How to Reduce Restaurant Employee Turnover

If you’re in the restaurant business, you’re in the people business. 

We’d argue that your restaurant employees are your greatest asset — because at the end of the day, a restaurant isn’t its wine list or its rooftop bar or its James Beard Award-winning cuisine. A restaurant is its people: without them, everything falls apart. 

Unfortunately, attracting and retaining the right employees in your restaurant is a perpetual battle, and it’s not getting any easier. In 2018, the employee turnover rate in the hospitality industry increased to 74.9 percent — the highest it’s been since the recession.

If we’re looking at the big picture, a rising turnover rate in hospitality isn’t a bad thing: it’s actually a byproduct of a healthy economy because it indicates that workers feel confident in the labor market. In other words, they’re not scared to quit their jobs and look for better alternatives.

Of course, that presents a unique challenge for restaurant employers in an already highly competitive labor market.

If you’re losing solid employees to other restaurants, or if you’re unsure how to compete with the explosion of gig-economy businesses: get our top four tips for retaining your restaurant employees.

 

1. Prioritize training

This seems like a no-brainer, but you’d be surprised at how many restaurant employees are dropped into the deep-end and expected to perform flawlessly. Even if your new hires have recent, relevant experience, no two restaurants are the same, and their background may not directly translate to a new place with new people, processes, standards and expectations.

That’s why a formal, repeatable training program is critical, no matter how big or small your restaurant is. Your program doesn’t have to be complex, but the most effective ones include a variety of tactics — written instructions, personal demonstrations, shadowing — to cover all types of learners.

Prioritizing employee training will ensure a consistent level of knowledge and service among each of your workers, which of course, is great for business. More importantly, a solid training program will build confidence. When people know exactly what they’re supposed to do and how they’re supposed to it, they’ll have a clear path to success and the tools they need to get there. That’s empowering.

Confident, successful, empowered employees tend to be happy employees — and happy employees tend to stick around.

 

2. Be fair — always.

There are a host of rules and regulations in place to protect restaurant employees, and for good reason: they’re some of the hardest-working people out there, and many of them are living paycheck-to-paycheck.

But it’s hard for employees to stay up-to-date and fully informed as to what’s fair or legal, and really, it’s not their job. As their employer, it’s your duty and obligation to play by the rules. And if your people see that you’re going out of your way to do right by them, they’ll take note — because that quality can be hard to find in an employer.

So what does that look like, exactly? It’s “little” things — like being aware of the fact that even when your employees are in training, they’re on the clock. Or knowing that if your servers spend a certain amount of time doing side work — bussing tables, folding napkins — where they’re not able to receive tips, they need to get paid the full minimum wage.

It’s also about finding ways to foster trust and transparency. In an increasingly digital industry, it’s much easier to give employees a great deal of visibility into their work — from scheduling and table management to payroll and tip-out history, so make sure you’re taking advantage of the right tools.

Speaking of money: maybe your people love what they do, or maybe hospitality isn’t their ultimate calling — but either way, at the end of the day, your employees are there to make a living and get paid. By ensuring they’ve got immediate access to the tips they’ve earned at the end of every shift, they’ll be less likely to leave you for the gig-economy jobs that pay out in real time. 

Long story short: when you demonstrate fairness to your employees, they likely won’t take it for granted.

 

3. Recognize your people.

Motivation, culture and morale are all driven by recognition of a job well down. Recognizing your employees doesn’t have to be hard or expensive — it could be a shout-out during a team meeting, an early-clock out, a free meal from the kitchen or a small gift card. 

This practice reinforces the right behaviors from your team members who are hustling and positions them as role models for the workers who need to step up their game. It’s also a way to show that you’re paying attention (without micromanaging), which makes everyone feel known and appreciated.

 

4. Nurture relationships.

This is a critical advantage restaurants will always have over the impersonal gig economy jobs: it’s simply impossible for the Lyfts and UberEats of the world to replicate the human connections and authentic relationships you have the opportunity to cultivate with your employees.

We live in a fast-paced world, and that’s amplified in the hospitality industry. But taking the time to get to know your employees, as you can, on a more personal level will go a long way in helping employees feel invested in their work and committed to their team. 

