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.

Why?

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?

Choose a tip pooling system
Decide how you’d like to pay out tips to employees
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

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?

Payroll

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.

Compliance

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.

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Restaurant Management

Tip Pooling: Pros and Cons

For restaurant owners looking to boost teamwork and make sure every employee gets their fair share, a tip pool or tip share seems like a natural solution. But like there are pros and cons to tip pooling that every operator should be aware of.

Of course, it doesn’t always make sense to pool tips. (And when it does make sense, tip pooling policies are definitely not one-size-fits-all!)

If you’re on the fence, check out our tip pooling pro-con list below and consider how they would affect your restaurant’s unique dynamics.

What are the pros of tip pooling?

It takes a lot of hard work and collaboration to deliver an excellent guest experience. For most restaurants, the primary goal of tip pooling is to ensure all employees are fairly rewarded for their contributions.

Here are a few of the benefits that tip pooling offers restaurant teams.

1. Improved performance

When executed strategically, tip pooling can bring your team together around a shared goal — delivering a top-notch guest experience — and reward them for doing so.

And when employees are all working toward a common goal, they’re much more likely to work together and go out of their way to lend a helping hand or fill in gaps. This can be particularly true for tip pools that include employees who generally aren’t directly tipped, like bussers, hosts, and back-of-house employees.

2. Reduced competition among servers

Does one section get all of the large parties (aka all the large tips)? Or does your patio section get too hot for most guests during the summer? When employees aren’t sharing tips, your workplace culture might start to feel (overly) competitive and even lead to tension or disputes. When servers start feeling slighted or get hung up on who-got-which-table, not only does that affect morale — it slows everyone down.

An equitable tip pool can keep servers from feeling like they need to keep score, so they can focus on providing top-notch service to all of the guests in the restaurant.

3. Increased focus on training

When you bring on new staff, you typically have them train with your best veteran servers. And when those vets know that their trainee will be part of their future tip pool, they’ll be more invested in the training, making sure to give them a master class in upselling and customer service.

4. More equitable distribution

Unfortunately, customer biases — conscious or not — can impact tip amounts. Whether based on race, gender, or other factors, this kind of discrimination can affect your employees’ livelihoods.

While restaurant operators can’t control if some employees receive preferential treatment, they can help to compensate for those injustices by pooling and fairly distributing tips.

Cons of Tip Pooling

While most restaurants these days run some form of tip pool or tip share, there are some common drawback and pitfalls to tip pooling, which are worth considering before you implement a new policy

1. Top performers may feel negatively impacted

If your best servers are consistently bringing in far more than the standard 18-20% in tips, they might not be so pleased to share with employees who may not have the same experience, talent or work ethic.

Couple that with the fact that some servers can turn tables much quicker than others, resulting in a higher volume of sales and a whole lot more tip income — well, your top earners could start feeling cheated by the tip pool.

And in a tough labor market, if a hardworking employee isn’t happy with their earnings, they likely have other options.

2. Under-performers can slip through the cracks

On the flip side of that: a tip pool could allow lower-performing employees to slip through the cracks. If you’re not closely evaluating the average tip amount (and average check size!), you may miss that one of your employees is struggling with their customer service.

3. Compliance is an added consideration

Tip pooling is regulated at the federal and (usually) state level. Some municipalities also have their own rules around how to legally pool tips. These laws can get pretty complicated, making it all too easy to fall out of compliance without even knowing it. For example: managers can’t participate in a tip pool; but what happens if a manager is also performing server duties? Can you include back-of-house in your tip pool? Does your eligibility for the tip credit change if you operate a tip pool? It’s important to know the answers to all of these questions and fully understand the laws that apply to each of your locations. (Especially if you have locations in multiple states!)

Tip Pooling Pros and Cons at a Glance

That’s a lot of information to take in, so here it is a handy-dandy pro-con chart.

To Pool or Not to Pool?

The majority of restaurants in the U.S. operate some form of tip pool. At Kickfin, we’ve worked with thousands of restaurant teams who participate in tip pooling or tip sharing. We’ve found that often, the positives outweigh the negatives.

But that comes with a major caveat: the best tip pooling teams have been strategic and intentional with their policies — and as a result, no two tip pooling policies look exactly the same.

If you want to set yourself up for tip pooling success, here are a few general rules of thumb.

