Author: Keely Hungate

If you’re starting up your own restaurant, bar, brewery, or event space and you plan on serving alcohol, you’re going to need a liquor license. It doesn’t matter the state where your business will be located: it’s always illegal to serve alcohol without a proper license. 

But getting a liquor license can be difficult and time-consuming. And once you have one, you can lose it if you violate state guidelines, whether it’s over-serving your customers, serving minors, selling alcohol during restricted time frames, or disorderly conduct in your establishment. And now with Covid-19 in the picture, state liquor authorities are temporarily revoking liquor licenses from restaurants and bars violating mandated health and safety protocols related to the pandemic.

Here’s everything you need to know about getting a liquor license in 2020: what it is, how much it costs, and what to expect from the process. 

What is a liquor license?

A liquor license makes it legal for your establishment to sell alcohol. Liquor licenses are issued by the state in which your business operates, as different states have different regulations relating to alcohol sales. Requiring restaurants and bars to obtain a liquor license makes it possible for the state and municipal government to enforce their alcohol policies.

What kind of liquor license do I need?

The type of license you need depends on how you sell or serve alcohol. The two primary “categories” are on-license and off-license.

• On-license: This is for businesses that are selling or serving alcohol to be consumed on-premises. (Also called on-premise or on-sale licenses.) This is the type of license that a restaurant or bar needs to obtain.
• Off-license: Specifically for businesses selling alcohol to be consumed elsewhere. Liquor stores, wine shops, and grocery and convenience stores are all examples of businesses that sell alcohol for “carry-out,” requiring an off-license.

There are several types of on-licenses that restaurants and bars may need to apply for, depending on the type of alcohol you’re serving and the manner in which you’re serving it. A few common examples:

• Restaurant liquor license: This is generally known as the “all liquor license” because it allows a business to serve all types of alcohol
• Beer and wine liquor license: Unlike the “all liquor license,” a beer and wine liquor license doesn’t permit you to sell stronger spirits.
• Tavern liquor license: This is commonly used for restaurants that serve both food and alcohol but have at least 50% of sales generated solely from liquor. 
• Server license: Some jurisdictions require individual servers to apply for a server license in addition to a liquor license. Any staff serving alcohol of any kind must take a liquor class prior to getting this license, which educates them on the kinds of alcohol there is, the legal amounts in which to serve it according to the state, and DUI and DWI laws. 

How much does a liquor license cost?

How much a liquor license costs depends on the state you’re operating in and the type of license you’re applying for. The range can be anywhere from $50 to more than $300,000. The average, however, is around $1,400. 

Keep in mind that you might be expected to pay additional processing fees depending on your local regulations. Some states have Liquor License Quotas, which means that only a certain number of licenses can be in use at the same time, depending on the population of the area. If that’s the case, then a new liquor license can be more expensive due to limited supplies. 

How do I apply for a liquor license? 

Applying for and obtaining a liquor license is a bit of process. There are a number of steps you have to take (and hoops you have to jump through) not only to get your license, but to maintain it.

• Know your state’s liquor laws 

Before you can apply for a liquor license, you have to know what you’re applying for. Remember, there are different licenses available depending on what kind of establishment you’re opening: a restaurant, a tavern or bar, or a liquor store. Also be sure to brush up on any additional requirements your city or county may have in place. You can consult your local Alcohol Beverage Control (ABC) board for this information, or you can check with your state’s alcohol or liquor agency.

• Get all of your business permits

Before you apply for your liquor license, check to see what kinds of permits you’ll need for your application. Here again, your local ABC board can be a great resource. Check their website to see which ones you’ll need. (Once you have them, keep all of the paperwork secure and on-hand, as you’ll most likely have to present it.)

• Apply with your local ABC board

Once you’re familiar with your local laws and know the type of license you’ll need, then it’s time to apply with ABC board in your area. You can do so in person, or in some cases, you may be able to apply online. 

• Defend your proposal 

You might need to defend your case as to why you want to sell alcohol in a public hearing if a member of your local community protests your application. 

• Renew your liquor license and permits

Applying for a liquor license isn’t just a one-time thing. Expect to renew your license and permits every one to three years. And keep in mind: if you’re found to be in violation of liquor laws, you could have your license suspended or revoked altogether. 

