How To Write a Restaurant Employee Handbook

A restaurant employee handbook is a document that outlines a restaurant’s policies, procedures, and expectations for your team. It’s an essential guide for owners, managers, and employees that clearly communicates information necessary for a restaurant to operate safely and efficiently. 

In this article, we’ll review the steps required to create a practical and effective employee handbook for a safe, profitable restaurant.

What Is a Restaurant Employee Handbook?

A restaurant employee handbook is a comprehensive document that outlines the policies, procedures, and expectations for employees and managers in a restaurant business. It serves as a valuable resource for both new and seasoned staff members, offering a clear description of their roles, responsibilities, and the standards they’re expected to meet.

The purpose of an employee handbook is to establish clear safety practices and sound procedures for operating various aspects of a restaurant business. It is the go-to guide for the restaurant’s mission, values, and culture. Items covered in a handbook typically include dress code policies, guidelines for customer service, health and safety procedures, tips and gratuity policies, and procedures for reporting grievances or issues in the workplace. 

Why Restaurants Need an Employee Handbook

Like any other business, restaurants use employee handbooks as a critical tool for managing employees and communicating expectations. A well-written handbook is an ideal way to articulate the company’s objectives, culture, and values. Furthermore, it provides clear guidelines on how to conduct oneself in various situations, minimizing misunderstandings and helping to ensure all of a restaurant’s employees and managers are on the same page and working towards common goals.

Additionally, an employee handbook serves as a reference for legal issues and disputes such as fair treatment, equal opportunity employment, and harassment policies. This protects the employer and the employees by outlining their rights and responsibilities. Such a guide helps ensure smooth operation, improves employee morale, boosts productivity, and contributes to the restaurant’s overall success.

Sections to Include in a Restaurant Employee Handbook

A restaurant employee handbook is an essential communication tool for restaurant owners and employees. A well-written and comprehensive employee handbook can be an effective tool for onboarding and maintaining a satisfied and informed staff. These are some of the main sections to include in a restaurant employee handbook:

Welcome and Restaurant History

Most employee handbooks start with an introduction to the business and an overview of the restaurant’s journey. These items serve as a welcome to new team members and convey appreciation for joining the restaurant’s team. This section should also review the restaurant’s history, including significant milestones and the vision for the business. It should discuss the restaurant’s culture and values, touching upon its mission and the standards it wants to meet.

Policies and Procedures

Next, a restaurant employee handbook should set forth various policies and procedures that employees must follow. These include punctuality, attendance, dress code, and behavioral expectations. The handbook should also describe how to call in sick, request time off, and follow scheduled break times. Customer service standards, food safety, and cleanliness policies should be clearly defined. This section should also include the restaurant’s policy on tip sharing, handling cash, and what constitutes acceptable and unacceptable behavior in the workplace.

Remember, the aim here is to foster a culture that embodies the restaurant’s values and promotes a safe, respectful, and professional environment. Providing clear guidelines helps to eliminate ambiguity and sets clear expectations for all employees, including managers.

Employee Dress Code

The dress code section is a crucial part of the restaurant employee handbook as it details the appearance standards employees are expected to maintain. This section should clearly outline the restaurant’s specific dress code, whether it requires uniforms, guidelines on acceptable casual wear (if allowed), or formal attire. It should also provide information about required accessories, such as name tags, aprons, or specific footwear.

This section may additionally cover policies concerning personal hygiene, tattoos, piercings, and other aspects of personal presentation that could impact an employee’s professional appearance.

A well-dressed, neat employee makes a positive impression, reflecting the restaurant’s commitment to professionalism and high standards. Furthermore, roles involving food handling, hygiene, and cleanliness are not just about making a good impression—they’re vital for maintaining food safety standards. 

Employee Conduct

The employee conduct section should clearly outline the codes and ethics governing each employee’s actions. This section might include guidelines about maintaining a positive and respectful attitude towards coworkers, supervisors, and customers and rules against workplace harassment, discrimination, or any other form of misconduct. It can also cover honesty, integrity, confidentiality, and adherence to the restaurant’s policies and procedures. This section can address the fact that alcohol and drug use are not tolerated in the workplace due to their potential to impair employee performance and jeopardize safety.

The employee conduct section lets you set your restaurant’s behavioral standards and cultural tone. It’s essential to laying the foundation for a respectful and harmonious workplace environment. Outlining the consequences of not adhering to these guidelines also provides a measure of disciplinary control, ensuring each employee is aware of the potential ramifications of failing to meet the standard you set.

