • Balance food costs and pricing: Implementing a service charge can help balance the cost of high-quality ingredients with competitive pricing for the customers. Restaurants operating in a higher price range often use premium ingredients, and a service charge helps offset these costs without needing to increase menu prices significantly.
  • Share tips equitably among staff: In many establishments, tips are shared among the service staff only. By implementing a service charge, restaurants can ensure a more equitable distribution of tips among all staff members.
  • Offset the cost of bottle service: For restaurants offering bottle service, the associated costs can be substantial. This service often involves premium liquors and additional staff to cater to the table. By applying a service charge, restaurants can help offset these costs.
  • Facilitate large group payments: Service charges are particularly advantageous when catering to large groups or events, such as banquets or parties. A preset service charge can ensure that the staff is equitably compensated for their time and effort and that costs associated with special decorations or other incidentals are covered.
  • Address split meal charges: When large parties dine together and split bills, it creates additional work for service staff. A fixed service charge helps compensate for this increased workload.
  • Accommodate delivery fees: One last case where service charges are common is in covering delivery fees. As food delivery has gotten more popular, restaurants have had to bear the cost of partnering with food delivery platforms. These platforms charge a significant percentage of the order total as their fee. By incorporating a service charge, restaurants can manage these expenses without having to compromise on the price or quality of their food. 

What’s the difference between a service charge and a tip or gratuity?

While this can be confusing to diners, service charges and tips/gratuities are not the same. The key differences between a service charge and a gratuity:

  • Service charges are compulsory. Service charges are mandatory and non-negotiable. Tips, on the other hand, are not required. Yes, they’re often expected — and many hospitality employees rely on them to increase take-home pay — but ultimately, tips are discretionary and generally based on the quality of the meal and service. 
  • Service charges are a set percentage of the bill. A service charge is a fixed percentage of the total cost of a meal as determined by the employer; it generally ranges from 10-20% of the bill. With tips or gratuities, while 15-20% is a customary percentage of the bill, the amount is completely up to the customer.
  • Service charges belong to the employer. Service charges can be used to increase staff wages, but ultimately, it’s the employer’s call as to where those funds go; operators might choose to use a service charge to offset other costs of doing business. Tips, on the other hand, belong solely to employees. Employers can implement tip pools or tip shares to distribute tips more equitably among employees, but it’s illegal for them to keep any portion of tips from any employee. 
  • Service charges are categorized differently by the IRS. When a service charge is used to increase employee compensation, it’s still not considered a tip. It must be reported as a “non-tip” wage.

Tipping on top of service charges

It’s important to understand that tipping is also still typically expected on top of the service fee. 

Again, though a service charge can contribute to the staff’s wages, that’s not always the case. Employers might use service charges for other costs of doing business. When this happens, “service charge” is a bit of a misnomer; that is, customers may (reasonably!) assume that the fee is going to the person or people who provided the service. As a result, customers might be less inclined to leave a tip.

That’s why it’s important for employers to clearly communicate to both customers and employees how the service charge is being used. If it’s unclear, and the charge isn’t being used to increase compensation, it’s likely that employees will miss out on tips. . 

What is an automatic gratuity or auto-gratuity?

Automatic gratuities are service charges, not tips or gratuities. (Confusing, right?)

Automatic gratuities or auto-gratuities are perhaps even more of a misnomer than “service charge” — in fact, some legal professionals advise employers to avoid using the term altogether.

Here again, customers will often assume that their service provider is the recipient of the automatic gratuity (and choose not to leave a tip on top of the auto-grat). Because auto-gratuities are service charges, they belong to the employer. While they can be brought in as non-tip wages for employees, they can also be used for other operating expense.

How service charges impact restaurant employees

Service charges have a significant impact on restaurant employees, affecting their overall income, the perceived value of their work, and job satisfaction. Here are some of the ways service charges influence employees:

  • Income Structure: When paid to the employee, service charges can provide more stable income for employees because they don’t fluctuate like tips.
  • Pay Distribution: When they’re distributed, service charges are usually divided amongst all staff, including non-tipping positions such as cooks and dishwashers. This can lead to a fairer distribution of income.
  • Reduced tip earnings: This may not be problematic if service charges are being paid to the employee. However, as noted above, customers might be less inclined to tip on top of a service charge, which can hurt employees who rely on tips as a significant portion of their wages.
  • Motivation and performance: Given the compulsory nature of service charges, some employees might feel less motivated to provide excellent service, as their earnings are not directly tied to their service quality. On the other hand, it might also alleviate some pressure, allowing employees to focus on providing consistent service without the stress of variable tips.

If a service charge is primarily used for fair wage distribution among employees, it can have significant implications on their wages and tips. This practice can ensure a more equitable wage structure, especially in establishments where behind-the-scenes staff, such as cooks and dishwashers, typically do not receive tips.

Using the service charge for paying employees can bring a sense of fairness and stability to restaurant wage structures, but it also requires clear communication and understanding from both employees and customers to function effectively..

How service charges impact restaurant customers

Service charges offer several benefits to restaurant owners and staff, but also have implications for the customers. These include:

  • Reduced tipping: Customers may believe a service charge is a substitute for a tip and reduce or eliminate their gratuity. Customers may also feel that a mandatory service fee reduces their control over rewarding good service, traditionally reflected through their tip.
  • Surprise costs: Customers unaware of a service charge may be surprised or frustrated when they receive the bill. This could be perceived as hidden costs, which might impact their overall dining experience negatively. 
  • Increased scrutiny of service quality: Knowing that a service charge will be added to their bill, customers might scrutinize the quality of service provided more closely, with customers more likely to be upset  by any small lapse in service.

Potential impacts of service charges highlight the importance of clear communication and excellent service, ensuring customers understand the purpose of the service charge and feel it justifies the quality of their dining experience.

Is implementing a service charge worth it?

Implementation of a service charge can have significant implications for a restaurant’s revenue. From a financial perspective, a service charge can lead to a more predictable revenue stream. Unlike tips, which are subject to variability, service charges are fixed and therefore ensure a consistent addition to the restaurant’s revenue.

However, the success of implementing a service charge largely depends on how it’s perceived by customers and employees. If customers feel that the service charge doesn’t correlate with the quality of service, or if it significantly increases their total bill, they might reconsider their dining choice, potentially leading to a reduction in customer frequency and ultimately affecting the restaurant’s revenue. 

On the other hand, if service charges are used to ensure fair wage distribution and provide a stable income for employees, it can foster a more satisfied and motivated workforce. This can indirectly contribute to the restaurant’s revenue by reducing employee turnover, enhancing service quality and efficiency, and creating a positive dining environment that attracts and retains customers.