How long does it take to get a liquor license?

Like we said: getting your liquor license is a process. In some cases, expect to wait weeks or even months for your application to be processed and approved. The standard waiting time to hear back from your local ABC board is up to six months.  If you live in a state with quotas, it can take longer, as you’ll have to wait for another business to forfeit theirs (or you can try to buy one on the secondary market).

So if you know you want the option to sell or serve alcohol, our advice is apply for your license as soon as you can in your startup process.

Liquor licenses: worth the hassle?

Getting your liquor license requires a lot of patience and planning — and it can be a financial investment, too. Beyond obtaining the license itself, there are other costs that go into serving alcohol, like equipment, server training, building out a drink menu, etc.

For bars, obviously, getting a liquor license is a no-brainer; for other establishments, you’ve got to decide whether it’s worth the hassle on and cost on the front end as well as the effort to maintain it. Take into account your location, hours, menu, and customer base/demographic. For example, a family or kid-focused establishment may choose not to serve alcohol. The same goes for restaurants that operate only on weekdays, during regular business hours — like breakfast spots, or cafes and coffeehouses catering to working professionals.

But many customers expect alcohol as an option, especially if your restaurant operates on evenings and weekends, or if your menu lends itself to alcohol pairings. It’s also important to note that alcohol sales generally have higher margins than food sales, so financially speaking, a liquor license is often worth the up-front hassle. 

Bottom line: before pursuing a liquor license, be sure that serving alcohol in your establishment is actually going to benefit your business. If you decide to move forward, don’t be intimidated by the process. Simply do your research on the front-end: determine the licenses you need, learn about the regulations that apply, and understand the associated costs and timeline. 

(Need help staffing your bar? Read our tips for hiring a bar manager here!)

Now that restaurants have reopened and are learning to co-exist with Covid-19, there’s yet another threat looming on the horizon: cold weather. 

Many restaurants have restricted indoor seating to somewhere between 25% to 50% capacity. To make up for that reduced capacity, wherever possible, they’ve expanded outdoor seating options. That’s worked out well amid balmy spring and summer temps, and even as we head into crisp autumn days, patios mostly remain open.

But the clock is ticking. Winter will be here soon (and in some cases, it’s already arrived — we’re looking at you, Denver). And this year, it’s coming with a side of impending doom for many restaurant owners, especially in states that experience regular snowfall and freezing temperatures.

In a recent Chicago Tribune story, Michael Roper, owner of the HopLeaf Bar, says, “We’re in terror of it. The patio represents most of our business right now.”

In Massachusetts, one in five restaurants have permanently closed since the beginning of the pandemic in March, according to the Boston Herald. And though most restaurants that are still open can stretch their outdoor seating into the early fall, the state will ban that option in November due to extreme temperatures. 

Suffice it to say: for a lot of establishments across the country, everything’s about to change all over again. The good news is that you can anticipate and manage the circumstances. If you’re operating a restaurant in an area where seasonal change is going to impact your current setup: here are three things you should be doing right now.

1. Make a (new) plan

We get it: you probably feel like you’re finally getting the hang of this whole operating-a-restaurant-in-a-pandemic thing. Just when you’ve perfected your Covid-19 contingency plan, it’s time to go back to the drawing board.

But if 2020 has taught us anything, it’s that restaurants must be nimble to survive. By and large, the industry has risen to that challenge — quite admirably! — over the past seven months. And fortunately, seasonal change is less of a curveball because we know it’s coming, and we can prepare for it. Here are a few ways to shore up and “winterize” your current Covid-19 setup.