Compensation and Benefits

The compensation and benefits section of the restaurant employee handbook should detail the remuneration employees can expect and the benefits provided. This section should clearly explain the pay structure, including the frequency and method of payment, such as whether it’s hourly or salaried and whether payments are made weekly, bi-weekly, or monthly. The handbook should also include information about overtime pay, holiday pay, or other special pay rates (if applicable). The restaurant’s policy on tips—whether they are shared, pooled, or given directly to individual servers—should also be clearly laid out.

Additionally, this section should outline the benefits offered by the restaurant, such as healthcare plans, retirement options, meal discounts, paid time off, and any other employment perks. Also, clearly explain the eligibility criteria and processes necessary to obtain these benefits. 

Health and Safety Guidelines

The health and safety guidelines are some of the most essential items in a restaurant employee handbook as they ensure the well-being of the staff and patrons. This section should emphasize the restaurant’s commitment to providing a safe and healthy work environment. It should detail measures to prevent accidents, such as keeping walkways and workspaces clear of hazards and correctly storing and using equipment. It should also include guidelines for the following:

  • Food safety: Describe applicable food safety regulations to prevent foodborne illnesses, like correct food handling, storage, and preparation, personal hygiene standards, and procedures for cleaning and sanitizing equipment and surfaces.
  • Handling of alcohol: If the restaurant serves alcohol, include guidelines on responsible service, including checking identification and refusing service to intoxicated patrons. 
  • Emergencies: Dedicate a portion of this section to emergency procedures, including what to do in case of fire, injuries, or other urgent situations. Include clear instructions on how to use fire extinguishers, the location of first-aid kits, and the protocol for reporting accidents or injuries. This section should also outline the restaurant’s policy on handling health-related issues, such as what to do if an employee is sick or suspects they have contracted a contagious disease.

Equal Opportunity and Anti-Discrimination Policies

This section should outline the restaurant’s commitment to providing equal employment opportunities regardless of race, color, religion, gender, sexual orientation, age, marital status, national origin, or disability. It should clearly state that discrimination is unacceptable and will result in disciplinary action. It should also provide information on how to report incidents of discrimination or harassment and the steps taken by the restaurant to address such issues. This section should align with federal and state employment laws and promote a workplace culture of diversity, inclusion, and fairness.

Communication Policy

An employee handbook should also include a section outlining times and methods of communication between employees, supervisors, and management. It should outline the procedures for addressing grievances or concerns without fear of retaliation. It should promote transparency, trust, and a healthy work environment where management can address problems promptly and effectively.

Tips for Writing a Restaurant Employee Handbook

Creating a restaurant employee handbook is essential to establishing a well-structured and smoothly operating restaurant business. Here are some tips to ensure your restaurant employee handbook is practical and user-friendly:

  • Make it comprehensive but concise. A good handbook covers all necessary topics but avoids unnecessary complexity. Use clear and concise language to ensure the information is easy to understand and digest.
  • Use a positive tone. Even though the handbook contains rules and regulations, strive for a positive tone. Doing so will help your employees feel welcome and valued rather than overburdened by numerous rules and policies.
  • Comply with legal requirements. Ensure your handbook complies with all local, state, and federal laws. Consult an attorney if you’re unsure about any particular items or sections.
  • Include visuals when possible. Photos, diagrams, and infographics can make your handbook more engaging and easier to understand, especially when addressing things like safety procedures or the proper handling of equipment.
  • Regularly update the handbook. Laws and restaurant policies can change, so update your handbook regularly.
  • Encourage feedback from employees. Let your employees know that their feedback on the handbook is welcome. This can help you identify any areas that may need clarification or improvement.

Your restaurant employee handbook is vital in communicating with your staff. A good handbook can foster a positive work environment where everyone understands their roles, rights, and responsibilities, making it easier to train employees and reducing unnecessary turnover among your staff.

The Ultimate Guide to Franchise Restaurants

Franchise restaurants are establishments licensed to operate under a brand name using specific products and business models. We’ll provide insight into what these restaurants are, the benefits and drawbacks of running a franchise, and how to launch and operate your franchised restaurant successfully.

What Is a Franchise Restaurant?

A franchise restaurant is a dining establishment that operates under a franchise agreement, entitling the owners to use a brand name they don’t own. The franchisee, or owner of the individual location, pays for the rights to use the franchise’s brand name, logo, business model, and products.