How to collect a service charge at your restaurant

The general process for handling service charges is as follows:

    1. Determine how much you will charge: A service charge typically ranges from 10% to 20% of the total bill but can vary based on the restaurant’s specific requirements.
    2. Determine how you will spend the funds: The service charge can either be retained by a restaurant or distributed among employees.
    3. Inform and train staff: Staff should be informed of how the service fees will be used, how it impacts their income, and how it benefits the restaurant. Proper training should be given to employees, particularly those interacting with customers, to effectively communicate the purpose of the service charge and address any customer questions or concerns.
    4. Create clear communication with customers: Customers should be informed about the service charge before they place their order. This can be conveyed through signage at the restaurant, communicated verbally by servers, or noted on menus. 
    5. Implement the charge: Once all of the above steps are completed, you can start levying the service charge on customer bills. This will involve updating your point of sale system and ensuring all staff are trained to handle the new billing system.
    6. Distribute proceeds accordingly: Once you start collecting service charges, proceeds should be distributed to qualified staff members based on your policy. This is something that Kickfin can help with, if you don’t have the ability to cashlessly distribute tips and charges,
    7. Ensure accurate reporting: Follow IRS guidelines for recordkeeping and reporting. When paid to employees, service charges should be treated as non-tip wages and are subject to social security tax, Medicare tax and federal income tax withholding.Employers can’t use these non-tip wages when computing the tip credit available to employers because these amounts aren’t tips.
    8. Monitor and adjust: After implementing a service charge, be sure to monitor its impact on both restaurant revenue and customer satisfaction. Gathering feedback from customers and staff to identify issues or areas of improvement. 

Remember too that it’s crucial that your restaurant remain compliant with local labor and tax laws when implementing a service charge system. This includes understanding how service charges are taxed and how they impact wage calculations. Laws can vary by location, so consult with a legal expert or your local government to clarify any uncertainties and avoid potential legal issues. 

How Kickfin can help

Kickfin offers an efficient and streamlined solution for managing tips in your restaurant. Our platform allows you to easily implement, track, and adjust your tipping system, ensuring a hassle-free experience for both your staff and customers. 

Kickfin is also designed to be compliant with local labor and tax laws, helping you stay within legal bounds when implementing tips for your restaurant. 

To hear more about how Kickfin can help you manage and distribute tips, sign up for a demo with one of our in-house experts.

10 Restaurant Management Tips for Your Business

Running a successful restaurant requires juggling staff, food quality, customer service, finances…the list goes on (and on). Whether you’re a seasoned restaurateur or a management newbie, implementing effective restaurant management strategies is crucial to the success of your restaurant, team and bottom line.

Chances are, you’re already doing a lot of these things — but it’s never a bad idea to revisit your restaurant management approach and make sure you’re covering all your bases.

Here are 10 restaurant management tips to help you navigate the restaurant industry, boost efficiency, and take your business to the next level.

1. Invest in restaurant technology

Your tech stack impacts every aspect of your approach to restaurant management.

The standard restaurant tech stack has changed in recent years — and it continues to evolve as new innovations roll out. Here are some essential tech tools every restaurant owner should consider leveraging:

  • Point of sale (POS) system: We know, we know…a POS is table stakes. But there are a ton of options out there — and if you haven’t done so lately, it could be worth revisiting your current POS to make sure it’s checking all your boxes. An advanced POS system goes beyond processing transactions. It can track sales, organize menu items, manage staff, and offer detailed reports to aid in business planning.
  • Inventory management software: Our motto: Automate what you can — and that includes inventory management. Accurate inventory tracking reduces waste and helps boost profits. Inventory management software helps you keep track of what’s in stock in real-time, predicting what you need to reorder and when.
  • Payroll software: A good payroll system simplifies the complicated task of managing staff wages, benefits, and tax deductions. It automates calculations, reducing the chance of errors and ensuring your staff is paid correctly and on time.
  • Tip management software: If you’re still paying out credit card tips in cash, it’s time to hit the “easy” button. Tip pooling and distribution software can be run as a standalone system or integrated with your POS to calculate and distribute (cashless!) tips instantly to your employees’ bank of choice. That means no more bank runs, a lot more visibility into tip payments for easier reporting — oh, and happier employees. (Sign up for a demo to hear more from one of our experts about what we do and how it can help you.)
  • Reservation and online ordering system: In today’s digital age, an online reservation and ordering system is non-negotiable. It allows customers to make reservations or order food online, improving their dining experience and boosting your bottom line.
  • Customer relationship management (CRM) system: Sometimes, leaning into automation and digitization can also mean less personalization. But for most restaurants, it’s still important to maintain that human touch and build meaningful customer relationships. A CRM system can help you do just that. It stores customer data, tracks their preferences, and ultimately allows you to better understand their preferences — creating a more customized experience and ultimately customer loyalty. 

2. Formalize your staff training program

Investing in regular staff training is another key restaurant management strategy that gives your people what they need to succeed.

A well-trained staff will not only possess the necessary skills to perform their roles efficiently, but they also reflect your restaurant’s standards and values. Whether it’s the kitchen staff preparing meals or the front-desk staff interacting with the customers, every individual contributes to the overall customer experience. 

Staff should be trained on how to handle various situations, from managing customer complaints to upselling menu items. Training also ensures that hygiene and safety standards are consistently met. 

3. Consider the employee experience

The hospitality industry is known for high employee turnover. Part of that is due to the nature of the job — many employees join the workforce during transitional seasons of life (think: college kids); there’s seasonality to consider, etc.

But turnover is also due to the fact that hospitality is a grind — and if you’re not meeting you’re staff’s expectations when it comes to things like culture, flexibility, and even benefits, then they’ll look elsewhere. (And they’ll likely find something, given the tough labor market.)

In addition to simply keeping your restaurant running, having a high staff retention rate makes every aspect of your operations easier. When your staff stays with you for a long period, they become more familiar with your standards, operations, and expectations, and are better able to deliver consistent, high-quality service. 

Frequent turnover, on the other hand, can lead to inconsistencies in service delivery and creates more headaches when it comes to scheduling and management. Plus, the cost of recruiting, interviewing, and training new hires adds up over time – especially if new staff only stays for a few months. Turnover also ups your admin burden when it comes to tasks like payroll and user management for your tech systems. 