• Evaluate everything. Take a step back and review the policies and procedures that you’ve put in place since March. Are they still necessary? Are your employees adhering to them? How will the winter months impact their feasibility or effectiveness?
• Ask for feedback. Hopefully you’ve been in constant communication with your team all along, but now is a great time to solicit input from your team. Talk to them: ask them what they believe has been going well in terms of the changes you’ve made, and what has been challenging or confusing. (If you’re worried about putting people on the spot, you can also gather feedback through a simple survey with anonymous responses.) 
• Do your research. As we mentioned above, some states are already putting new rules in place regarding seasonal change. Be sure you’re tuned in to any upcoming regulatory shifts by following legitimate, credible news outlets and industry publications at both a local and national level. 
• Assess your physical space. Outdoor seating has been a lifesaver for restaurants, but it’s going to be a whole lot trickier if temps start to fall in your area. Be realistic about the safety and comfort level of your patrons, and plan accordingly. Your course of action depends on the climate you’re in, the layout of your restaurant, and your budget. It may make sense to invest in outdoor heaters or to explore ways to partially enclose patios and porches. If outdoor dining really isn’t an option, think through ways to maximize indoor dining capacity — like installing plexiglass dividers between booths and tables. 

Don’t get complacent with your cleaning and sanitation procedures. While it’s best to avoid over-the-top stockpiling, make sure you’ve got a “responsible” surplus of soap, hand sanitizer, toilet paper, cleaning supplies, and other items that may be susceptible to shortages. 

2. Tighten your purse strings

Whether your bottom line is hurting or business is booming, the reality is that no one is out of the woods yet. 

When it comes to managing expenses and budgeting, savvy restaurateurs are continuing to be very discerning as we move into the colder months. In addition to the impact cold weather could have on your operations (e.g., further reducing seating capacity), it’s also more conducive to the spread of germs. Not only do we still have Covid to worry about; we’re now coming up on flu and cold season, and no one really knows how bad it could get. Unfortunately, that means we can’t rule out another shutdown. 

So for most restaurants, now isn’t the time for risk taking. Instead, it’s prudent to remove as many variables as possible. That may mean putting off scheduled expansions or renovations, or temporarily cutting back your operating hours.

Many restaurants have uncovered savings and efficiencies by streamlining their menu. For example, Boston-area HIghland Kitchen reduced its offerings and changed its focus to fried-chicken tenders and sandwiches, along with tiki cocktails — all to-go. (They also cut back on the days and hours they’re open.) Making strategic menu changes gives you the opportunity to focus on higher-margin items, reduce supply/inventory costs, and/or to make your back-of-house more efficient. 

3. Get creative

If there was ever a time to think outside the box, now is it. Here are a few ideas to manage the “winter edition” of Covid-19.

• Offer cold-weather items (think: blankets, gloves, beanies) for guests to use while dining outside. You could tap into your marketing budget and brand these items, making them a giveaway. Or you can allow guests to borrow them — but you’ll need to ensure you’ve got proper cleaning procedures in place (and be sure you’ve communicated those to your guests).
• Invest in outdoor heaters, igloos or winterized tents. (Remember, you’ll still need to adhere to social distancing between parties, especially if you’re creating enclosed spaces.)
• Create a large outdoor fire pit surrounded by (socially distanced) seating.
• Take advantage of your parking lot by converting a portion of it into a covered/heated patio space.
• Reimagine your layout. Eating a full meal in chilly temperatures isn’t ideal, but your patrons may be open to enjoying a pre-meal cocktail outside. Consider setting up a (heated) outdoor bar area — even better if you can make it feel festive with fall or holiday decor. You’ll free up indoor dining space at your regular bar area, and you’ll provide extra (safe) space for diners to hang out while they’re waiting to be seated.

Change is here to stay

No one has a crystal ball, but we’re confident this Q4 will be unlike any other. (Let’s be honest: that’s pretty much been the theme of 2020.)

The silver lining here is that we’ve got a little time, and a lot of fresh experience, on our side. The hospitality industry has already been blindsided by a pandemic and upended by an unforeseeable shutdown; we can prepare for the worst because — well, we know what the “worst” looks like. 

So as you look ahead to the coming months, keep doing what you’ve been doing: stay nimble. Anticipate every outcome. Collaborate with your peers and, yes, your competitors.

And most importantly, continue to put the health and safety of your people and your patrons ahead of everything else. 

There are a lot of factors that can make or break a restaurant: quality of food, atmosphere and ambience, level of service. Because they’re so important, these are areas where restaurant owners spend a good deal of time, energy and resources on a daily basis. 