A franchise business structure allows individual franchise restaurants to benefit from the larger brand’s established reputation, best practices, and customer base. While they have to adhere to guidelines set by the franchisor regarding food quality, service standards, and restaurant decor, franchisees also get support in areas like marketing and supply chain management.

Pros and Cons of Investing in a Franchise Restaurant

As with any restaurant, franchises have advantages and disadvantages. Understanding the pros and cons of investing in a franchise can give you a better idea of what to expect from franchising and whether the franchise business model may be right for you. 


  • Proven business model: Franchise restaurants operate on an established business model. This considerably reduces the risk of failure compared to starting a restaurant from scratch. As a franchisee, you can leverage the franchisor’s experience and expertise, learning from their best practices.
  • Brand recognition: Buying a franchise means investing in a known and trusted brand. This instant brand recognition can attract customers right from the start, giving you a head-start on marketing that can be expensive and time-consuming.
  • Ongoing support: Most franchisors provide continuous support to their franchisees. This can range from initial training, site selection, and construction support to long-term operational and marketing assistance. This support can be invaluable, especially for first-time operators.
  • Greater purchasing power: Being part of a franchise network often means benefiting from the franchisor’s purchasing power. Franchises often negotiate lower inventory, equipment, and supplies prices, saving individual franchisees money.
  • Easier access to financing: Financial institutions are often more willing to lend to franchisees due to the lower risk associated with the business model. This can be a significant advantage when covering the considerable costs of building out and equipping a restaurant.


  • High initial investment: Franchise restaurants often require a substantial upfront investment. This can include the franchise fee, construction costs, equipment, and inventory purchases. These costs can be considerable and may take two years or more to recoup.
  • Ongoing fees: As a franchisee, you must often pay the franchisor ongoing royalties and other fees. This is usually a percentage of your gross sales, regardless of your profitability. 
  • Limited creativity and flexibility: While a proven business model is a plus, you have less freedom to make decisions. The franchisor sets the menu, decor, uniform, and operating procedures. This lack of control may not suit entrepreneurs who prefer flexibility in running their businesses.
  • Dependence on the franchisor’s reputation: Your success as a franchisee is closely tied to the brand’s overall reputation. Any negative press or scandal involving the franchisor can harm your business, even if your specific restaurant is performing well.
  • Potential profit sharing: Some franchisors require franchisees to share a portion of their profits. You’ll need to review the franchise agreement to understand all the obligations carefully.
  • Rigorous standards and rules: Franchisors often have strict rules and standards to ensure uniformity across all locations. Compliance with these standards can be challenging, and failure to meet them could lead to penalties or even termination of your franchise agreement.
  • Termination risk: Franchise agreements typically have termination clauses. If a franchisee doesn’t meet certain performance standards or violates the agreement, the franchisor has the right to terminate the contract. 

How Much Does It Cost to Buy a Franchise Restaurant?

The cost of buying a franchise restaurant varies greatly depending on the specific brand you choose to affiliate with, the location of your restaurant, and the buildout required. Generally speaking, you’ll be required to pay a franchise fee of at least $10,000 to $25,000, the cost to acquire and renovate a property, staff costs, marketing fees, and ongoing expenses like royalties. 

Here’s some detail on what you can expect to pay when opening a franchise:

Franchise Fees

A franchise fee is the initial cost a franchisee must pay to gain the rights to operate a franchise. These fees typically cover the franchisor’s administrative expenses, training, site assistance, and the right to use the franchisor’s trademarked brand, including their name, logo, and other materials. 

Franchise fees can vary significantly based on the brand’s recognition, success, and the resources provided by the franchisor, but generally range from $10,000 to $50,000. However, some high-profile restaurant franchises can command fees of $100,000 or more. 

Real Estate Costs

Real estate costs are the expenses associated with securing a physical location for your franchise to operate. These costs vary greatly depending on the size, location, and whether you buy or lease the property. Also included are costs associated with renovating the space to meet the franchisor’s specifications, which include interior design, signage, and equipment installation. 

If you are leasing, monthly rental rates could range from a few thousand dollars to tens of thousands. If you are purchasing a property, you can expect to pay several hundred thousand dollars to a few million. However, if you buy and later close or move your franchise, you can often recoup a large portion of your real estate costs by selling the property.

Marketing Fees

Marketing fees charged by some franchisors contribute to the brand’s regional and national advertising efforts. These fees are sometimes a percentage of your gross sales – often between 1% and 4% – and are used to promote the brand through various marketing activities such as social media advertising, TV commercials, print ads, and promotional campaigns. 