A few retention-oriented tactics you can incorporate into your restaurant management plan:

  • Competitive wages
  • Employee benefits (which may be more financially feasible than you think!)
  • Career growth opportunities, with a clear path to achieve them
  • A fun, respectful workplace culture

One key factor contributing to employee satisfaction and retention in the restaurant industry is the fair and prompt disbursement of pay and tips. That’s where Kickfin can help. Kickfin is a digital tip distribution platform that enables restaurant owners to send tips directly to their employees’ bank accounts, instantly after their shift.

By eliminating the need for cash handling, Kickfin not only increases efficiency but also ensures transparency and fairness in tip distribution. Employees can expect to receive their tips promptly, fostering a sense of financial security. Moreover, the immediacy and reliability of Kickfin’s system can boost employees’ morale, leading to increased job satisfaction.

4. Focus on Customer Experience 

As a restaurant manager, prioritizing service is crucial to ensuring your customers feel welcome and receive a high-quality experience. That includes:

  • Greeting guests: Invest time in training your staff on how to interact with customers — which starts the moment someone walks in the door. A genuine, prompt greeting sets the tone for the overall dining experience.
  • Communication: Employees should be able to communicate clearly, listen to customer needs, handle complaints with professionalism, and provide quick solutions. Not only does it demonstrate your restaurant’s commitment to satisfaction; it’s also a great way to help your employees boost their tips.
  • Efficiency: Quality service means efficient service. Make sure orders are taken accurately and delivered to tables promptly. Regular staff meetings can be useful to highlight areas of improvement for both front-of-house and back-of-house — and it’s an opportunity to recognize efforts of staff who consistently go above and beyond.
  • Feedback: Feedback, whether positive or negative, is a powerful tool for improvement. Consider using comment cards, online surveys, or simply asking customers about their experience. This not only shows your customers that their opinion matters, but it offers insights into how your service and food are perceived and where there might be room for improvement.

5. Be aware of online reviews

In today’s digital world, online reviews significantly influence a restaurant’s reputation and customer decisions. Continuously monitor and respond to reviews on platforms like Yelp, Google, TripAdvisor, and social media.

Negative reviews, in particular, should be addressed promptly and professionally. Avoid getting into online battles: Simply apologize for any shortcomings, acknowledge the customer’s dissatisfaction, and suggest a resolution. This approach shows potential customers that you’re dedicated to providing exceptional service and willing to make things right when they don’t go as planned.

Positive reviews deserve your attention as well. Thank each customer for their feedback and express your delight in serving them. It will encourage repeat business and inspire others to visit your restaurant. You might even consider incentivizing those who have had positive experiences to share them more widely. 

6. Always be marketing 

Continuous marketing is essential to keep your restaurant at the forefront of customers’ minds. Actively promoting your restaurant on various platforms, like social media, flyers, and local newspapers helps you reach a broad audience and increase visibility. Social media platforms, in particular, offer cost-effective and highly engaging ways to connect with customers, showcase your food, and build a community.

Regular updates about new menu items, special discounts, and events can entice customers and increase sales. It’s also beneficial to leverage local publications, as they can help you attract a local crowd and build a loyal customer base. Distributing flyers and circulars in nearby areas can be effective, too, especially for promoting new offers or events. Keep in mind that marketing is a continuous process – not a one-time, check-the-box restaurant management task.

7. Experiment and innovate

The best restaurant management plans leverage outside-the-box thinking. Don’t be afraid to experiment with different aspects of your business — for example:

  • A dynamic menu can keep your patrons excited and curious about your offerings. Trying out new recipes or introducing seasonal dishes can provide a unique dining experience, attracting new customers and encouraging regulars to keep coming back.
  • Creative pricing strategies can drive profitability. Offering discounts during slow hours, or bundling certain items together at a lower price, can boost sales and enhance customer satisfaction. 
  • If you have the space, hosting private events can also increase sales while making your restaurant feel like an entertainment destination — and can be an opportunity for new guests to visit your business.
  • Live music nights, themed dinners, or cookery workshops can generate buzz around your establishment and foster a sense of community amongst your customers.
  • Rethinking the decor — whether it’s a true overhaul, a spruce-up, or simply decorating for seasonal trends — can make your space feel fresh and inviting, which in turn elevates the dining experience. 

8. Be aware of your cash flow and accounting 

Keeping a close eye on cash flow and accounting is essential for maintaining sustainable restaurant operations. Inconsistent or inadequate cash flow can lead to various challenges, potentially affecting your ability to pay employees, suppliers, and other expenses.

Remember, as a manager, your continuous focus on cash flow and accounting is critical to the financial health and success of your restaurant. Using technology like bookkeeping software can significantly aid in this endeavor, allowing you to focus more on delivering exceptional food and service to your customers.

This is another area where digital tipping can make restaurant management more efficient. With more credit card tips than ever before, many restaurant managers know the pain of not having enough cash in the safe to pay out tips at the end of a shift.  Kickfin makes it easy to distribute tips instantly (no cash required) by instantly transferring funds to your employees’ bank accounts. Not only do real-time, digital payouts make for happier customers — it also makes reconciliation and reporting a breeze, and gives everyone greater visibility into cash flow. 

9. Connect with a mentor or other restaurant owners

Establishing connections with a mentor or other restaurant owners can provide invaluable insights and guidance for your business. A mentor with industry experience can offer advice based on their own triumphs and mistakes, helping you to navigate the challenges of the restaurant business and stay up-to-date with the latest trends and best practices. They can provide a fresh perspective when you’re faced with difficult decisions, and their wisdom can prevent you from making common mistakes.

Similarly, joining a community of restaurant owners or managers can offer a platform for mutual support and information exchange. Communities often host forums or meetings where members discuss industry changes, innovations, and common hurdles, providing practical solutions based on their experiences. Amidst the ups and downs of the restaurant business, these connections can serve as a lifeline, providing emotional support and reassurance.

Having a mentor and being part of a community enables you to continuously learn, grow, and adapt, enhancing your ability to manage your restaurant effectively and successfully.

10. Be the manager you’d like to work for

Being a successful restaurant manager takes more than just business acumen; it requires embodying the qualities of a leader. As a manager, you need to be an excellent multitasker, capable of overseeing several operations simultaneously. 

You also need to be transparent. Being open and honest with your staff fosters a sense of trust, respect, and loyalty. Share relevant information, provide clear instructions, and involve employees in decision-making processes where appropriate. 

If you own or manage a restaurant, you set the tone for the entire establishment. A positive attitude is contagious, inspiring employees to put their best foot forward and delivering an exceptional dining experience to customers. Through your enthusiasm, commitment, and resilience, you can create a motivating work environment that translates into the overall success of your business.

6 Tasks Restaurant Teams Can Automate with AI

AI is kind of having a moment right now. 