Now more than ever, restaurant cleanliness should be at the top of that priority list. Granted, it’s not the most fun or exciting aspect of restaurant operations; few people go into the business with a dream of opening “the cleanest restaurant, ever!”. But restaurant sanitation, or lack thereof, can have a direct impact on your restaurant’s success — especially in 2020, where we find ourselves in the midst of a pandemic.

Following the initial shutdown, most restaurants have reopened in some capacity, but they’re operating with more stringent sanitation standards. Some have been put in place by their respective cities or states, while others are self-imposed by the restaurant owners themselves for the well-being of their people and patrons. 

If your own cleaning policies and procedures could use some attention, read on for ways to maintain a restaurant that puts the health of your people and patrons first. 

How Maintaining a Clean Restaurant Impacts Your Bottom Line

Even in pre-pandemic times, choosing not to adhere to the cleaning guidelines established by the CDC could cost restaurants their business.

Whether you’re not properly cleaning or maintaining your physical space, sanitizing dishes, storing food, washing hands — there are very real and even dangerous consequences that can result from ignorance or negligence.

The biggest risk you run is harming the health of your employees or customers. But even if no one gets sick, violating the health code can put you in legal hot water. And you also have your reputation at stake. In the hospitality industry, where word of mouth is a key marketing channel, you certainly don’t want to become an establishment that’s known for poor sanitation. 

Of course, the pandemic adds another layer to all of this. The general public is experiencing quarantine fatigue — many people are more than ready to get out of the house — but they’re also fearful of the potential for viral transmission. Demonstrating and communicating a commitment to sanitation and safety can go a long way in making people feel comfortable in your space once again.

It’s not just for the sake of optics, though. We’re still learning about COVID-19, but there’s no doubt that it’s fairly contagious. It behooves restaurant owners to mitigate the spread of the virus so that they can reduce the risk of an outbreak in their establishment. If your team gets sick, not only will you have to operate short-staffed, but you’ll also potentially scare away diners who don’t want to catch the virus themselves.

Your 2020 restaurant cleaning checklist 

COVID has changed the way we look at cleaning procedures. As a restaurant owner, it’s important to be explicit about your sanitation standards, so your staff understands what’s expected of them, and your customers feel safe inside your space. 

Let’s delve further into ways you can ensure proper restaurant cleaning procedures. Consider this your essential 2020 restaurant cleaning list!

Front of house cleaning checklist: pandemic edition

While making sure you’re following all restaurant cleaning procedures throughout your space, there is an added element you need to keep in mind when it comes to your restaurant front of the house cleaning checklist: reassuring your customers they are safe eating in your restaurant. 

This means it’s important for them to see your staff practicing food safety and implementing proper restaurant cleaning procedures, following all recommended best practices from the CDC, EPA, and the FDA. Be prepared to answer questions around your procedures — or consider being proactive and posting signage that helps customers understand the measures you’re taking. 

High touch areas

When it comes to your restaurant front of house cleaning checklist, staff should focus on disinfecting all high-touch areas, including:

• Door knobs, handles and push plates
• Railings
• Light and air control switches
• Faucets
• Non-food countertops
• Guest tables, chairs and benches 
• Restrooms
• Registers
• Counters and bar surface
• Pens
• Check presenters
• Guest pagers

Cleaning and disinfecting should be done as often as possible, not just one or twice a day, but every 30 minutes to an hour. For places where customers sit, this should be done in between guests. 

Keep in mind: there’s a difference between disinfecting and sanitizing. Disinfecting with one of these EPA-approved disinfectants against COVID removes more germs than sanitizing, making it more effective in killing pathogens. But disinfectants are typically not safe around food, so these spaces must be rinsed and dried after the solution has had enough time to properly disinfect, which can take up to a couple of minutes. While sanitizing is easier and faster, it’s just not as effective as disinfecting. 

And don’t neglect your outdoor spaces. Open air and sunshine aren’t quite as conducive to germs, but that doesn’t mean your patio is risk-free. Your staff should adhere to the same cleaning protocols for indoor and outdoor dining.

Low touch areas

Low-touch areas should also be cleaned and well-maintained, but may not require frequent disinfecting. 