While you benefit from the franchisor’s marketing efforts, you may still need to budget for local marketing to raise awareness of your specific location.


Royalties are ongoing payments that franchisees make to franchisors in return for the continuous use of the franchisor’s brand name and business model. The royalty fees also often cover the franchisor’s support services, such as training, operational support, and updates to the business model.

Royalty fees are typically calculated as a percentage of the gross sales of the franchise restaurant and often range from 4% to 8%. Some franchisors may also have a minimum monthly royalty fee, which franchisees must pay regardless of their sales volume.

How To Open a Franchise Restaurant

Opening a franchise restaurant typically requires following a well-formed process established by a franchisor. While the process is exciting, it’s often much more complex than opening a standalone restaurant. 

Here’s an outline of the process for establishing a new franchise restaurant:

  • Thoroughly research franchise opportunities. Start with extensive research into available franchise opportunities, industry trends, and market demand in your planned location. Analyze the success rate, brand reputation, and support system each franchisor offers before making a decision.
  • Hire a consultant with experience opening franchise concepts. If you’re new to franchises, consider engaging a professional consultant with experience opening franchise restaurants. These consultants can provide valuable advice, prevent costly mistakes, and help streamline the process. For example, consider consultants like Monte Silva, who have a proven track record in this field.
  • Understand the financial commitment. Familiarize yourself with all the costs of opening and operating a franchise restaurant. This includes franchise fees, real estate costs, marketing fees, and royalties. Review the specific costs of individual franchisors and prepare a business plan to manage these expenses.
  • Arrange your finances. Ensure you have adequate funds to cover the initial investment and running costs until the restaurant becomes profitable. This typically involves arranging debt financing as saving or raising equity funds to cover part of your upfront costs.
  • Meet compliance requirements. Consult an attorney to understand the legal requirements, franchise agreements, and other regulations related to owning a franchise restaurant in your desired location.
  • Choose a location. Decide on a location that ensures high traffic and easy accessibility for your target audience. It should also be in line with the brand image of the franchisor.
  • Recruit and train staff to follow brand standards. A well-trained team can enhance customer experience and ensure smooth operations. Make adequate provisions for their training as per the guidelines of the franchisor.
  • Make the most of marketing and promotion. Use online and offline marketing strategies to create brand awareness and attract customers. This could involve social media advertising, local radio spots, hosting a grand opening event, and other steps recommended by the franchisor.

Owning a franchise restaurant is a significant commitment. It requires a strong dedication to a brand and its operational standards, as well as a relentless focus on customer satisfaction. However, if you follow the process carefully, partner with a strong franchisor, and manage your location effectively, it can be a rewarding and satisfying experience.

Hot Tips & Takes w/ Jaimeen Dalia: How Can Emerging Restaurant Franchises Succeed

Meet Jaimeen. 

He’s grown up in a family of franchisees, and now he’s using his inside knowledge of the industry to connect franchisees with their peers and with technology. As the founder of FranTable, Jaimeen Dalia brings a wealth of knowledge across franchises of varying sizes and industries. We sat down to talk to him about the advantages of purchasing a franchise and how emerging restaurant franchises can stake their claim in the current landscape. 

What is an emerging restaurant franchise?

The definition of an emerging restaurant franchise can vary depending on who you ask within the franchising industry. 

A commonly accepted definition is that any brand with fewer than 100 units is considered an emerging franchise, while enterprise brands are characterized by having over 500 units. Emerging franchises often have a larger pool of available territories, which can be an appealing prospect for potential franchisees. 

What are the pros of purchasing a franchise over opening your own independent restaurant?

There are several significant advantages to opting for a franchise as opposed to launching an independent restaurant. Firstly, franchisees benefit from the established brand equity of well-known franchises, which can be a game-changer for new businesses. Imagine a scenario where a new resident is deciding between a local eatery and a nationally recognized franchise; the trust associated with the familiar brand often sways the decision in its favor.

Another key advantage is the potential for more favorable rates with vendors.  Franchise brands tend to have more bargaining power with their vendors, given the large volume of supplies they purchase, from food ingredients to everyday items like paper towels. This leverage allows local franchise owners to access better deals on essential supplies, which can be challenging for small business owners operating independently.

Lastly, franchise ownership offers accelerated learning curves when it comes to business development. Independent entrepreneurs typically spend months, if not years, fine-tuning fundamental aspects of their business, such as understanding customer preferences, pricing strategies, and marketing tactics. By partnering with a reputable franchise brand, franchisees can tap into the wealth of knowledge and experience of the franchise brand. 