When you develop those relationships, you’ll also develop trust. That can go a long way in reducing employee turnover because they’ll be much more likely to come to you when things aren’t going well or when their needs aren’t being met — before they go out and find a new job.

Learn how Kickfin’s tip-out solution can improve culture and retention rates in your restaurant or bar. Get a free demo today.

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Tip Pooling: What Every Restaurateur Should Know

In the hospitality industry, tips aren’t icing on the cake: they’re often the reason employees can make a living wage. Tip pooling and tip sharing can ensure that everyone who contributes to a customer’s experience, not just servers, can be reap the rewards of a job well done.

To truly benefit your team and business — without damaging your culture — tip pooling and sharing must be done fairly, transparently, and in accordance with current regulations. Unfortunately, the latter is easier said than done: legislation is always changing, and the rules vary from state to state.

Whether you’re in California or Connecticut, here’s an overview of how tip pooling should work, plus some resources to make sure you’re in compliance with the laws in your own state.

What is tip pooling?

Let’s make sure we’re all on the same page: Tip pooling is a practice unique to the hospitality industry where all tipped employees contribute some portion of their tips into a pool. That pool is then divided evenly among a group of employees. 

Sometimes tip pooling is simply recommended or encouraged by an employer, but it’s ultimately at the discretion of the employees. When tip pooling is voluntary, it’s not regulated.

Other times, restaurants require tip pooling, and if that’s the case, then they need to comply with certain regulations. The biggest rule you need to be aware of: tips belong to employees, not employers. Whatever your tipping policies are, tips cannot be distributed among managers, supervisors or employers.   

Who is a tipped employee?

There are some positions that are commonly tipped — like servers, bartenders, bellhops, valets — but the title isn’t what really matters. Your employees qualify as tipped employees if they “customarily and regularly” receive more than $30 in tips per month.

Non-tipped employees are often, but not always, back-of-house staff, like chefs, line cooks, dishwashers and janitors. These people typically contribute to some aspect of a guest’s experience, but they don’t actually interface with the guests and don’t have the opportunity to receive a tip.

Tip pooling vs tip sharing

Tip sharing involves pulling a certain percentage of tips from tipped employees and distributing those earnings among non-tipped employees. Employers are not allowed to require tip sharing; it can only be done voluntarily, at the discretion of the tip-earning employees. Prior to 2018, this was the only way non-tipped employees could gain access to tips. 

However, with the amendment of the Fair Labor Standards Act in 2018, non-tipped employees are now allowed to participate in a tip pool. There’s one condition, though: employers who include non-tipped employees in their pool cannot be taking a tip credit. If an employer is taking a tip credit, their tip pool can only include tipped employees.

Which leads us to our next point…

What’s a tip credit?

Employers in the hospitality industry can legally pay their employees less than minimum wage if their employees’ tips make up the difference. When employers do this, it’s called taking a tip credit, because they’re crediting their employees’ tips toward an employer obligation to pay minimum wage.

Federal law states that the largest tip credit and employer can take is $5.12; minimum wage is currently $7.25, so that means means employers can’t pay their employees less than $2.13 an hour, even if tips put employees way over the minimum wage threshold. 

Of course, minimum wage varies by state, and some states are more stringent with their tip credits. A few don’t allow tip credits at all. (To check out minimum wage rules for your state, go here. For a general fact sheet about what’s allowed under the Fair Labor Standards Act, go here.)

Employer tip “deductions”

As stated above: tips belong to employees, not employers. However, when your employees are tipped via credit card, federal law generally allows restaurants to deduct a proportionate percentage of the credit card processing fee from the tip.

(That is, if you have to pay a 4% credit card processing fee, you can legally deduct 4% from your employees’ tips. Keep in mind: this is another case where federal law may permit this policy, but states may have stricter rules.)

Also, service charges — for large parties or private events — aren’t considered tips, so you’re not required to share those with your employees, although many employers do so anyway.

What’s right for your restaurant?

Tip pooling can be a sensitive subject. Many restaurateurs have the best of intentions when they decide to establish a tip pool, but it’s not always done in a way that benefits the team.

