Category: Restaurant Management

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

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

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

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

What does it mean to instantly tip out employees?

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

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

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

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

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

Digital tip payouts

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

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

Cash tip payouts

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

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

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

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

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

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

What are the options for instant tip payments?

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

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

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

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

Ready to try us out? Get a Kickfin demo today!

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

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

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

What is PCI compliance?

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

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

Why does PCI compliance matter for restaurants and bars?

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

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

PCI compliance requirements

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

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

Making your restaurant PCI compliant

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

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

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

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

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

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

In some ways, marketing your restaurant effectively has never been easier. Here in 2020, with the current digital landscape, the sky’s the limit when it comes to the multitude of tools you’ll find online to get the word out about your dining establishment. 

The problem is, your competition knows this, too. 

As we mentioned in our last blog post, around 30% of restaurants fail the first year and 60% after three years. That means you’ve got to come up with some pretty inventive marketing tactics for your restaurant to compete with the more than 660,000 other eateries in the United States. 

Before we get into how to market your restaurant effectively, let’s talk about the importance of your marketing strategy.

Why Your Restaurant Needs a Marketing Strategy

There’s no limit to the many ways you can effectively market your restaurant. But if you don’t have a marketing plan or strategy, you’ll be wasting valuable time and money guessing at what works and what doesn’t. Here are the seven steps you need to take to create an effective restaurant marketing strategy: 

1. Determine your objective – Assess your current business needs and ask yourself what you’re trying to gain from marketing. Be as specific as possible. Do you want to drive more traffic? Improve your brand image or expand awareness? Become more discoverable online?

    

2. Decide how you’ll measure success – Once you’ve decided what you’re trying to accomplish with marketing, it’s time to set some specific and quantifiable KPIs (key performance indicators) that will help measure success. Although marketing will always involve some amount of trial and error, it’s important to use data to help you understand what’s working and what’s not, so you can course correct along the way.

    

3. Create a marketing budget – Setting your budget before you complete your marketing plan ensures you’ll stay within your limits and keeps you from spending reactively, which can get you into financial trouble. Keep in mind: time is money. Take into consideration your bandwidth to focus on marketing and whether you’ll need to outsource any support.

    

4. Define your audience – Before you start marketing, it’s important to consider who your customers are. Think about the demographics of your current or potential customers. How old are they? What are their interests? What do they do for a living? Where do they spend their time? Knowing who your customers are and who you want to attract will help when it comes to the type of marketing you do and the messaging you use.

    

5. Note your customers’ needs – Consider the problems or needs you’re solving for your customers — and here again, get specific. Sure, if you’re a restaurant, they’re probably hungry. But dig a little deeper: what are they looking for when they walk through your doors? Are they looking for a comfortable place to gather with friends? Do they prioritize fast service and affordability? Make a list to refer to later as you brainstorm marketing messaging.

    

6. Identify your true strengths – Rather than generically marketing your restaurant’s assets, think about what you’re doing that really keeps your customers coming back for more and what makes you stand out from the competition. Ideally, this should align with the needs you identified in Step 5. If you currently own a restaurant, what are the aspects they like about it? Do they enjoy the atmosphere? Is it a great location? What about the service? Are you known for specific items on your menu?

    

7. Bring it all together – Now that you have an idea of what you’re trying to accomplish, who your customers are, and your competitive strengths as an establishment, it’s time to put all of it to use by launching your restaurant marketing campaign.

5 Effective Restaurant Marketing Ideas and Tactics 

You have a restaurant marketing plan; now it’s time to implement it. Here are 5 tactics and tools you should consider using to reach your key audiences: 

1. Tap into social media

This is probably a given. Though there are plenty of social media platforms out there, Instagram is the best for marketing your restaurant, and Facebook comes in a close second. Posting high-quality photos of your dishes and drink offerings is the way to go, along with short videos of your friendly staff and events going on at your eatery. Here’s a great guide to get you started. 