It’s basically impossible to scroll through a newsfeed without stumbling across an article (or 10…) about the rapid developments we’re seeing in AI technology — and all of its benefits, risks, and mind-blowing potential to change life as we know it.

While AI is getting quite a bit of PR here in 2023, many industries have been embracing AI for years, including hospitality. From automated customer insights to voice assistants, AI is becoming increasingly entrenched in restaurant operations. 

What even is AI?

AI (short for artificial intelligence) is an exciting new technology that’s changing nearly every industry — including the service and hospitality industries. AI is intended to take in information and respond in a way that mimics human responses. This means it can respond to queries with valuable information. If you use Alexa at home, you’re interacting with AI every day.

Machine learning is what makes AI really valuable, especially in restaurants. Machine learning takes in information from a data source (for example, your POS) and analyzes it. Once the tech “learns” from historical data, it can predict trends and behaviors in the future. For example, TikTok uses machine learning to determine which videos you’re more likely to engage with and shows you new content based on those predictions in hopes of keeping you on the app for longer.

Why use AI in your restaurant? 

Running and managing a restaurant is stressful. Operators and managers wear a lot of hats, and it can be hard to streamline operations when you’re pulled in so many different directions. Restaurants can use AI to make life just a little bit easier — and cut costs while you’re at it.

Does that mean the service industry should start preparing for the inevitable robot takeover? Not just yet. The human element is still vital to many segments. But there’s never been a better time for restaurant operators to innovate: new AI advances can streamline and simplify everyday restaurant management processes, helping operators to uncover new efficiencies, increase staff and customer satisfaction, and ultimately boost your bottom line.

Here are a few ways AI can lighten your workload and optimize your restaurant operations.

1. Menu Development 

Your chef and kitchen staff have been hard at work putting together delicious dishes that will turn your new customers into regulars, but how are you supposed to put all the flavors and components into a short, enticing description? With AI, you can skip the writer’s block and simply generate well-worded descriptions in seconds. 

2. Hiring

Restaurants are still experiencing staffing shortages and struggling to fill positions — but what if AI could streamline your hiring efforts? There are a few ways to relieve the burden that staff issues have put on restaurant management. 

  • Writing job descriptions: Remember how we said it was tedious to write menu descriptions? Same goes for job descriptions. Of course, you want to provide all the details about the role, but sometimes it can be hard to creatively describe a serving job and show off your restaurant’s culture. Instead, turn to AI for quick job descriptions that only need to be slightly edited to show off more personality. 
  • Reviewing applications: Once you’ve posted your job online, you have a few different ways to leverage AI in the hiring process. For one, you can use AI to filter out candidates that don’t meet your requirements about experience, age, or availability. Then, you have fewer applications to wade through and can focus on serious candidates only. 
  • Chatbot: To really lean into the AI trend, you can also use an AI chatbot that has a text conversation with applicants to learn about their skills, job experience, pay expectations, and availability. Choose a chatbot that can integrate with your existing technology, so you don’t have to create your own software (unless you want to). Rather than filling out the traditional application form, your candidates will share about themselves in a more casual, conversational manner, almost like a pre-interview. These chatbots can still filter out candidates who aren’t going to be a good fit — and it might impress your more tech-savvy candidate pool.  

Of course, you can also tackle staffing issues by automating some of your positions. QSRs can especially take advantage of AI voice assistants to man drive-thrus and take orders, while your human staff focuses on fulfilling them.

3. Scheduling

You’re not limited to AI writing tools. New technology can automate and optimize almost every aspect of your business, from front of house to back. 

Now that AI’s streamlined your hiring practices, give it a chance to improve your schedule, too. Restaurant budgets can be tight, so you don’t want to have too many employees during a slow weekday lunch — but you also don’t want to be understaffed during a huge rush. Machine learning can analyze your sales data to determine peak times and the optimal amount of staff to schedule for a shift. You can put in parameters that will keep the schedule within budget, and then use the AI-generated roadmap to create your weekly schedule.

4. Forecasting

AI can do even more with your POS data to optimize your entire restaurant and predict trends, empowering you to make data-backed business decisions. 

For example: inventory management. No one wants to over-order and let food spoil, nor do you want to 86 a popular dish because you ran out of one ingredient. With AI, you can utilize POS data to determine your best-sellers, which items you frequently run out of, and where you could be over-purchasing. With your inventory optimized, you’ll prevent food waste and serve your customers their first-choice dish.

>> Find out more about Revenue Forecasting for restaurants

5. Marketing & Customer Insights

Once you get people in the door, you want to keep your loyal customers coming back. Many small restaurants don’t have the luxury of a full-time employee to run their marketing efforts. Good news: You can employ AI instead. 

Auto-generate marketing emails to let your customers know about specials, events, and coupons. If you have a loyalty program, you can even take it a step further. AI can figure out each customer’s most frequent orders and when they’re most likely to come in, and offer individualized deals based on their ordering habits. Your customers will feel like you really know them, and you can relieve pressure off the FOH manager who does marketing on the side. 

6. Customer Engagement 

While you don’t want to lose the human touch that really makes your customer experience, there are a few tasks you can pass off to AI that will free up managers’ and employees’ time for more pressing tasks (especially when they’re in the weeds on a busy Friday night). 

If your phone is ringing off the hook with people asking about wait times, making a reservation, or wondering if you have outdoor seating, AI can help field calls and answer their questions. You can program the AI to pick up on certain terms (like “reservation”) to generate the answer your guests are looking for. If you can integrate AI with your waitlist and reservation software, the AI can add callers to your waitlist, estimate wait times, and create reservations. 

Adding an AI chatbot to your website can also quickly engage customers, allowing them to get answers to specific questions that they’d normally call in to ask. 

Of course, there are limitations to tech, especially in the communication and hospitality departments. When choosing to add any new technology to your restaurant operations, make sure that it gives you more tools to engage with customers — and doesn’t create a cold, mechanical dining experience. It’s there to make your life easier, but AI can’t replace good service and personal connections with your customers.

Looking to simplify your tip out process? Kickfin can help. Check out a demo of our instant digital tipping software.

How to Comply with Tip Pooling Laws

Thinking about implementing a mandatory tip pool?

In more collaborative work environments, tip pooling might seem like a logical, equitable way to handle employee tips. It can encourage teamwork, build a spirit of camaraderie, and ensure that all of your employees are fairly compensated for their hard work.

But depending on where you’re located, tip pooling laws can get very complicated, very fast. A quick Google search will show you how many restaurants have found themselves at the center of costly lawsuits because they were (often unintentionally) operating illegal tip pools.