While everyone plays a role in a guest’s experience, servers typically put in the face time and (arguably) can make or break the tip by managing the experience — i.e., establishing rapport, avoiding mistakes, doing damage control when the kitchen’s backed up or runs out of salmon. Servers and other tipped employees may be less excited about sharing tips with back-of-house staff.

Unfortunately, there’s also a level of distrust that your employees may have around tip pools, as some restaurateurs and employees have gamed or abused the system for their own benefit. While they’re certainly in the minority, they’ve given tip pooling a bad rap.

On the other hand, there are some pros to tip pooling and tip sharing with non-tipped employees. Your back-of-house staff certainly contributes to the experience a guest has — and they’re working just as hard as their tipped co-workers — but they don’t have the earning potential that comes with being a tipped employee. 

If you’re establishing a tip pool for the first time, after ensuring that you’re 100% compliant with state and federal laws, think through the policies and specific percentages that will work best for your restaurant. 

Then, focus on transparency: clearly communicate your objectives and policies. Not only is it required by law that you provide oral or written notice, but it’s also important from a culture and trust perspective. If employees understand the thought and logic behind your decisions, they’ll feel confident that you care about the financial well-being of every person on your team.

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8 Restaurant Software Solutions You Need for 2020

For restaurant operators — and the consultants who advise them — building out your technology stack can be overwhelming. There are literally hundreds of software products and platforms at our disposal that promise immediate ROI, new operational efficiencies, increased productivity…the list goes on.

Of course, no restaurant needs more than a handful of tech tools, no matter how big you are. So how are you supposed to know which ones are right for your business?

We recommend taking a step back and thinking about the solutions you require — before you start sifting through actual vendors and platforms.

Below, we’ve compiled a list of solutions we’d recommend for every multi-location restaurant group. It may look like a lot — but the good news is that with only a few different tools, you can cover every item on this list!

1. POS Software

At the most basic level, your POS hardware and software should give you the tools you need to manage orders and process payments. A modern POS system should also have data security features to protect customers’ information (and yours), and it should also provide some level of reporting. 

With that being said, there’s now a good amount of crossover between POS solutions and end-to-end restaurant management software. The latter includes POS hardware and software, as well as some combination of inventory management, employee management, accounting, payroll, and more — but not everyone needs such a robust solution. 

Let your budget be your guide, and also consider the tools you’re currently using so you don’t double up on functionality.

2. Accounting Solutions 

Many restaurateurs outsource accounting to third-party firms or consultants, and that can be a great solution. But if you’re handling everything in-house, you need a transparent, accurate, and easy way to track your numbers — including sales, revenue, food costs, vendor payments, payroll, and more.

You’ll want an accounting system that integrates seamlessly with your POS solution, as well as any other software solutions you have in place. You also should be getting automated, actionable and real-time insights into where your business stands financially. Bonus points if it automatically tracks payments and generates 1099s for your vendors.

3. Payroll and Tip Out Solutions

For many restaurant owners, operators and managers, payroll swallows up hours of their week, every week. Choosing the right payment solutions will not only give you time back; it will also make a strong statement to your employees — that you care about them getting paid fairly, quickly and predictably.

Many employees in the restaurant industry live paycheck to paycheck, which means the faster they can access the wages they’ve earned, the better. If weekly payroll is cost- or time-prohibitive for you, then leveraging a real-time tip-out solution for your employees can fill in those gaps between paychecks.

Keep in mind: With both payroll and tip-out software solutions, there may be hidden fees (for you and for your employees) that you’re not accounting for in your monthly or annual vendor payments. Make sure you fully vet the solution you’re considering before you sign on the dotted line.

4. Workforce Management Solutions

Hospitality employees often struggle with difficult or unfair schedules, lack of training, and poor communication. Leveraging workforce management software solutions can boost your team’s culture and drive retention, loyalty and engagement. Plus, it can reduce labor costs from 4 to 5%.

If you’re purchasing workforce management software for a multi-location restaurant group, it should offer (most of) the following capabilities:

  • Auto-scheduling
  • Time tracking
  • Workforce communication
  • Insights and analytics
  • Hiring, training and other HR functionalities

5. Table/Floor Management

Table management solutions deliver visibility into what’s happening at each table in real-time, so your team can know exactly when and where to seat guests, serve guests, bus tables, etc. 