2. Build a website or online store

In 2020, a clean, professional-looking website is a must. A website makes it easy for your current and potential customers to find you. Items to include on your website are high-quality images of your establishment and the food, along with contact info and location, a current and scannable online menu, online ordering capabilities (especially during Covid) and if you really want to get people talking, an online store with cool swag. 

3. Invest in SEO

Building a website is one thing; making sure people actually discover you online is another. 

Let’s say you’re a pizza chain in Philadelphia. If someone performs a Google search for “best pizza in Philly,” you want to make sure you show up at the top of those search results. Take time to research guidelines and best practices as you’re building your site and putting content on it — or consult an expert to help you optimize.

4. Leverage word of mouth

Speaking of people talking, according to Atlanta-based word-of-mouth marketing agency Fizz, 76% of Americans don’t believe ads, 92% say word of mouth is the best source for product ideas and 15% of every conversation includes a branded product or service. Word of mouth is exactly what it sounds like: people talking about your restaurant to other people.

Though it can be done in-person (with the right strategy), it can be done online as well. Think about when you shop on Amazon. How often do you read the reviews for products in which you’re not familiar? Most likely, quite a bit.

A great customer review on Yelp!, social media or even on your own website can increase your traffic exponentially. Because everyone at some point asks for restaurant recommendations, whether they’re travelling or they’re just tired of the same old place in their own town. 

Keep in mind, though, to pull off word-of-mouth marketing you need a strategy. If you want to learn more, Fizz even has a book. 

5. Create a loyalty program

This is a great tactic if you’re trying to build up repeat business. While there are a variety of software platforms that make this easy to do — in fact, your POS or restaurant management software may have a built-in capability — you can also make it as simple as having a punch card. 

How To Measure Success: Restaurant Marketing KPIs 

You’ve got your tactics and strategy; now you need to measure your results. To do this, you’ll need KPIs. Otherwise known as Key Performance Indicators, KPIs are measurable data to help you see how well your restaurant marketing strategy is working. They help you quickly determine which tactics are working and which aren’t so you can revise your strategy as you go along. Go beyond revenue; a few KPIs to keep track of when marketing your restaurant include: 

• Website traffic 
• Social media traffic and interactions
• Customer reviews

For an in-depth look at these and more KPIs, here’s a great guide. 

Effective Restaurant Marketing in 2020: Get Creative

In 2020, there are more marketing channels and tools at your disposal than ever before. But there’s also more competition. That means you’ve got to get creative and let your KPIs be your guide. Remember: stay true to your brand, keep your audience front and center — and get marketing!

When you were first inspired to start your own restaurant, what was the spark that made you want to do it? With around 30% of restaurants failing the first year and 60% after three years, it’s important to have a very clear vision for your business. Aside from operational costs, good staff, and the proper location, one often overlooked aspect of success is a restaurant mission statement. 

Like any business, your restaurant needs a way to communicate why you’re starting your business in the first place. What’s the need that will be fulfilled by your brand? What’s the purpose that will drive customer loyalty? Establishing your restaurant mission statement will communicate exactly why you’ve decided to open your business in the first place. But there’s more to it than that. 

What is a mission statement?

Most businesses have a mission statement. Typically, it’s a sentence or a short paragraph about why the company exists. It’s the beating heart of the institution; not a business plan that explains how the company will make money, but a statement that clearly defines the motivation for why it exists. 

Many people confuse a mission statement with a vision statement, and it’s important to establish the difference between the two. While a vision statement focuses on a company’s future, answering the question, “Where are we going?”, a mission statement answers the question, “Why are we here?” 

Why every restaurant needs a mission statement

Writing your restaurant’s mission statement is an essential part of your brand’s identity. It’s how your investors, employees, customers, and the media identify what your business is all about. 

Your restaurant mission statement may be the first impression new customers will have of your establishment. And it will serve as a constant reminder to your and your employees as to why you started your business. Consider it a rallying cry for your entire restaurant staff to get behind — a unifying factor that will help bring consistency to everyday operations and overall growth. 