So: before you pass go, get up to date on the latest tip pooling laws and regulations to avoid hefty fines and a bad reputation. 

The Fair Labor Standards Act (FLSA)

Starting in 2020, the federal Department of Labor made significant rulings based on the tip regulations stipulated under the 2018 Fair Labor Standards Act. These new rulings are designed to better protect tipped employees from wage theft and other illegal tipping practices. They’ve released their final rule, which went into effect on April 30, 2021.

One important thing to note: while the DOL uses the umbrella term “tip pooling,” these rules apply to all tip-sharing practices, including tipping out. Even if you’re not explicitly pooling and redistributing tips, any tip sharing at all is subject to these laws.

Who can keep tips? 

Employers are completely barred from keeping any tips, pooled or otherwise. According to the FLSA, tips explicitly belong to the employees, not their employer, so any tips withheld by the employer can be seen as wage theft. 

As an extension of the employer, managers and supervisors may not participate in a tip pool or retain any employee tips. Managers can, however, keep tips that are directly given to them based on service they directly and solely provided. 

Some of the tip pooling laws depend on if your restaurant is taking the federal tip credit of up to $5.12:

  • If you do take the tip credit, non-tipped employees (like cooks, dishwashers, and other back-of-house employees) cannot participate in the tip pool. 
  • However, if you do not take the tip credit and pay traditionally tipped employees the full minimum wage, the tip pool can be shared with your back-of-house staff and other non-tipped employees. 

Maintaining Payroll Records & Timeliness

For the most part, the Department of Labor rewards employers who don’t take the tip credit and pay their tipped employees the full minimum wage by offering more flexibility around tip pooling. 

Still, even non-tip credit establishments have some extra rules to follow. Employers who require employees to pool their tips must maintain thorough records of payroll, tip redistribution, and the weekly/monthly tip amounts for each employee.

Speaking of payroll, all pooled tips must be redistributed to employees by the end of the pay period in which they were earned. The timeliness of returning tips to employees applies to all establishments, whether you take the tip credit or not. 

State and Local Tip Pool Laws 

Don’t forget that tipping laws vary state by state — and some states explicitly bar tip pooling. If you live in Kentucky, Wyoming, Minnesota, or Montana, you cannot require employees to participate in the tip pool, but employees may voluntarily pool tips if they so choose. 

Additionally, many states have higher minimum wage requirements than those laid out by the federal government, so you may need to double-check that your tip pool doesn’t cause any employees to fall below their required pay. 

As of now, 14 states have additional state laws that extend beyond the FLSA rulings, so make sure to read up on your state’s tipping regulations before implementing a tip pooling system.

Here are the states where tipping & tip pool laws vary: 

California

Tip pools are legal, but they cannot be shared with BOH employees or any manager who has the power to fire employees. 

Employers are also required to pay servers the full minimum wage of $15.50/hr — meaning California business owners cannot take the tip credit.  

Colorado

Tip pools are legal, but Colorado does have more rules about the tip credit. If you deduct credit card processing fees from your servers’ tips, you cannot take the tip credit and must pay the full minimum wage of $13.65.

Delaware 

Mandatory tip pools are legal, but servers cannot be required to contribute more than 15% of their tips. If servers create their own voluntary tip pool, they can choose to contribute as much as they would like. 

Kentucky 

Mandatory tip pools are illegal, but employees may voluntarily form their own tip pool. 

Maine

Any mandatory service charges must be treated as a tip for employees, so therefore, service charges can be included in the tip pool. 

Massachusetts

Mandatory service charges are viewed as tips that can be included in the tip pool, but only employees who provide direct service can take part in the tip pool. 

Minnesota

Mandatory tip pools are illegal, but employees may form their own tip pools. The employees may also vote to allow their employer to manage and disperse from the tip pool. Mandatory service charges are also viewed as tips unless it’s explicitly stated to the customer that they are not being paid to the employee. 

Montana

It is illegal for employers to mandate a tip pool, but voluntary tip pools are allowed. Mandatory service charges can only be treated as tips for the server. 

New Hampshire

Mandatory tip pools are banned, but employees may elect their employer to manage and disperse voluntarily pooled tips. 

New York 

Mandatory tip pools are legal, but employers are banned from participating. Employees providing direct service and supervisors with limited authority are the only employees allowed to participate in the tip pool. All mandatory service charges must be paid to the employee who provided the service. 

North Dakota 

To establish a tip pool, employers must hold a vote for the tipped employees to make the final decision. At least 50% plus one of the tipped employees must vote in favor of the tip pool, and the employer must keep record of the vote. 

North Carolina 

Tip pooling is legal but only among regularly-tipped employees. Employees may only contribute up to 15% of their tips to the pool. 

Utah

Tip pools are legal, but the tip pooling policy needs to be provided in writing before establishing a tip pool or hiring any new staff. 

Wyoming

Only voluntary tip pools are legal in Wyoming, and employers are banned from pressuring or coercing their employees to form a tip pool.

What’s at stake? 

If you don’t comply with federal tip pooling laws – even without your knowledge – you could be liable for massive fines and employee back pay. In 2020, the Department of Labor also released its final rule on Civil Money Penalties (CMPs) to determine the punishments that come with violating the FLSA tip regulations. 

The final rule clarified that the Department of Labor can assess penalties of up to $1,162 per violation, even if the violations aren’t repeated or willful. This fine is in addition to back pay and damages that employees can sue for. 

On top of the financial risks, you don’t want to ruin your reputation. No one wants to work for a company known for shady tipping practices, and customers generally don’t want to support unfair labor practices either. It’s in your best interest to take tipping laws seriously. 

Rulings and regulations can get confusing without expert help. It’s always safest to speak to an attorney to ensure that you’re complying with federal, state, and local tipping laws to keep your business out of hot water. 

Additional Resources

Once you’re confident that you’re complying with tipping laws, consider making tip pools and tipping out even easier. Request a demo of Kickfin to see how digital, instant tip-outs simplify tipping, save time, and help you retain employees.

The Ultimate Guide to Restaurant Tip Management

Restaurant tip management can be confusing and time-consuming, especially if your restaurant has a large staff. Differences in state laws regarding employee wages and tipping, as well as the overall increase in credit card usage, further complicate how tips are shared with your employees.

If you own or run a restaurant, you’re responsible for creating an in-house tipping system that’s fair to both your front-of-house and back-of-house staff members — as well as your customers.

Read on to learn everything you need to know about managing tips in your restaurant — or click here to schedule a demo with our team to hear more about how Kickfin can help manage your restaurant’s tips.