Table management solutions also give restaurant operators actionable data and insights around what’s happening on the floor. And by reducing wait times and making service more efficient, they often result in a more pleasant experience for guests.

These tools run the gamut from super simple to incredibly smart. But don’t pay for more than you’ll need in the foreseeable future, and consider all the implications of going digital: for example, if your demographic skews more Baby Boomer and less millennial or Gen Z, some of those (very cool) features may not be necessary.

6. Inventory Management and Purchasing

When you automate inventory management and purchasing, you’ll cut down on food waste and costs, keep inventory records current, understand how food costs stack up against revenue, and make bookkeeping a breeze. 

Pro tip: Be sure your purchasing and accounting solutions to play well together, if they’re not part of the same platform, so you can avoid the dreaded export/download/import process.

7. Online Ordering and Delivery

Smart restaurateurs know that online ordering capabilities can quickly and easily increase sales, especially during slower seasons. 

Choosing the right online ordering platform can also save you time, labor costs and hassle. It’s faster than phone orders (and requires less manpower), and orders go straight to the kitchen, so there’s a lower risk of human error. 

Plus, once your online ordering program gets off the ground, you’ll have a wealth of customer information that you can leverage to market to them, so they’ll keep coming back to you.

Remember: if online ordering isn’t part of the POS solution you’ve purchased (or you’re about to purchase), you’ll want to be sure they sync. The same goes for menu management, so you can avoid having to update menus in multiple locations every time a menu item or price changes.

8. Customer Loyalty Solutions 

A loyalty program is a highly effective marketing tactic for restaurants, and (bonus!) it can be relatively hands-off, once it’s up and running, assuming you’ve got the right software in place. 

There are so many ways to structure loyalty programs: points systems, tiered programs, etc. Maybe you want to build a VIP program, or perhaps you want to reward guests for making referrals or writing reviews. If you’ve got a vision for the way you want yours to work, there’s likely a software solution that can make it happen.

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Managing Millennial Restaurant Employees

Real talk: millennials have gotten a bad rap over the years. At best, they’ve been a puzzle everyone wants to solve; at worst, their name has become a catch-all for anyone under the age of 23 who comes across as entitled unmotivated, or lacking ambition.

But millennials aren’t kids anymore. In fact, a lot of them are out of school and have families of their own; some of them (ahem) are even staring down middle age. And they now make up the bulk of the hospitality workforce as employees and managers — and increasingly as owners, executives and consultants.

If you’re operating a restaurant or bar, chances are, you’ve probably got a team of millennials. Even if you’re a millennial yourself, you might be scratching your head as to how to manage them in a way that engages them, motivates them to work hard, and makes them want to stick around.

Good news: a little understanding can go a long way. Here are 5 things you should know about your millennial restaurant employees that will make work more productive and pleasant for everyone (yes, yourself included).

1. Set them free (within reason).

Maybe you’ve heard millennials have a problem with authority — and for some of them, that’s probably true. But it’s no more of an epidemic for millennials than it was for their predecessors.

What is different, however, is their very obvious desire for freedom. Millennials, on the whole, are wary of being tied down. Compared to Baby Boomers and Gen Xers, they’re enthralled with the idea of a life in constant motion. FOMO (fear of missing out) is a real thing, both on a random Friday night, but also when it comes to the bigger picture— because millennials want to see and do and experience everything.

As restaurant employees, it doesn’t mean they’re unreliable or impossible to pin down. But it does mean they’re more open to moving from one job to the next, unlike their parents and grandparents who tended to stick with an employer for the long haul.

So how do you keep them around and give them the freedom they crave?

  • Train and teach: There’s nothing less freeing than feeling like you’re being micromanaged. As a restaurant owner, you won’t have to do that if you create an effective and efficient onboarding program that clearly communicates responsibilities, policies and procedures from the get-go. And remember: training isn’t a one-and-done kind of deal. It should be ongoing, so that you’re always reinforcing good habits.
  • …and then, trust: A Harvard Business Review article defines workplace freedom as “trusting employees to think and act independently.” That doesn’t mean your restaurant becomes a free-for-all; it means if you’ve hired the right people, implemented the right framework, and communicated it to your team, then everyone should feel equipped and empowered to succeed in their roles — no hovering required.
  • Let them share: Hopefully, you’re hiring smart, curious people who have been shaped by many diverse experiences. Give them the freedom and space to share ideas, give feedback, or contribute in ways beyond the role they were hired to do, if they express an interest or desire. At the very least, they’ll appreciate your willingness to listen and your trust in their perspective.