• Dust shelves, ceiling fans, artwork, blinds, window sills and baseboards 
• Vacuum and clean upholstered furniture; spot clean or shampoo as necessary
• Sweep and mop hard-surface floors
• Vacuum carpeting, rugs and mats; spot clean stains as quickly as possible
• Clean all air vents and replace filters regularly

Restaurant Cleaning in 2020: Don’t Be Complacent

If the pandemic has taught us anything, it’s that we should double down on our restaurant cleaning procedures for the foreseeable future. 

It may require extra time, energy and attention to detail from your staff — so be sure you’re setting clear expectations and keeping your people aligned. If you haven’t already, look into contactless technology that can digitize processes and workflows, so that there are fewer physical interactions and touch points. 

For more restaurant cleaning resources, check out: 

1. COVID-19 Cleaning and Disinfection for Human-Touch Surfaces by the Food Industry Association
2. COVID-19 Cleaning & Sanitizing Guidelines for Restaurants & Food Service
3. The FDA’s Best Practices for Retail Food Stores, Restaurants, and Food Pick-up/Delivery Services During the COVID-19 Pandemic

In 2020, if you’re not leveraging social media marketing for your restaurant, you’re missing out on an important tool to promote your business and an excellent way to open up communication with your customers. 

While traditional advertising will always have its place, restaurants that use social media marketing have access to a much less expensive and much more direct way to reach audiences. In other words, there’s no reason not to do it.

With that being said, a lot of restaurants aren’t using social media, or they’re not using it to its fullest potential. If you’re in that boat, read on for the what, why and how of leveraging social media marketing for your restaurant or bar. 

Why is social media relevant to restaurants?

According to QSR Magazine, 89 percent of U.S. diners have at least one social media account, 36 percent of them follow restaurants on social media and 39 percent of them use it to help them decide where to eat when dining out.

That means that, here in 2020, having an online presence is much more than maintaining a website. Sure, your site is a great way to enhance your discoverability, but it doesn’t provide much of an opportunity for interaction. 

And therein lies the key benefit of social media: the right platform(s) will allow people to not only discover your brand, but to engage with it — and assuming you make the experience a positive one, that can be an incredibly effective way to draw in new (loyal) customers.

Another great thing about social media is that it costs nothing to get started. Should you choose to put a spend behind your content (which isn’t a bad idea, especially as you’re trying to grow your following), it doesn’t take a big budget to launch an effective paid social campaign. Plus, targeting your key geographies and demographics is easy on platforms like Facebook or Instagram. And unlike print, television, radio and billboards, you can easily measure the effectiveness of your campaigns.

6 steps to creating a social media marketing plan for your restaurant

Before you start creating social media accounts and randomly posting content, you need a restaurant social media marketing plan. Here are 6 steps to creating and executing the right social media marketing strategy for your restaurant or bar.

1. Choose the right platforms 

Trying to decide which social media platforms to use for your restaurant social media marketing can be overwhelming. There are more than 75 different social media platforms, from Tumblr and WhatsApp to LinkedIn, Snapchat and Pinterest. You don’t need to maintain an account on every single one.

When trying to choose the right platform, consider your ideal customer and where they’re likely spending their time.

Here’s a quick rundown of the top three platforms restaurants tend to use. 

Facebook: While Facebook has started skewing toward a slightly older demographic, most restaurants would be wise to maintain a company page for their restaurant, at the very least. Facebook is a great option for restaurants and bars that may not have the time or resources to get a website up and running. On your company page, you can post hours, address, contact information, links to menus, and of course regular content and updates for your followers. 

If you’ve got a budget to work with (even if it’s small), Facebook ads are a great way for restaurants to geo-target their audience. Facebook ads allow you to advertise to people in specific ZIP codes, so you won’t waste your marketing budget advertising to people who likely won’t be visiting your restaurant. You can use other criteria to target your audience, too — like age or income level. If you use Facebook, make sure you take advantage of Facebook Business, which has a whole range of advertising capabilities. 

Instagram: With more than a billion users, Instagram was created to tell stories through beautiful images. And what better way to promote your food, friendly staff, or hip dining space?

While this is subject to change, Instagram currently seems to offer some common ground in terms of demographics: Gen Z, millennials, Gen X and even Baby Boomers are all active on the platform. Here again, if you’ve got a budget, you can run paid Instagram campaigns in tandem with your Facebook ads.