What challenges do emerging franchises face that are different from independent restaurants and enterprise brands?

I think the number one challenge for emerging franchises is their limited capacity to provide robust support to their franchisees. Unlike well-established enterprise brands with ample resources and a large workforce dedicated to operations, marketing, and sales, emerging franchises typically operate on tighter budgets and have fewer full-time people on staff. This can sometimes impact their ability to provide the necessary assistance and guidance to their franchisees.

Number two; emerging franchise brands often face a significant challenge when it comes to raising capital to support their franchisees. While established franchises have a track record of success and access to more traditional financing options, newer brands tend to lack the same level of credibility and may struggle to attract investment. This can affect their ability to expand, provide ongoing support to their franchisees, and develop effective marketing and operational strategies. To overcome this challenge, emerging franchise brands need to be innovative in how they pursue fundraising, explore alternative financing options, and demonstrate a clear and compelling vision for their business to attract potential investors and lenders.

The third challenge would be the tough competition they encounter from larger, more established brands. They can struggle to distinguish themselves in a market where a number of well-known names already dominate the consumer landscape. Something I’ve noticed often is how even small coffee franchises with just a handful of locations often tend to be compared to mid-tier and enterprise-level coffee giants. Emerging franchises need to get creative with their marketing and product innovation so they can carve out their niche.

What advantages do emerging franchises have over enterprise brands?

Emerging franchises can have some unique advantages over their enterprise counterparts. One notable advantage is their agility and speed in decision-making and support. As a franchisee within an emerging brand, individuals often enjoy direct access to the brand’s executive team, sometimes even the founders. This level of direct engagement allows emerging franchises to be more hands-on and responsive. This close collaboration with founders and experienced executive teams can be particularly beneficial for less experienced franchisees. Generally, such personalized support is not as readily available within the larger enterprise brands.

Emerging franchises are also typically more flexible in adapting to local market conditions and changing customer preferences. They can often customize their products, services, and marketing strategies quickly to better cater to the unique needs of their specific locations. This nimbleness and ability to pivot quickly helps form stronger connections with the local community and drive higher customer satisfaction.

In many cases, emerging franchise brands may also require a lower initial investment from franchisees compared to larger enterprise brands. This lower financial barrier to entry can make it more accessible for aspiring entrepreneurs and individuals with limited capital to become franchisees. 

What are the signs that an emerging franchise is succeeding? 

This can be tricky to answer. I think there’s a few factors involved. Firstly, the satisfaction of franchisees plays a pivotal role. Are the current franchisees happy? Are they getting along with the brand? Is their experience in line with the expectations they had before buying the franchise? 

Secondly, you can look at some of the quantitative indicators. That involves evaluating the financial performance of the brand. Are the franchisees profitable? Are they growing year over year? 

Lastly, the growth trajectory of the franchisees can also be a good way to assess how well the brand is doing. So you can look at whether there’s year-over-year expansion through increased same-store sales or the addition of new systemwide locations. I also like to see if the current franchises are adding more units. When existing franchisees show confidence in the system by investing in and opening additional territories, this can demonstrate the brand’s potential to establish itself as a category leader within the industry.

How important is it for franchisees to connect with their peers? 

I think establishing strong connections with fellow franchisees is very important for franchise owners, particularly with those who may be in similar business situations as them. In my view, this is one of the biggest advantages of being part of a franchise system. It provides a network of non-competitive peers who are willing to share their operating experience with you. 

Unlike independent business owners, who often lack a supportive community, franchisees can readily seek guidance from others who have likely encountered and addressed similar issues. 

FranTable plays a vital role in facilitating these interactions, enabling franchise owners from various brands and industries to engage in knowledge-sharing and ensure they are making informed decisions.

>> To learn more about Jaimeen Dalia and the ins and outs of operating a restaurant franchise, check out FranTable.

Restaurant Profit Margin

A restaurant’s profit margin is its profits as a percentage of gross sales. Healthy profit margins are critical to the success of any food service business and can be influenced by several factors. In this article, we’ll explain what profit margins are, what margins are common in the restaurant industry, factors that impact your bottom line, and how you can improve them.

What Is Restaurant Profit Margin?

Restaurant profit margin is a measure of a restaurant’s profitability. In essence, it’s the percentage of sales revenue that the restaurant retains as profit after accounting for all operating costs, including the cost of goods sold (ingredients), employee wages, rent, utilities, and marketing expenses. The equation for restaurant profit margin is below, with the resulting figure usually expressed as a percentage.