It’s also a starting point on which to base your vision statement for where you see your operations years down the road. 

Examples of restaurant mission statements

We all have our own favorite places to eat. Whether it’s a local dive or an established chain, we have our reasons for loving these restaurants — the great food, the friendly and efficient service, the welcoming atmosphere. These eateries are our favorites because their owners have established their purpose, and they strive daily to reinforce it to their customers and staff. 

It doesn’t matter what kind of dining establishment you’re operating—a fast-food chain, a family-owned sit-down restaurant, a deli or a pub or bar—a well-executed restaurant mission statement won’t ensure your business will succeed, but it will provide consistency and purpose that will help establish your brand for the long run. 

There’s a reason these eateries have been around for as long as they have. For a little inspiration, peruse these famous restaurant mission statements: 

Fast food restaurants 

McDonald’s – “McDonald’s brand mission is to be our customers’ favorite place and way to eat.”

Dunkin’ Donuts – “Make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores.”

Arby’s – “To provide an exceptional dining experience that satisfies our guests’ grown-up tastes by being a “Cut-Above” in everything we do.”

Bars, taverns and pubs 

Iron Hill Brewery – “Inspire loyalty in both our guests and in our staff.”

Ninety Nine Restaurant & Pub – “A passion to serve”

The Dead Rabbit Grocery & Grog – “To bring the Irish bar into the 21st century.”

Cafe and fast casual restaurants

Starbucks: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” 

Chipotle: “Ensuring that better food, prepared from whole, unprocessed ingredients is accessible to everyone.” 

Panera – “Food as it should be. Food should taste good. It should feel good. It should do good things for you and the world around you.”

Family-style restaurants

Medieval Times – “Our valued team is fueled by the passion to provide our guests with genuine hospitality and exciting entertainment. It is our honor and privilege to care for our animals and to be good corporate citizens in our communities.”

Cheesecake Factory – “To create an environment where absolute guest satisfaction is our highest priority.”

P.F. Chang’s – “Celebrate Life. Family. Food.”

Writing your own mission statement

According to Dr. Chris Bart, FCPA, the CEO of Corporate Missions Inc, an international consulting firm dedicated to helping organizations excel in the execution of their strategies, a mission statement consists of three essential ingredients: 

• Key market: the target audience.
• Contribution: the product or service.
• Distinction: what makes the product unique or why the audience should buy it over another.

When writing your own restaurant mission statement, you want it to be short and memorable, with clear objectives. This is not something you want to take lightly. Do some soul searching. Spend time thinking about your core values and why you want to open your restaurant. Here are some questions to think about as you write your restaurant mission statement: 

• Why does my restaurant exist? 
• What does my restaurant do? 
• Who do we serve? 
• What are my restaurant’s goals? 
• What do we believe in? How do we strive to bring those values to life? 
• What makes us different than our competitors? 

A strong mission statement is memorable and inspiring. It’s a way for customers to trust in your brand and to create loyal, trusting employees. Here are six attributes you should keep in mind as you write: 

1. Accurate – Be concise in what your restaurant will do. If your mission statement doesn’t accurately reflect your restaurant, it might be time to revise some of your operational policies. 
2. Attainable – Having high expectations is great. But make sure your goals are realistic, measurable, and achievable. Simply stating to be the best at something is generic and tough to measure. Be as specific as you can in the goals you set for your restaurant. 
3. Actionable – Not only should your goals be specific, but you should mention how you plan to achieve them. 
4. Concise – Nobody is going to remember a mission statement that’s a page long. It needs to be easily digestible and understood. Try to keep it under five sentences. 
5. Honest – Avoid business jargon as it comes across as insincere. Be simple and honest about what you want your restaurant to be. 
6. Unique – Your mission statement should not sound like your competitors. Millions of restaurants exist already. How is yours different than all of the rest? If your mission statement doesn’t reflect the difference your restaurant is going to make, then it’s not doing its job. 