Understanding tips and wages

Federal law requires that everyone employed in the U.S. be paid at least $7.25 per hour. Many states have minimum wages higher than the federally-mandated minimum. However, due to the long-standing practice of tipping, many states have instituted lower paid minimum wages for employees expected to supplement their income with tips. Paying a wage lower than $7.25 to tipped employees helps your business save money, but is not legal in every state and situation.

For example, according to the U.S. Department of Labor, it’s legal to pay tipped employees in Alabama as little as $2.13 per hour if the employee earns at least minimum wage by the time tips are factored in. However, in Washington, D.C., establishment owners must pay tipped employees a full wage of $8.00 per hour, regardless of tips earned. This wide variation makes it important to consult with a local employment lawyer versed in your state’s laws when establishing your restaurant’s tipping system.

What is a tipped minimum wage?

The federal minimum wage is $7.25 per hour, with many states implementing higher minimum wages. However, employers can pay employees who regularly receive tips a lower direct hourly wage, known as the tipped wage. A tipped wage is typically lower than the standard minimum wage and is set by law. The rationale behind these laws is that tips employees receive make up the difference between the rate the employer is paying and the minimum wage.

For the tipped minimum wage system to be valid, an employee must actually earn at least the state’s minimum wage after tips. Most businesses accomplish this by requesting that employees report tip earnings at the end of each shift. The business then adds together the total amount of money the employee has earned in tips versus an hourly wage and divides this figure by the number of hours the employee has worked. If this calculation reveals that the employee did not earn minimum wage, the employer must supplement their income.

What is a tip credit?

A tip credit is the extra money an employer must pay to an employee to make up the difference between the tipped wage and the state’s minimum wage.

Let’s take a look at an example of a situation where an employer might need to supplement a tipped minimum wage. Imagine you manage a restaurant in a state where the tipped minimum wage is $5 an hour and the standard minimum wage is $10 per hour. After working a 40-hour week, one of your employees reports a total tip-out of $180.

However, if your state has a minimum wage of $10 per hour, this means that any of your employees who work at least 40 hours must receive at least $400 in total compensation ($10 per hour). If an employee only earns $380 between wages in tips, you would need to make up the difference by including an extra $20 tip credit in the employee’s check.

If the employee earns more than minimum wage when calculating tips plus wages, no action is taken. For example, you can’t reduce an employee’s wages to $0 if they earn more than minimum wage in tips alone.

How to collect tips

There are a variety of ways your restaurant can accept tips from customers. Some of the most common ways to collect tips include:

  • Cash: Cash is the most straightforward way to accept tips. Each employee may keep the cash they collect on each check, or pool tips together to split among the staff.
  • Credit cards: Many customers prefer to put their tips on the credit card they use to pay for their meals. Accepting tips via credit card is convenient for customers, but will require calculation via your in-house system to pay them out correctly.
  • Third-party payment apps: Some establishments ask individual employees to create payment accounts with third-party payment apps, like Venmo and CashApp.

Employees are allowed to independently collect tips with their user codes. These tips are usually treated as cash for reporting purposes, making this method unsuitable for establishments that pool tips.

Many modern point of sale (POS) systems or terminals used in restaurants have the functionality to suggest tip amounts to customers during the payment process. If using these systems, ensure your tip recording and reporting system complies with local regulations.

How do you combine cash and charged tips?

If your restaurant receives both cash and charged tips, it’s essential to have a clear process in place to handle and distribute them appropriately. This requires keeping a careful record of all tips received — regardless of whether they’re in cash or on a credit card. Most POS systems include a mechanism to collect this information automatically as it’s entered, but you may want to keep an additional backup record.

Store cash tips securely and separately from other funds to ensure accurate accounting and distribution. Establish a process where employees can safely deposit their cash tips in designated envelopes or containers, and have a standing protocol around who can access funds and how. It can be helpful to keep cash tips locked in a manager’s office until distribution.

There are a few options for disbursing credit card tips to employees. You can pay out credit card tips in cash to employees at the end of the day, but this requires taking credit card tips from the restaurant’s cash reserves, which may be limited during slow seasons. You can also include credit card tips on each employee’s wage check.

However, this strategy may require spending more resources on accounting and billing to ensure all employees are fully compensated.

And, keep in mind: Many hospitality employees are drawn to the industry because of the promise of daily payouts. Putting tips on payroll can be hard on your staff, especially if they’re accustomed to nightly tip-outs and have to start waiting days or weeks to receive their tip earnings.

A cashless tip distribution solution can be a helpful tool in streamlining and simplifying the process of distributing tips, especially when combining cash and charged tips. With a cashless solution, charged tips can be directly deposited into individual employee accounts or a centralized tip pool, reducing the need for manual handling of cash or checks. This also reduces the chances of making a costly mistake when distributing employee tips and calculating wages.

Ways to distribute tips to your employees

“Tipping out” refers to the service industry practice where employees who receive tips share a portion of those earnings with other employees who provide a service or support role during the customer’s experience. For example, while servers might directly receive tips, house rules might establish that servers tip out a small percentage of the tips they collect to the back-of-house staff or hosts who do not collect tips.

Not every establishment tips out, with some electing to pay higher wages to non-tipped employees. These are some of the most common tip division and redistribution strategies to consider for your restaurant:

Individual employee tips

The easiest method to handle tips is to allow each employee to keep the tips that they individually earn. Only tipped-wage employees are required to earn tips, so this method empowers those interacting directly with customers to keep the tips that they collect. However, this method benefits only individual tipped employees and may lead to uneven earnings across your staff.

Tip pooling

Tip pooling is a practice common in the service industry where a portion of the tips received by employees is combined into a common pool and then distributed among a group of eligible employees. Rather than keeping individual tips, employees contribute a portion of their earnings to be shared among the team.

 

Typically, a predetermined percentage or formula is used to allocate the pooled tips among the eligible employees. This is usually based on employee roles and contributions to the overall customer service experience. Some establishments tip out the same percentage to all employees, while others devote a larger percentage to the individuals collecting the tips.

The purpose of tip pooling is to foster teamwork, incentivize collaboration, and ensure all employees involved in providing excellent service receive a fair share of the tips — even if they don’t directly interact with customers or receive individual tips.

However, tip pooling may also foster contempt amongst employees, particularly if employees earning minimum wages receive the same percentage of tips as tipped-wage employees. That’s why it’s important to weigh the pros and cons for your team, ensure your policy is fully compliant with tip pooling laws, and create a culture of communication and feedback channels so you can understand what’s working and what’s not.

Percentage-based tip-outs

Percentage-based tip-outs involve distributing a specific percentage of the total tips earned by an employee to other individuals or groups. By dividing tips by varying percentages, management can ensure that tipped employees receive a larger percentage of their tips while also keeping things fair for non-tipped employees crucial to the customer experience.