2. Be flexible

Freedom and flexibility go hand in hand. Many hospitality workers have chosen this line of work because it offers some level of flexibility that other jobs don’t — it’s not a 9-to-5, stuck-in-a-cube kind of gig. And while this is a true career for some people on your team, for others, it’s a job they’re able to work around school, or family duties, or another job.

But restaurant employees — from hostesses to servers to line cooks to chefs — are some of the most overworked people in the modern workforce. And the keyword there is people: they’re not assets or line items. They’ve got lives beyond the four walls of your business.

Fairness and compassion go without saying. Being accommodating is simply the right thing to do when circumstances arise that are beyond their control. But if you get a little creative, there are other ways to provide a little flexibility to your millennial employees:

  • Millennials increasingly gravitate toward remote-friendly, work-from-home jobs. Obviously, unless they’re planning to seat people in their very own kitchen, it’s hard to work remotely when you’re a restaurant employee. But perhaps you can choose to make some of your team meetings virtual, or maybe you can give digital access to onboarding and training materials.
  • Another flexibility play is giving employees more control over schedule creation, while also ensuring that your team is actually large enough for the business you’re doing, so that it’s not impossible to get shifts covered as those needs arise.

3. Go digital.

Technology is a millennial’s one true love. There’s a “smart” everything these days, and no one is more enamored with (or appreciative of) the digital age than this crowd.

Millennials are well-versed in technology and they understand the efficiencies and capabilities that innovation can deliver at home and on the job. They’re also extremely well informed because they’re always connected to the rest of the world — so they know what else is out there.

That means, for employers, ignorance is not bliss. If you’re not leveraging the technologies that could make work and life easier for your people, then they’re probably well aware of that fact, and they have easy access to jobs with other employers who are doing it right.

For example: many restaurateurs have felt the pain of the labor crisis as their employees go after “gig economy” jobs with the Ubers and Lyfts of the world, whose platforms allow for real-time pay out. Taking advantage of industry innovation can help you win the battle for good labor.

Tools like Kickfin — which allow you to tip out employees in real time, directly to their bank accounts — or front-of-house solutions like workforce and table management software will certainly deliver ROI to you, but they’ll also show your team that you’re invested in their wellbeing and that you take care of your people.

Pro tip: Employee-facing software solutions should drive transparency and engagement across your whole team, not just your managers or operators. Selecting vendors that take the employee experience into account is incredibly important; it may be something as simple as having a well-designed app or an intuitive, easy-to-learn interface.

4. Give them purpose.

Work is work — there’s no way around it. But millennials are coming to the table (so to speak) with higher expectations. Yes, they’re willing to work, but they also want to be fulfilled and find meaning in what they’re doing.

It’s not about pride or being the most important person in the room; it’s about being a part of something bigger than themselves and contributing to a greater cause. Maybe your restaurant isn’t going to save the world or solve the hunger crisis, but every good business and brand should give its people and its customers a reason to believe.

So find out what that reason is, if you haven’t already. Know your mission, know your why — and share it with your team. Every single person you employ should be able to articulate this.

At the end of the day, there’s no code to crack or equation to solve. Like with any other employee or colleague, empathy will go a long way in establishing trust and transparency — two things that millennials value highly.

And here’s the good news: when you bring millennials into the fold, they tend to bring a lot of people with them. By winning their respect and loyalty, you’ll also win some of the best brand ambassadors you could ever hope to have.

Kickfin can change the way you manage your millennial restaurant employees.

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4 Reasons Why Prepaid Cards Are Bad for Restaurant Employees

Prepaid cards

If you’re one of the many restaurant owners or operators who uses prepaid cards to tip out your employees: we get it.