Now that you’re prepared to write your restaurant mission statement, get to writing! 

Much like other industries such as healthcare, construction, and manufacturing, restaurants must comply with OSHA rules and regulations for the safety of employees and customers.

If you’re not familiar with OSHA (or you need to brush up), here’s a quick primer.

What is OSHA?

OSHA stands for the Occupational Safety and Health Administration, or OSHA, as part of the Occupational Safety and Health (OSH) Act of 1970. It was created as a response to the rising number of workplace deaths and injuries during that time. OSHA sets and enforces certain standards in an effort to keep working men and women safe and healthy while working at their place of employment. These standards are reinforced with training, outreach, education, and assistance for employers and their employees. 

OSHA Rules and Regulations for Restaurants

Restaurants are subject to the same standards as factories and other work environments, though the implementation might differ. OSHA provides specific rules and regulations that restaurant owners must adhere to “keep their workforce free of serious recognized hazards,” according to the OSH Act. These include:

• Posting an official OSHA poster that notifies employees of their rights under the OSH Act and a list of the owner’s obligations. The poster should be placed in a highly-visible area where there is a lot of floor traffic. 
• Keeping accurate and updated records of accidents and injuries that occur in the workplace. 
• Reporting any work-related fatalities, hospitalizations, loss of limbs or eyes to OSHA within eight hours of being altered of the event. 
• Allowing employees and their representatives easy access to their medical records. 
• Ensuring employees there will be no retaliation if they bring up safety concerns or contact OSHA. 

New requirements and safety standards for restaurants are being enforced due to the Covid-19 pandemic. One of them requires employers to report any cases of the virus among restaurant staff. Others include:

• Limiting direct contact with the public through takeout or curbside services
• Encouraging employees who are sick or show symptoms to stay home
• Training workers in proper hygiene practices
• Cleaning and disinfecting surfaces on a regular basis using only cleaning chemicals on this list
• Allowing workers to wear masks or other protective gear to help prevent spread 
• Communicating regularly about any health and safety concerns

For more on OSHA’s standards, refer to the Young Workers – Restaurant Safety page on the OSHA website. 

Restaurant Employee Protections Under OSHA

As a restaurant owner, your employees can file two types of complaints:

1. Safety and health complaints – These are filed by employees who believe they are working under unsafe work conditions or the atmosphere is detrimental to their health. 
2. Protection from retaliation complaints – Employees can file a complaint if he or she believes they have been retaliated against for voicing concerns about the health and safety of their work environment to OSHA.

Your restaurant employees also have other rights under OSHA, including these key protections:

• A safe and healthy workplace
• The ability to file a worker’s compensation claim if injured on the job
• Minimum wage payment, whether through hourly pay, tips or both
• Overtime pay if more than 40 hours are worked a week
• A 30-minute meal break during any shift longer than six hours
• Protection from discrimination
• Protection by laws for minors (if under 18 years of age)

   

How To Keep Your Restaurant OSHA Compliant

Following OSHA rules and regulations in your restaurant is essential for happy and healthy employees. There are a number of ways to make sure you reinforce safety and health standards in your kitchen and dining area: 

• Communication – One of the most important things you can do to ensure the health and safety of your employees is to openly communicate with them, and encourage them to do the same. This means practicing patience and good listening skills without judgement, offering valuable feedback and guidance, and making them feel valued. 
• Training – Employers are required by OSHA to train their employees on the health and safety of their profession. This includes instructing them on the use of tools and machines necessary for them to perform their jobs, as well as emergency procedures. 
• Ergonomics – The most common type of injury in restaurants are sprains and strains, burns, lacerations and puncture wounds, and eye injuries. Make sure employees have the equipment needed to perform their jobs safely, and are able to use it in the most comfortable way possible. 
• Floors – Slips and falls are the most preventable accidents but they can result in serious injuries. Make sure floors are clean, not slippery and are clear of obstructions. Wherever employees have to stand for a long time, such as at prep and cooking stations, provide a padded surface to avoid back and leg strain. 
• Heat – Train employees on how to work safely around heat in a commercial kitchen to avoid burns, hot oil splashes and hot plates.