For example, let’s say your restaurant has a 20% tip-out policy and a server earns a $100 tip. In this case, the employee will be required to distribute 20% of their tip ($20) to non-tipped employees. Depending on your restaurant, this may include hosts, prep cooks, bussers, and other qualifying employees. The remaining 80% of the server’s tip ($80) is theirs to keep.

Point system tip-outs

Some establishments use a points-based tip-out system. In a points-based tipping system, rather than distributing a percentage of the total tips, a certain number of points are allocated to each employee, and these points are used to distribute the tips among the team.

Let’s take a look at another example using a $100 tip. If your restaurant uses a point system, you might assign a server 50 points, a bartender 30 points, and a busser 20 points. In this example, points correlate to percentages, so a server would keep $50 of the tip. Accordingly, the bartender would receive $30, while the busser receives $20.

Points-based tipping systems allow for a more customized and flexible distribution of tips, considering the different roles and contributions of the employees. The allocation of points can be based on factors such as seniority, job responsibilities, or performance evaluations, enabling a more nuanced approach to distributing tips among the team.

Tax and reporting obligations

The IRS has specific regulations regarding tip reporting, withholding, and taxation. Failing to comply with these requirements can result in legal and financial consequences.

As a business owner, it’s crucial that you take steps to keep tips and payouts in order. Following these tips can help you stay on the right side of the law:

  • Keep accurate records: Keep detailed records of all tip income, including cash and charged tips. Document tip allocations, distribute tips promptly, and maintain accurate records of tip pools and distributions. This documentation will be valuable in case of audits or employee inquiries.
  • Implement clear and consistent policies: Establish written policies on tip reporting, allocation, and distribution. Ensure employees understand these policies and provide regular reminders or training sessions to reinforce compliance. This will help prevent disputes with employees, especially those collecting tips.
  • Educate employees on their responsibilities: Train your staff on the IRS requirements for tip reporting and explain the importance of accurate record-keeping and reporting. Encourage employees to report their tip income correctly and provide them with resources or guidelines to do so.

Remember that as the business owner, the responsibility to maintain financial records falls on your shoulders. This is one area where a cashless tip management system can be majorly beneficial.

How software makes restaurant tip management easier

Even the most organized business owners can find themselves confused when managing dozens of tipped employees. Software, including tax reporting software and POS management systems, can make the process of tracking payouts and income easier. In particular, a cashless tip management system can provide a host of benefits to employers and employees themselves.

Enhanced accuracy and transparency: Cashless systems provide accurate tracking and recording of tip transactions. This helps ensure that tips are distributed correctly and transparently and minimizes the risk of human error that can lead to lawsuits and claims of improper employee payments.

More convenient for employees: Cashless tip distribution allows employees to receive their tips directly in their bank accounts or digital wallets, offering flexibility and convenience. With a growing consumer trend toward digital payments, some employees prefer the ease of non-cash payouts.

Increased efficiency: Cashless systems streamline tip distribution. Instead of manually handling cash, the system automates the process, saving time and reducing administrative burdens. Employees also don’t need to worry about the risk of loss and theft that comes with carrying cash.

How Kickfin helps with restaurant tip management

Kickfin really helps restaurant managers with facilitating the cashless disbursement of tips to eligible employees. Fewer and fewer customers pay for transactions with cash — which is why so many managers find themselves running to the bank on a daily or weekly basis because the safe is empty, and there’s not enough cash to pay out tips.

With Kickfin, you’re able to track your tipped employees’ earnings through your normal POS, and quickly total their tipped earnings at the ends of their shifts. Then, with the touch of a button, you can distribute their tips to them electronically, without having to count cash or stuff envelopes. And your employees’ tips hit their accounts instantly.

Click here to learn more about Kickfin and how our cashless tipping solution can work for you

How to Recruit Summer Staff for Your Restaurant

Summer Restaurant

School’s out — which means a lot of students are about to hop into the hospitality workforce. If summer is your busy season, you’re probably used to pulling in folks who are looking for a gig so you can meet high-volume needs.

But the labor market is still tough, and you won’t be the only restaurant looking to staff up. If you want to win over the in-demand seasonal workers, you’ll need to stand out from the crowd. 

Why hire summer employees for your restaurant? 

It’s been hard to find good help at your restaurant thanks to the labor shortage, so it might seem counterintuitive to hire someone just for a season.

But now more than ever, flexibility is your greatest recruiting tool. By hiring people just for the summer, you can beef up your team to handle the busiest season of the year without requiring long-term commitments that could turn off potential hires. 

Plus: If you’re in need of year-round help, it can also buy you some time to run a real recruiting process and hire for the long haul.

How to bring in summer hires: 

You’re not going to be the only restaurant looking to add to their staff, and your applicants will have their pick of places to work. It’s time to get proactive — and creative — with your recruiting strategy to win them over. 

1. Get the word out (and leverage every channel)

The obvious first step to finding new employees? Let them know you’re hiring. 

  • Go social: We’re talking about Gen Z here, so if you want to meet them where they are, it’s time to go digital. At a minimum, post your job description wherever you’ve got a following (no matter how big or small) — Facebook, Instagram, etc. 
  • Boost it: It doesn’t cost a lot to boost a post, so if you want to expand your audience, put a small spend behind your listing. Be sure to identify geographic targets as you’re setting up your mini-campaign. (If your restaurant is in Milwaukee, you don’t want to spend money on impressions in Santa Fe!)  And of course: sell it. Include pictures and #workperks (more on that below), and show off your team culture.
  • Leverage email: Got a customer email list? Take advantage of that, too. Even if your target staff demographic doesn’t overlap with your customer base, word of mouth can be a great way to pull in talent. 
  • Update your site: These days, everyone checks out the menu before they hit up your restaurant. Use a homepage banner or pop-up tool to get your 
  • Old school still works, too: And then, of course, don’t neglect the tried-and-true recruiting methods. “Now Hiring” signs and fliers are still effective. Have applications ready at the guest stand. And think outside the four walls of your restaurant. Check with local high schools, colleges, and shops to see if you can display a flier in the bathroom or near a register.

2. Promote your perks 

What makes your restaurant a great place to work? Identify your restaurant’s unique selling points and mention them often in your job descriptions and when you meet with candidates. And while offering healthcare and PTO for your long-serving employees is great, you need to have perks that apply to new hires who will only be around for a few months. 

