We know how important same-day payments are for veterans of the service industry who are accustomed to quick cash — and we’re now seeing that same demand expand into other industries as well.
Kickfin co-founder Justin Roberts joined MasterCard’s InConversation Webinar series to discuss why immediate payment disbursal is key for the restaurant industry and the gig economy as a whole.
Watch the webinar here or read our recap for the highlights:
People live paycheck-to-paycheck
Not just some people are living paycheck to paycheck. Most people are.
That’s right: around 64% of U.S. consumers are just getting by. Even more shocking, 51% of consumers who earn over six figures are still living paycheck to paycheck, despite their higher tax bracket.
It’s a major reason why employees need access to their earnings sooner rather than later. The pressure of watching your bank account slowly drain in the two weeks between payday is putting a lot of pressure on people, leading to a much greater demand for instant payments than ever before.
Instant payouts are now table stakes
A PYMNTS study found that people of all ages prefer to be paid out immediately, as well as some other interesting statistics:
- When given the choice, 68% of respondents said they would opt for an instant pay out
- 40% of gig workers surveyed were willing to pay a fee for an instant disbursement
- 81% of respondents were willing to switch jobs to an employer that offers instant access to earned wages and tips
It’s safe to say instant payouts are becoming the expectation for today’s modern workforce. But not all instant payouts are created equal.
Consumers are much more likely to engage with an instant payout system if they aren’t required to share their bank account and routing numbers and can access funds with just their debit card credentials. Why? It’s faster, more convenient, and feels more secure.
Instant payouts and tip management: a perfect use case.
Instant payout innovation has come at the perfect time for the restaurant industry, which is struggling more than ever with the hassles and cost of cash.
If you’re in the restaurant biz, then you know: Most consumers pay with credit cards these days, not cash. That means there’s rarely enough cash on hand to pay out tips at the end of a shift. But employees still want and need instant access to their tip earnings.
Enter: instant payouts. Offering employees the option to receive their tip earnings directly to their bank of choice, the second their shift ends, can go a long way in improving employee satisfaction and ensuring their financial security.
But instant payouts are more than a work perk for employees. The operational benefits for employers range from reduced administrative burden and significant time savings to stronger compliance and streamlined reporting.
Modernizing your tip management strategy: 5 best practices
There are three key components to your tip management strategy:
- Tip pool policy: How are you divvying up tips among your staff?
- The payout method: How are you distributing those payments?
- The systems and tech: What are you using to facilitate those payments?
Under the current circumstances, restaurant operators are under immense pressure to bring their tip management into the future.
5 best practices for tip management
Based on our experience working with restaurant operators across the country, we’ve found that these five practices are the perfect recipe for building a successful tip management system.
- Determine the right model and method for your restaurant, based on your location and tech stack
- Get a written tip policy (and get it legally approved)
- Solicit employee feedback in a structured way
- Leverage technology for efficiency, accuracy, and compliance
- Don’t over-complicate (but do over-communicate!)
Tip management solution must-haves
When seeking a new tip management solution, make sure you carefully vet each system to see if it really meets your needs, or if it’ll be just as frustrating as cash. Here are a few suggestions for what should be on your checklist:
- Instant payouts
- Direct to bank of choice
- Availability of employee funds
- Payroll option
- Integrations
- Simple implementation + onboarding process
- Around-the-clock customer service
Big emphasis on strong customer support teams. Restaurants and bars don’t have “typical” business hours, so neither should your tech support.
Bar Louie automates payouts with Kickfin
In a recent case study, we took a deep dive into our partnership with Bar Louie, a chain with over 60 locations that took advantage of our new integration with Toast. They made the switch from cash payouts to Kickfin’s instant, direct-to-bank payouts and haven’t looked back.
Two-minute tip-outs
Before Kickfin, managers spent an average of 45 minutes per shift working through Bar Louie’s complex tip out policy and counting cash. The tip pooling rules were important to them — it’s what makes the entire staff feel like they’re getting their fair share.
Using the Kickfin Toast integration, Bar Louie was able to automate the tip pool calculation process and send tips straight to employees in under two minutes – a potential annual savings of 15,000 labor hours across all locations.
>> See more customer success stories
Do you want to see these kinds of cost-saving results at your business? Let’s talk. Get a demo of Kickfin and see why restaurant owners and employees alike trust us to manage their tips.