Maintaining and enforcing OSHA standards is essential to help keep your employees safe. But the Covid-19 pandemic has shown a new light on the importance of restaurant cleanliness and safety. Using software that allows employees access to their tips without handling cash is one very important way to help deter the spread of Covid-19 and ensure you’re following OSHA guidelines. 

Tipping out on payroll can seem like a winning solution for employers: namely, you don’t have to deal with the headache, liability, and health hazards of cash, and it solves the problem of ever-increasing credit card transactions. 

But for employees, payroll tip-outs have some major downsides — most notably the time lag before funds are available.

In normal times, asking hospitality employees to wait weeks for their earnings ultimately puts restaurateurs at a disadvantage. Until recently, workers in a competitive labor market were increasingly opting for positions with employers or gig platforms that pay out daily. 

Of course, the pandemic has turned the labor market on its head — at least for a little while. But that doesn’t change the problem that payroll tip-outs present to workers; in fact, the current environment makes it even worse. Now more than ever, hospitality workers need and deserve every ounce of financial security they can get. 

Let’s take a closer look at the situation, the real impact and some alternatives you have today.

THE SITUATION

There’s no doubt about it: tipping on payroll can make the flow of business simpler for restaurant owners and operators.

• Speed – Process automation can make it a fast option for management when they’re pressed for time. (Which, we know, is all the time.)
• Visibility – Being able to see the whole process can help avoid overpayment of supplementary wages (covering minimum wage and/or healthcare coverage). It also eliminates the human error that is so common with cash tip-outs.
• Ease – Having all taxable income in a single location can make it easier to calculate and take the Tip Credit, as well as comply with tax withholding, reporting and payment requirements.

Tips on payroll can feel like they’re working for your employees simply because they aren’t complaining. But especially now — when hospitality workers know their jobs are on the line — your people may be less likely to speak up, however financially strained they may be.

THE IMPACT

Tipping through payroll puts direct and indirect stress on your people — which, in turn, puts direct and indirect stress on your team culture and the dynamics within business.

3 types of stress your people may be experiencing:

1. Financial Stress – Daily tips are key part of the reason employees are in hospitality. Biweekly electronic payments create a time lag, which can cause major cash flow problems. 
2. Manager/Employee Stress – When restaurants tip out on payroll, visibility and transparency suffer. Often, employees begin to question if tip calculations are done correct when they’re not done daily, which puts managers in the hot seat and can ultimately erode trust.
3. Environmental Stress — A work environment that with culture issues puts a strain on productivity, regardless of whether the stress is due to reasons professional or personal – and that’s assuming they stay with you. After all, 42% of employees have left a job simply due to the stressful work environment. 

Any one of these could be the reason that your talented staff choose to leave for another opportunity, and turnover costs are significant. 

AVAILABLE ALTERNATIVES

Employers have a variety of real-time options to help avoid the downsides of tipping through payroll. 

• Cash – It’s easy for employees to understand the value of their tips when they are paid in cash, but there are a variety of hidden costs ranging from external fees to increased risk of employee theft. 
• Paycards – Cashless options always mean a safer environment for staff, but paycards involve long transfer times and are not accepted by all businesses. 
• Virtual Tech Solutions – Options like Kickfin can transfer tips directly into your employees’ bank accounts, instantly. That means it’s available for use right away. This combines the immediacy benefit of cash, the security benefit of paycards, and the hassle-free benefits of payroll, while eliminating all of the cons.

Tipping on payroll impacts your business in both visible and less visible ways. Explore all your options, so you don’t lose out on talent for reasons completely in your control. 