Having trouble thinking of your perks that would benefit a short-term employee? Here are a few ideas you can pull from: 

3. Offer referral bonuses

Turn your top talent into your ambassadors by encouraging them to refer potential employees. You’ll cast a wide net with less effort (and you’re more likely to get intro’d to team members you trust), while your staff will have the opportunity to work with their friends — it’s a true win-win.

Encourage and incentivize your employees to bring qualified candidates in for interviews. To ensure you’re working with a high quality pool, consider structuring the referral program so that employees get a referral bonus if their candidate actually gets offered the job. 

4. Lean on technology 

Most of your summer hires are going to be Gen Z students out of school for the summer — and they’re going to expect tech in any workplace. They probably won’t even look twice if you don’t offer a mobile-friendly job application online. 

On top of an easy application process, you’ll need to differentiate yourself from other restaurants by showing applicants the tech you use and how it can benefit them during their tenure. For example, do you have a scheduling system or are you still printing off and posting schedules the old-fashioned way? Do you use tech to easily trade or pick up shifts? 

Finances are also top-of-mind for your summer applicants, so let them know how tech can benefit their wallets, too. If you have a digital tip out solution in place, you can show them how easy it is to get direct, instant access to their tips — meaning no more waiting around for cash after their shifts. Instead, servers will be able to head out as soon as they finish their side work and spend the rest of the day by the pool. 

For restaurant owners, summer is an exciting – and hectic – time of year, but with the help of summer employees, you can make it your most lucrative season. 

Ready to leverage tech in your recruiting strategy? Check out a demo of Kickfin today.

Beat the Labor Shortage: How to Increase Tips and Keep Your Best Servers

In the midst of a (neverending?) labor shortage, restaurant operators are doing everything they can to encourage their best servers to stick around. 

A sure-fire way to keep your current employees happy? Help them earn more money. Of course, when margins are tight, that can be tricky —  which is where tips come in. Tipping allows employees to earn significantly more than what your revenue constraints might allow.

In fact, for many restaurant teams, particularly in the full-service segment, tips make up the majority of a server’s income. And if you practice any sort of tip pooling, then tips can increase take-home pay for other front-of-house and back-of-house employees, too.

While tip amounts are generally determined by the total bill and the quality of service a customer receives, there are things you can do to help your employees earn more tips. Here are a few ideas to try out at your restaurant.

1. Give them bigger sections

Your veteran servers can handle a lot more than you give them credit for. They probably want everything you throw at them, because more tables can generally mean more tip-making opportunities for them.

We get it: you don’t want customer service to slip. But you can trust your best servers to be honest about how much they can handle. If their answers vary, you can create different-sized sections where you reward top performers with more tables, while newbies get their feet wet with smaller sections.

2. Server training sessions

In the restaurant industry, you’re bound to get a lot of green serving staff. Give them the knowledge and tools they need to exceed customer expectations and operate with efficiency, so they can start earning more tips, faster.

If you don’t already have some kind of formalized training program in place, now’s the time to start. (For tips on onboarding new employees, check out our webinar here.) 

Of course, there are some basics they’ll need to learn — policies, standard operating procedures procedures, how to use your tech stack, etc. If they’re new to the industry, don’t make any assumptions: introduce them to every part of the restaurant. It’s important that they understand operations from front to back and how their success is tied to the success of the whole team.

Soft skills are equally important. Being able to engage with guests in a warm, professional manner can take the dining experience to the next level — and it compensates for slip-ups here and there while employees are still learning the ropes.

3. Teach the art of the upsell

In addition to the training they receive during onboarding, it’s never a bad idea to offer ongoing sessions for newer staff and seasoned pros alike. One focus area to consider: coaching your team on the art of the upsell. 

No, you don’t want your servers to turn into full-blown salespeople; but when it’s done in a way that’s focused on improving the guest experience, it has the added benefits of boosting tip amounts and increasing your restaurant sales, too. 

For example, hold a drink pairing class where your team learns what drinks to suggest for each order. Help them practice presenting daily specials in a way that’s appealing and easy-to-follow. Remind them not to miss an opportunity to suggest a starter and be smart about how they position the option for a dessert. (E.g.: They’re full from dinner? Offer that pie to-go!)

Not every server will have time for extra classes (school, family, and life can get pretty hectic), so make these classes optional. Your servers who can make it will thank you for providing them with flexibility and tools to increase tips, and your customers will notice and appreciate how knowledgeable your staff is. 

4. Run your kitchen efficiently

We all know that servers bear the brunt of frustrated, hangry customers. If guests are waiting and waiting for their food, they often blame the server (even if they’re not at fault) and deduct from their tips. Also, the longer a party sits waiting for their food to come out, the longer the server will have to wait to get their next table. 

Want your servers to earn more money? Address any back-of-house issues that might be impacting the customer experience. Hungry guests will be much happier when their food arrives quickly, and it’ll help your servers turn and turn more tables throughout the night. 

And keep in mind: For restaurants that include back-of-house employees in their tip pool, kitchen employees benefit from better tips, too — so help them understand how a rising tide lifts all boats.

5. Manage expectations at the host stand

Just like the kitchen, the host stand is completely out of the servers’ control — but it can seriously affect their tips. While you can’t really help going on a wait during a busy Saturday night dinner rush, you can train your hosts to tactfully manage guests’ expectations, so they aren’t fuming by the time their server comes to greet them. 

For one, hosts need to accurately predict wait times. There’s nothing worse than telling a customer that it’ll only be a 20-minute wait and then watching them sit squirming in your waiting area for 45 minutes. Consider taking advantage of restaurant tech that can help hosts manage the floor and the waitlist. 

It can also be confusing to guests if they’re on the waitlist, but they see empty tables. What they may not know is that you don’t have enough servers to cover all of the tables in the restaurant — so if that’s the case, consider asking your hosts to be proactive about explaining the situation.

Of course, when a party leaves and the table is ready to be cleaned, encourage your hosts to jump in and support busy bussers so that the next guests can be seated quickly.

6. Put your managers back on the floor 

When things go wrong, managers often swoop in to save the server’s tip. Managers are there to smooth over customer complaints and ensure a high-quality dining experience for every guest in your restaurant. But if they’re in the back office working for the entire shift, servers don’t get the support they need. 

Free up your managers’ shifts so they can spend more time touching tables, refilling drinks, and supporting the FOH staff. When managers can spend more time interacting with guests and helping servers who are in the weeds, guests enjoy their dining experiences more and are happier to leave a generous tip. 

(One idea to give your managers hours back in their day: Try out Kickfin’s instant cashless tipping software so your managers can spend less time counting out cash tips and crunching numbers, and more time connecting with customers and supporting your servers. Check out a demo today.)