Twitter: Twitter is less image-focused than Facebook and Instagram, but it’s a go-to choice when it comes to real-time interaction between users. Restaurants that leverage Twitter often use it to address questions and complaints, or to keep their audience updated on their latest specials and deals. 

2. Select a social media manager  

You may be thinking, “I don’t have the time nor the staff to manage this!” And you may be right.

That’s why a lot of restaurants designate a point person to manage their social media marketing. Not only does that ensure that it actually gets done; it also will help to maintain brand consistency and alignment.

Depending on your budget and the scale of your campaign, you may choose to have an existing employee or manager run your social media marketing. Or it may make sense to hire an in-house marketer who can handle social media along with other marketing needs. Some restaurants leverage agencies that do this work day-in and day-out — which makes sense if you’re planning to make a sizable spend or if you want to constantly be testing and optimizing your campaigns. Another lower-cost option is to look for a freelancer or even an intern; college-aged people, for example, tend to be pretty tech-savvy and are more likely to be familiar with multiple social platforms. 

When it comes to choosing the online face of your restaurant, you want the person or agency to check a few boxes:

Communication skills: Your social media point person doesn’t have to be a novelist, but they need to have solid writing skills, and they should be able to present content (text and images) in a way that’s engaging and on-brand. Which brings us to our next point…

Familiarity with your business and brand: This is more than knowing your menu, hours, and policies (although that’s important, too). They should also be able to capture the personality of your restaurant. A fine dining establishment isn’t going to be posting the same content as a dive bar.  

Experience with key platforms: The person running your social media marketing should have, at the very least, personal experience with the platforms you’re using. Ideally, they’ll also have experience running a business page or account. 

Emphasis on data: A key advantage of social media marketing for restaurants is the ability to measure effectiveness. You should expect regular reporting on metrics that show growth in followers and engagement over time.

Accountability: Whoever has the keys to your social media platforms needs to be 100% trustworthy. Make sure everyone is clear on what’s acceptable and what’s not when it comes to posting — because as we all know, what happens on the internet stays on the internet. You don’t want to go viral for the wrong reasons!

3. Create guidelines

Social media is an extension of your restaurant, which means that anything you post online will need to meet and maintain your brand guidelines and image. To ensure your point person is able to do this properly, create specific guidelines that codify the tone, voice and visual elements of your brand. It helps to provide consistency in messaging and extends the personality you want your restaurant to portray. For guidance, here are three great resources:

How to Create Social Media Brand Guidelines

Building Your Restaurant’s Social Media Presence

5 Steps to Create a Social Media Style Guide for Your Brand

4. Implement a social media calendar

Set up a social media calendar to keep you consistent in your posting and plan ahead so you can align your social media posts with upcoming specials and events. Hubspot provides 10 different calendar templates and tools to help you create a well-organized social media calendar. 

5. Leverage automation tools

Save time by taking advantage of automation tools like Hootsuite, Buffer, and Sprout Social to schedule your posts ahead of time. But social media automation doesn’t stop there. Use chatbots to automatically reply to customers online when you’re not able to. And utilize social listening tools like Hubspot (Hootsuite and Sprout Social also offer this function) to monitor any online interactions with your social media accounts. 

6. Utilize user-generated content

User-generated content, or USG, includes photos, tweets, and other social media posts created by your followers that highlight things like the quality of service, your food and beverages, or other aspects of your restaurant. 

USG is essentially free advertising for you because your patrons are posting about their positive experiences at your establishment. You can then repost that content from your own account, as long as you credit the original author of the post. It’s a great way to connect with your audience and allow them to hear from their peers about why your place is so special. Here’s a great guide on how you can encourage your followers to create USG that you can use for your benefit. 

Bottom line: Creating a social media plan for your restaurant doesn’t have to be time-consuming or expensive. Once you’ve got a plan in place and your accounts are set up, it’s all about being consistent and authentic with your content — and, of course, letting data be your guide. If you’re not seeing the impact you hoped for, reassess and refine your plan as you go.

As a restaurant owner or operator, you know your employees’ financial security depends heavily on their tips. 