(Total Sales – Total Costs) / Total Sales

A higher profit margin indicates a restaurant pays less in expenses relative to its sales, as compared to its competitors. It’s important to note, however, that average profit margins can vary widely depending on the type of restaurant and location. For instance, a high-end restaurant in a prime urban location may have different profit margins than a fast-food outlet in a suburban area.

What Is Gross Profit?

Gross profit is the total sales revenue a restaurant generates minus its cost of goods sold (COGS). The COGS for a restaurant typically encompasses the direct costs associated with food and beverage production, including ingredients and labor involved in preparing dishes. This figure can be divided by a restaurant’s total sales and expressed as a percentage to show the gross profit margin.

However, gross profit and gross profit margin don’t account for other operational expenses like rent, utilities, marketing, or administrative costs. Although they’re less comprehensive than a restaurant’s total profit margin, gross profit margin provides good initial insight into operational efficiency before other expenses are considered.

How To Calculate Gross Profit

To calculate the gross profit of a restaurant, you first need to calculate your total sales revenue. Next, subtract the total costs of goods sold (i.e., ingredients and direct labor). The resulting figure is your gross profit.

For example, suppose a restaurant generates $10,000 in total sales in a month. Suppose the COGS for that month, which includes the cost of ingredients and direct labor, is $4,000. In that case, the restaurant’s gross profit can be calculated as follows:

Gross Profit = Total Sales – COGS

Gross Profit = $10,000 – $4,000

Gross Profit = $6,000

The gross profit for the restaurant in this example would be $6,000 for that month. This signifies the amount of money the restaurant has after accounting for the cost of producing the food and beverages sold before considering other operational expenses like rent, utilities, and marketing.

Taking the calculation further, we can calculate the restaurant’s gross profit margin by dividing its gross profit by its total sales ($6,000 / $10,000). In this example, the restaurant would have a gross profit margin of 60% for the month.

What Is Net Profit?

Net profit (also called the “bottom line”) is the final measure of a restaurant’s profitability after all expenses, both direct and indirect, are accounted for. This includes the cost of goods sold, along with operational expenses like rent, utilities, marketing, management salaries, and administrative costs.

How To Calculate Net Profit

Calculating net profit is relatively straightforward – simply subtract all of a restaurant’s expenses for a given period from its total sales revenue for the same period. The resulting figure represents the restaurant’s overall earnings for a specific time, after it covers all its costs. If the figure is positive, the restaurant made money for that period; if it’s negative, it spent more money than it made.

For example, let’s consider our restaurant from the above example. Let’s say that, in addition to its $4,000 in COGS for the month, it also incurred $2,000 in operational expenses, including rent, utilities, marketing, and salaries. The net profit can be calculated as follows:

Net Profit = Gross Profit – Total Expenses

Net Profit = $6,000 – $2,000

Net Profit = $4,000

In this scenario, the restaurant’s net profit for the month is $4,000. This is the amount of money the restaurant retains as income after all costs and expenses are covered. 

How To Calculate Net Profit Margin

To calculate net profit margin, divide net profit (total sales – total expenses) by total sales revenue. The resulting figure is typically expressed as a percentage (you can multiply it by 100 to get the percentage figure). It represents the percentage of sales a restaurant retained over a period rather than paying it out in the form of costs. The formula for the net profit margin is below. 

Net Profit / Total Sales

In our previous example, the restaurant’s net profit for the month was $4,000, and the total sales revenue was $10,000. The net profit margin can be calculated as follows:

Net Profit Margin = (Net Profit / Total Sales) x 100

Net Profit Margin = ($4,000 / $10,000) x 100

Net Profit Margin = 0.4 x 100, or 40%

The net profit margin for the restaurant in this example is 40%. This figure indicates that the restaurant retains 40% of its total sales as profit after accounting for all costs and expenses. The higher a restaurant’s net profit margin, the more profitable it is relative to its sales.

What Is the Average Restaurant Profit Margin?

The average profit margin for a restaurant can vary significantly depending on factors such as location, type of restaurant, and efficiency. Generally, the average profit margin for restaurants hovers between 3% to 10%. However, some highly efficient and successful restaurant models and those focusing on bar sales can achieve profit margins as high as 10% to 15%. 

Why Are Restaurant Profit Margins So Low?

Restaurant profit margins tend to be low relative to some other types of businesses due to several factors. Firstly, the food industry is characterized by high operational and overhead costs. Secondly, restaurants also face the challenge of pricing their menu items competitively while still making a profit.