On the surface, prepaid cards, or pay cards, seem like a smart solution to the daily (and nightly) tip-out dilemma. Managers don’t have to acquire and distribute cash, which saves time and hassle. Plus, you’re keeping your employees safe — because no one is more vulnerable to theft than when they’re walking to their car with a pocket full of cash in the wee hours of the morning. And the biggest perk of all: you’re giving your employees instant access to the money they worked so hard to earn.

Except: you’re not.

Unfortunately, prepaid cards aren’t as simple or seamless for your employees as they may be you. What seems like a superior alternative to cash tip-outs could actually be costing your people a sizeable chunk of their earnings — and creating other unintended consequences — every time you load up and hand out a card.

Here are four reasons why prepaid cards could be making life harder for your staff.

1. Hidden fees

It’s not an exaggeration to say that prepaid cards are predatory. Prepaid cards come with a slew of fees that will add up incredibly fast when your people try to use their cards. Want to make a purchase? Check your balance? Withdraw cash? It’s not uncommon for people to be hit with fees for all of the above.

Depending on the card or vendor you choose, hidden fees can include:

Transaction fees: Transaction fees for prepaid cards may include a monthly fee or per-purchase fee; ATM withdrawal fees; and cash reload fees.
Service fees: Service fees for prepaid cards may include checking your card balance at an ATM; fees charged when you call customer services; and inactivity fees.
Other fees: Again, depending on the card or vendor, your employees could run into miscellaneous fees listed within the “fine print.”

Suffice it to say, when restaurant employees attempt to use prepaid cards, they’re likely losing valuable dollars they’ve earned. And while that’s frustrating for everyone involved, it could lead to an even bigger problem for your restaurant — because your people could start looking for a new employer in our competitive gig economy, where they’ll get immediate access to their earnings without having to pay for it.

Waiting for prepaid card transfer

2. Long transfer times

The hospitality workforce has been overtaken by millennials, and their Gen Z successors aren’t too far behind. This 35-and-under crowd has a deep affinity for all things automation. That’s especially true for monotonous, unpleasant tasks…like paying bills.

You’d be hard-pressed to find a millennial who doesn’t have at least one of their utilities or subscriptions (power, phone, gas, cable, Netflix…) set to auto-pay, so that payment is pulled directly from their bank accounts on a monthly basis.

That can be a problem if you’re living paycheck-to-paycheck and you’re not getting access to your tips after your shifts. Unfortunately, “instant” pay cards aren’t a solution. Not only can it take 2-4 full business days to transfer and receive funds from your card to your bank account — but your employees will often run into fees for attempting to do so. It’s yet another inconvenience for your people (and another way pay cards make their money).

3. Low vendor acceptance

Prepaid cards are different than debit or credit cards. Again, it depends on the card you’re using — but it’s not unusual for prepaid cards to get turned down by specific types of vendors. In other words: prepaid cards may not be accepted everywhere your employees wish to spend their money.

It seems people run into the most issues with travel-related vendors — like car rental services. According to Chime, vendors that typically put holds on cards may be less inclined to accept a prepaid card, as they don’t come with a name or expiration date.

4. Fewer regulations

It’s no secret that checking accounts and credit cards are highly regulated to protect consumers from fraud and loss. Until this year, prepaid cards weren’t afforded the same protections.

Fortunately, in April 2019, a new Consumer Financial Protection Bureau rule extended some of the existing checking account and credit card regulations to prepaid accounts — but there are several caveats.

For example, in order to be covered by several of the new protections, users must register their cards. If your restaurant employees neglect to register their card (typically through an online form), then they won’t have the right to dispute fraudulent charges or get reimbursed following loss or theft.

Another catch: in the event of unauthorized charges, prepaid card users are required to pay the first $50, and if they don’t report the unauthorized charges within two days of the activity, that number can go up.

Without question, restaurants that use prepaid cards as a tip-out solution have only the best intentions — and they may be saving their managers the time and hassle of dealing with cash. But the hidden issues that come with prepaid cards make them less than ideal for your employees — and ultimately, it could cost you your best people.

Here’s the good news: with Kickfin, you can deliver your employees’ tips directly to their bank accounts in real time — with complete transparency, and no hidden fees. Get a demo today!

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8 Restaurant Software Solutions You Need for 2020

For restaurant operators — and the consultants who advise them — building out
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