According to the National Employment Law Project, the average hourly earnings from tips account for almost 60% of wait staff earnings, and 54% of bartenders’ earnings. On a monthly basis, this amounts to just under $900 a month, which is typically more than what most of the floor staff receives through their hourly wage. 

But too often, restaurants and other service industry providers aren’t instantly tipping out employees — or they think they’re tipping out their employees instantly, but it’s not quite as instant as it seems.

Here’s what every restaurant owner needs to know about instant employee tip payments: what they are, why they matter, and how to choose the best method for your team. 

What does it mean to instantly tip out employees?

Instantly tipping out employees means just that: you’re giving your wait staff, bartenders, and other restaurant employees real-time access to the tips they earned during their shifts. 

There are three primary ways that employers can pay out tips:

1. Payroll tip payout
2. Cash tip payouts
3. Digital tip payouts 

Of those three options, payroll clearly does not fall into the instant tip payment category. Employees who are tipped out on payroll don’t receive any earnings (gratuities or hourly wages) until they receive their paycheck.

Cash and digital tip payments qualify as instant tip payments in theory. But the reality is that employees often still have to wait for their earnings.

Digital tip payouts

In our book, “instant” means your employees get real-time access to their funds using a digital tipping platform. But not every digital tipping platform is created equal.

If you’re counting paycards as “instant,” — well, that’s not exactly the case. Employees who receive tips on paycards can have a hard time actually getting access to their funds. Paycards aren’t accepted at many ATMs or retail locations, and transferring funds to the bank can take days. (On top of that, paycards often come with predatory fees.) 

Cash tip payouts

Even for restaurants that tip out in cash, it’s often just the closers who get their cash tips at the end of their shift. Everyone else has to make a trip back to the restaurant to pick up their cash (or wait until their next shift).

Another important point: paying out cash tips is never really instant on the employer’s side. That’s because (if you’re not automating your cash flow), your managers are essentially playing the role of a bank teller. From bank runs to counting and recounting cash to distribution — not to mention handling inevitable tip disputes — cash takes a whole lot of time.

Bottom line: there’s only one real way to pay out tips instantly, and that’s by completely automating the tip out process.

Why is it important to use an instant employee tip payment platform?

When restaurants choose to use an instant employee tip payment solution, everyone wins. That’s because:

1. Employees want (and deserve) it: With Covid in play, employees need instant access to their earnings now more than ever. The economy is shaky and jobs aren’t as secure as they once were; many restaurants are continuing to cut back shifts. Employees can’t afford to wait for payroll to roll around, or for their paycard funds to transfer to their bank.
2. It saves time: Again, while cash can be instant for employees, it’s never instant for employers. With credit card transactions on the rise, there’s less cash on hand to tip out, so managers are making more bank runs than they already were — and that takes even longer in a pandemic, when many bank branches are closed or open by appointment only. Then there’s the counting, distribution and inevitable tip disputes that eat up hours every week.
3. You’ll cut costs: Saving time means increasing efficiency and reducing labor costs. When employees aren’t waiting around on the clock for their earnings, shift after shift — that adds up. Plus, managers get time back in their week when they’re not running to the bank on a daily basis.
4. You’ll stay competitive: In our gig economy, employees are apt to look elsewhere for employment if they’re not getting paid in real time. 
5. There’s complete transparency: When employees wait days or weeks for earnings, it minimizes visibility and sets the stage for tip disputes.

What are the options for instant tip payments?

To recap: payroll isn’t instant (no surprise there), and paycards can appear to be instant — but they’re not.

That leaves you with two options for instantly tipping out your employees:  

• Cash: It may seem like there’s nothing quite as real-time as handing someone an envelope of cash. But for employers, cash isn’t instant — especially during a pandemic. (And as we’ve discussed previously, there are a whole lot of time and financial costs associated with using cash.) 

• Kickfin: Kickfin is the only way to truly pay out tips in a way that’s instant for both employees and employers. Tips are automatically transferred directly into employees’ bank accounts, the second the shift ends, 24/7/365.

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In 2019, four major restaurant chains—Krystal, Moe’s, McAlister’s Deli, and Schlotzky’s—were hacked. Four million of their customers’ credit and debit card information was being bought and sold in an underground cybercrime marketplace, according to an article published by KrebsOnSecurity.  