This is further compounded by the fact that food and beverage costs are often subject to market fluctuations, making profit predictions difficult. Additionally, wastage of perishable goods, seasonal variations in sales, and the high level of competition in the industry also contribute to the slim profit margins. 

Finally, the restaurant industry faces much higher employee turnover than businesses in other industries. The costs associated with attracting, vetting, and training employees can be significant and reduce a restaurant’s profits if owners and managers can’t retain talented employees.

Average Profit Margins By Restaurant Type

Restaurant profit margins vary widely, largely due to the type of restaurant. Here are a few examples of typical profit margins for successful restaurants in several categories:

  • Full-service restaurant: The average profit margin of a full-service restaurant typically ranges between 3% to 10%. However, this can vary based on location, menu, quality of staff, and the overall dining experience.
  • Cafe: The average profit margin for a café typically falls between 3% and 8%.
  • Fast food restaurant: Fast-food restaurants average around 6% profit, but this can vary depending on whether the industry is a franchise and the type of food offered.
  • Food truck: Profit margins for food trucks can range from 10% to 20%, but this also depends on the type of cuisine offered, location, and overall operational costs.
  • Catering: Catering businesses can have higher profit margins, typically between 10% and 20%, due to their focus on events and parties rather than daily operations. They also often have reduced overhead, as they don’t need to maintain a restaurant facility capable of seating regular guests.

How To Improve Restaurant Profit Margins

In a competitive and dynamic industry such as food services, improving restaurant profit margins is a critical, ongoing task. Understanding where and how to increase revenue and cut costs can make the difference between a thriving establishment and a failing one. Here are some effective strategies to enhance your restaurant’s profit margins:

  • Manage your inventory. An optimal inventory management system minimizes waste and reduces unnecessary expenses. Regular inventory counts also help to identify any theft or other issues impacting stock levels.
  • Price menu items carefully. Make sure you understand the cost of each menu item and price it appropriately to achieve your desired profit margin for that item. 
  • Train employees on upselling and cross-selling. Staff training should include strategies for upselling and cross-selling, which can increase average transaction value. This could be as simple as suggesting additional items or promoting higher-priced dishes to customers.
  • Regularly review profit and loss statements. Regularly reviewing income statements helps restauranteurs identify trends, monitor the effectiveness of cost control strategies, and spot potential areas of improvement.
  • Reduce operational costs. Review your operations regularly to identify areas where you can reduce costs without compromising service quality. This could involve renegotiating supplier contracts, investing in energy-efficient equipment, or improving scheduling to match staff levels with demand.
  • Work on customer retention. It’s almost always cheaper to retain existing customers than to acquire new ones. Loyalty programs, exceptional customer service, and regular engagement with customers through social media and email marketing are all effective ways to increase customer retention and profits.
  • Handle payments electronically. Handling payments electronically is an effective strategy for improving restaurant profit margins for several reasons. Electronic payments streamline operations, reducing the time and labor associated with manual cash handling, and are more accurate, reducing errors in cash transactions that can lead to losses.

While many payments can be handled electronically through restaurant point of sale (POS) systems and banking apps, one notable exception is distributing employee tips. Kickfin can be instrumental in facilitating electronic payments from restaurants to their tipped employees. 

Kickfin provides instant, electronic tip payments, eliminating the need for cash on hand. This reduces the risk of theft or loss, saving restaurants from unnecessary financial drain. Schedule a demo with one of our experts to learn more about how Kickfin can help increase your operational efficiency and boost your profits.

Hot Tips & Takes w/ Greg Nasser: How to Avoid Becoming a Statistic

Meet Greg. 

As a veteran of the service industry, Greg Nasser has been a bartender, cooked, and eventually opened restaurants of his own. Over his long career in the industry, he noticed a common trend: restaurants often fail prematurely. And more often than not, failing restaurants seem to operate on intuition and impulse, rather than looking to the data.

That’s why he created Borne. At Borne, they’re focused on restaurant intelligence powered by AI and machine learning, with the goal of preventing premature restaurant closures. With data-backed insights, Borne provides restaurateurs with the tools and information they need to make the right business decisions and stay afloat.

What are the main reasons you see restaurants fail?

There are a lot of reasons that restaurants fail, but those reasons usually fall into one of two major buckets: wrong concept or wrong location. 

From the wrong concept side, a boring or forgettable concept in an already saturated market doesn’t make sense. There may be value perception issues — like a higher check average when there are 10 other burger restaurants that are all half the price. You need to understand what people want and need in a neighborhood, which is where tech can come in. AI allows you to pinpoint what people are searching for and offer them a concept that they want.