In recent weeks, big-name players and small independent outfits alike have rapidly pivoted to off-premise delivery or curbside services — a model that many of these restaurants had never considered before the coronavirus pandemic required them to.

Fortunately, shutdowns and social distancing are not forever; but that doesn’t mean the shifts you’ve made to your operations should be temporary, Band-Aid solutions.

While these changes may seem challenging, or even forced, savvy restaurateurs are finding ways to leverage them in their favor so their businesses and their teams can benefit in the long term.

As you’re pivoting, be sure that you’re making strategic decisions wherever possible — so that you’re not only responding to today’s situation, but also positioning your business for growth as our industry rebounds.

Is your business ready for the changes you want to make?

“Readiness is all about building agility into your fundamental business model,” says CohnReznick’s Stephen Mancini, Hospitality Operations Leader. “Although you can’t spend weeks, months, or years solving the problems confronting you today, you do have the opportunity to evaluate with a fresh perspective.”

Below are six variables and opportunities to consider as you’re navigating this new normal and planning for relaunch.

1. Review Your Fixed Costs: Look at your existing contracts. What are you paying in rent and on your lease/mortgage? This is the basis for leverage in renegotiating with your landlord or bank. (It will also help you determine whether government relief opportunities are applicable.)

2. Revisit Your Labor Framework: Is your staffing plan labor-heavy? Review what is truly required to keep your team in place. Consider ways to operate more efficiently in-house. Changes need to factor in both monetary savings and what will be needed to support the pivot to off-premise delivery or curbside services.

3. Reevaluate Your Cost of Goods Sold: What does it really cost to produce your menu? Make sure you get more product into the fast-casual concept as you pivot. Buy in bulk whenever possible, and use your buying power to secure the best pricing. You may also find ways to retool your offerings, such as adding another pasta entrée or lower-cost menu item. 

Are there new tech solutions that can support your pivot?

Restaurant owners/operators rarely have time to explore the entire technology landscape. Focus on options that will support your movement toward off-premise delivery or curbside services.

Keep in mind: While your budget may be constrained given the current market, many platforms are providing their software for reduced rates to support new and existing customers during this difficult time.

4. Leverage tech that delivers a new customer experience. Introducing an online reservation/ordering service or tapping into a reservation/ordering call center would mean that you no longer need a dedicated host on-premise for nine hours each day. Centralizing this labor-intensive activity compounds the savings for multi-unit operations.

5. Utilize tech that impacts the employee experience. During the Covid-19 crisis, more people are paying online or with credit cards. Many restaurants are attempting to reduce the amount of cash on their premises, as it harbors hazardous germs.

Implementing contactless payments for tip-based income means you can reduce the amount of cash on your premises, without making employees wait for tips to come through on payroll. This is more important now than ever before, as many hospitality workers are suffering financially. (Bonus: You do not have to factor in the hidden costs of tipping out in cash.)

6. Employ tech that further simplifies your operations. Available technology can scan invoices and drop them directly into your accounting system. You could shift your bookkeeping labor to help keep you on top of invoicing/purchasing or eliminate your bookkeeping labor costs altogether.

In order to survive, hospitality businesses must be extremely nimble and make decisions fast, but that doesn’t mean you can’t think long-term. Prepare for the future by making strategic operational changes now — and wherever possible, take advantage of today’s technology to help you work through the practical realities of pivoting to off-premise delivery or curbside services.

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Stephen Mancini is a senior manager in CohnReznick’s Strategy and Transformation Advisory practice and the firm’s National Hospitality Operations Practice Leader. Stephen focuses his practice on areas of growth and innovation strategy, corporate and business unit strategy, go-to-market strategy and execution, operational value creation and digital and technology transformations.

CohnReznick’s online Coronavirus Resource Center provides guidance for your business during this uncertain time. This resource is available to the public and provides detailed insights on managing risk and addressing challenges during this pandemic as well as content on preparing for future disruptions.