It’s no wonder The Ascent claims that last year was the worst year in history for identity theft reports, marking an increase for the second year in a row. Data breaches play a huge role in this alarming trend. 

As a restaurant owner, you’re probably familiar with restaurant PCI compliance — and if you find it confusing, you’re not alone. But it’s important that you understand the basics for the sake of your restaurant’s security and your customer’s safety — especially with the increase in digital transactions due to the pandemic. 

What is PCI compliance?

Back in 2004, payment fraud was on the rise. To combat this growing problem, credit card industry leaders such as Mastercard, Discover, American Express, and Visa, along with the Japan Credit Bureau, brainstormed ways to help protect their cardholders against identity fraud. They introduced PCI DSS 1.0 in December of that year, which required all merchants that accept credit cards to comply with this new set of standards. 

Otherwise known as Payment Card Industry Data Security Standards Compliance, or PCI Compliance, these standards have been updated over the years to conform to industry trends and emerging technology. PCI compliance protects all businesses that process credit card information and the customers that patronize them from data breaches and identity theft. 

Why does PCI compliance matter for restaurants and bars?

You’re well aware that providing amazing food, an exceptional guest experience, great ambiance, and top-notch service is part of why customers keep coming back to your establishment. But if customers don’t feel safe using their debit or credit cards due to potential theft, then that tarnishes your hard-won reputation as a trusted and reliable restaurant of choice. 

As a restaurant owner, you’re responsible for your customers’ debit and credit card information the moment it’s swiped into your system. PCI compliance ensures that this info is protected at all times. If your restaurant is not in compliance, it could result in high fees from banks, credit card companies, and other merchants. On average, a data breach can cost a business an estimated $3.92 million, according to IBM, which would hurt a large-chain restaurant significantly and force closure, undoubtedly, for owners of smaller chains or neighborhood restaurants and bars. The best thing you can do is to closely follow all restaurant PCI compliance guidelines. 

PCI compliance requirements

There are 12 PCI compliance requirements you need to implement to ensure your restaurant is protected from credit and debit card theft. To stay compliant you should: 

1. Install and maintain a firewall configuration to protect cardholder data
2. Protect stored cardholder data
3. Do not use vendor-supplied defaults for system passwords and other security parameters
4. Encrypt transmission of cardholder data across open, public networks
5. Use and regularly update anti-virus software on all systems commonly affected by malware
6. Develop and maintain secure systems and applications
7. Restrict access to cardholder data by business need-to-know
8. Assign a unique ID to each person with computer access
9. Restrict physical access to cardholder data
10. Track and monitor all access to network resources and cardholder data
11. Conduct vulnerability scans and penetrations tests
12. Maintain a policy that addresses information security

Making your restaurant PCI compliant

The 12 steps above may seem daunting. To help with this process, reach out to your credit card processors, as they most likely have tools to help you become compliant. But be aware that while credit card processors claim their hardware and software tools are PCI compliant, this doesn’t mean your restaurant will be in the clear. It’s your responsibility to make sure you are maintaining a fully-compliant environment as well as using a compliant processor. 

In the case your credit card processor doesn’t provide the tools you need to become PCI compliant, Level 4 merchants, which is what you most likely fall under, can establish compliance through a self-assessment questionnaire (SAQ). There are a number of different SAQs you can use, so use this guide to help you find the right one for your restaurant. 

After you’ve found the correct SAQ version to use, complete it and then do these steps to establish restaurant PCI compliance: 

1. Complete a vulnerability scan with a PCI Approved Scanning Vendor (ASV), which is an organization with a set of security services and tools to conduct vulnerability scans that validate PCI compliance. Here is a list of approved ASVs. 
2. Submit your SAQ to the bank you use for your restaurant. 

From there, you’ll simply wait to hear back if you’ve been certified PCI compliant, which can take a few weeks. 

Keeping your restaurant PCI compliant is essential to the security of your paying customers and for the reputation of your establishment. If you’re not compliant, or you’re unsure if you’re meeting all of the criteria, do it as soon as you can. The livelihood of your business could depend on it.