The other bucket is wrong location. In this category, a lot of restaurants fail because of a bad lease deal. Owners often find themselves signing an unfavorable lease based on unrealistic projections. People often overestimate the consumer value sentiment for their brand based on incorrect information or human intuition that isn’t complemented with data. That leads to failure because people don’t see value in your concept in the area. 

How are restaurants faring in 2023?

Restaurant closures overall are down in 2023 from 2022. But, first off, restaurant closures are not predictive of economic trends — they’re kind of a reaction to them. 

It’s a complicated question, because different service styles (counter service, drive-thru, full service) all have different metrics. You also have to consider differences between rural, urban, suburban, and destination restaurants. 

In the QSR sector, I know that they’re doing 30% better than they were prior to 2019. But in some urban sectors, restaurants in downtown corridors still haven’t recovered as well, especially in cities like San Francisco. 

Still, restaurants are definitely going in the right direction, and people are continuing to go out to restaurants and spend money and enjoy themselves. 

What are some of the blind spots for restaurant operators that can impact their success? 

If we’re talking about in-house operation, your biggest challenge is your prime costs. If you have a relatively fixed prime cost, you kind of know what your cost of goods will be. You can get into the theoretical costs of goods sold to control your cost there.

The one statistic that’s always evolving and changing is labor. With minimum wage increases, insurance increases, legality by city, by state forecasting and understanding how labor can impact your brand over a five-year window is really important. Labor is something that I think a lot of us take for granted. 

We also see owners having an idea and hoping to open a restaurant because they’re passionate about it. But does the data back up your idea? Where is the right place to open it? You have to plant seeds early on so that your restaurant can flourish. In the past, you would spend six months on R&D, standing outside of a location to see how many people are going to nearby restaurants and engineering the menu. That old-school methodology is pretty much out of use and only works if you really know the area. Otherwise you’ll get inaccurate information. 

The blind spot here is that we have data and AI tools that you can use to guide your human intuition, and that is invaluable for learning what customers will value about your cuisine and brand. You have to learn who your customer is and make sure it matches with your brand personalities.   

How important is real estate for the restaurant business? What can operators do to make your location successful?

I mean, it all starts with the location. So one thing to keep in mind is that when we talk about restaurant trip takers and market opportunity, restaurant trip takers will always buy brands that they feel are like minded. If they go to Whole Foods, Lululemon, Pete’s Coffee, then they’ll go to X Restaurant because it makes them feel like the other three.

From a real estate perspective, you need to understand how a brand should feel and how it should be presented to meet the restaurant trip-taker’s needs. That includes the right cuisine for the location. 

As I mentioned before, it’s also important to know what a reasonable lease deal is for your restaurant. I think a lot of restaurants fail because of unfavorable lease deals that leave no money on the bottom line. Usually this means they’re overpaying and underperforming. 

I think understanding revenue projection and matching occupancy budget for a specific address is really the key to the real estate piece. At the Borne Report, we help people get that and bridge the gap between real estate broker and restaurateur.

How can restaurateurs look more to data and AI rather than their own intuition to ensure that they don’t fail?

The Borne Report is a great resource to help guide human intuition. I don’t think AI should ever take away human intuition on the restaurant side, because the restaurant business is a human business dealing in a lot of human characteristics. 

When you look at the Borne Report in its totality, it gives you a really good understanding of cuisine recommendations, revenue projection, market profile of the restaurant trip taker, competitive landscape, and other key data. You also get an inside look into retail and restaurant trends and spend in that specific trade area around that address. It really saves that time that you would need to spend on R&D, allowing you to focus more on things that matter, like guest experience and design. 

You can think of the Borne Report as a way to guide your intuition but also as an insurance policy to avoid failing. 

What is the outlook for restaurants in 2024? What can restaurants do to stay on top?

Being versatile in service styles is important. Maybe you’re a counter service brand that offers dine-in with beer and wine. Or if you have a model that works well with adding drive-thru, breakfast, or late night, those can be beneficial depending on your location. That versatility will lead to faster growth and more success. 

Our models are also predicting that live music, farm-to-table, wine bars, and live fire will be huge trends in 2024. That experiential dining that we didn’t get during the pandemic is becoming more readily available and drawing people in. 

To learn more about Greg Nasser and data-backed restaurant recommendations, check out the Borne Report.

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. 


  • 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 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? 


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. 


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.