Evaluate your requirements: Ask yourself why you’re running a tip pool. What needs are you trying to address or problems are you trying to fix? Specifically consider your restaurant type, team size, org chart, and local market to find the best policy for you.
Don’t overcomplicate: It shouldn’t require a degree in calculus to calculate your tip pool. If you feel like it’s getting unwieldy, it’s possible you’re setting your team up for mistakes and tracking issues.
Get feedback for better buy-in: This shouldn’t be a decision-by-committee scenario, but it’s worth checking with management and even some of your team’s unofficial leaders to get their input before running with a new policy. This can help get the rest of your employees on board.
Write it down and run it by your counsel: Your tip pooling policy should be on paper, in black and white. You should also have your legal counsel review it to make sure you’re not inadvertently out of compliance with tip pooling regulations.
Communicate everything: Once you’re feeling good about your policy, share it. Make sure every tip-eligible employee understands how it works and has the opportunity to ask questions.
Ensure transparency by tracking everything: It’s not enough to share your policy. It’s important that every payout is tracked, including how those payouts were calculated. Not only does that streamline accounting and reporting; it also creates a culture of trust with your employees. If there is ever any question around a payout, having a digital paper trail is invaluable.

The best tip pools are automated

Tip pool calculations often happen in a spreadsheet, which is less than ideal. Kickfin integrates with your POS, so you can eliminate spreadsheet math, reducing the risk of human error and ensuring every payout is accurately calculated and tracked. Plus: Kickfin customers can send instant, cashless payouts directly to their employees’ bank of choice.

The result: All the benefits of tip pooling, without the hassles, risk, and time required. (In fact, many of our users can calculate and pay out tips at the end of each shift in under 60 seconds!)

Want to learn more? Request a demo today.

Product and Company News

Kickfin Recognized on the 2025 Inc. Regionals List

Kickfin has earned a top spot on the 2025 Inc. Regionals list in the Southwest region! This recognition places us among the fastest-growing privately held companies in America—and we couldn’t be prouder of what this means for our team, our customers, and the restaurant industry at large.

A Milestone Achievement

As the #1 tip distribution platform, Kickfin is trusted by thousands of restaurant teams to automate tip pooling and payouts. Since 2017, our technology has given managers hours back in their week while improving accuracy, visibility, and reporting for operators.

Only 951 companies made the cut across all regions, and in the Southwest alone, the businesses on this list contributed 13,809 jobs to the U.S. economy while achieving a median growth rate of approximately 106 percent from 2021 to 2023.

Powering the Future of Tip Management

In the past year, Kickfin has taken automated tip management to a whole new level. In addition to exciting new features that make our platform more robust than ever, we continue to add to the list of our direct integrations with the leading POS brands—which currently includes Toast, SkyTab, Square, Heartland, RPOWER, PAR POS, Oracle MICROS, NCR Aloha, and more.

→ See how the Kickfin-Toast integration “changed everything” for HOBNOB restaurants

Kickfin’s POS integrations give our customers the ability to auto-calculate even the most complex tip pools in just a few clicks, which eliminates unwieldy tip spreadsheets, saves managers even more time, and gives operators unprecedented visibility into payout calculations and history.

A Heartfelt Thank You

This achievement wouldn’t have been possible without the trust of our customers and the dedication of our team.

As Justin Roberts, co-CEO of Kickfin, puts it: “We’re incredibly grateful to our customers who have made this growth possible by trusting Kickfin with their tip management needs. This recognition is a testament to the value that automated tip management brings to restaurant teams—helping them save time, reduce risk, and take care of their people.”

We’re honored to be included in the 2025 Inc. Regionals list, and we’re excited to see what the rest of 2025 has in store!

Product and Company News, Technology and Software

Kickfin Integrates with RPOWER POS to Automate Tip Distribution for Restaurants, Bars and Nightlife

You heard that right — Kickfin has added yet another partner to our ever-growing list of POS integrations!

RPOWER POS has joined the list of leading POS systems that now integrate with Kickfin so users can fully automate tip calculations and payouts.

RPOWER is a trusted name in the restaurant industry known for its handheld devices, online ordering capabilities, and robust reporting. RPOWER’s dedication to staying on the cutting edge of restaurant tech makes the integration with Kickfin a perfect match!

With the RPOWER-Kickfin integration, restaurant operators can:

Easily build out highly complex tip policies
Calculate tip outs based on roles, shifts and hours worked
Distribute tips directly to employee bank accounts
Establish an electronic “paper trail” for every tip out

( …and more. Dive into the latest Kickfin updates for the full scoop.)

Like all of our integration customers, when RPOWER users activate the Kickfin integration, they’ll have access to our robust Customer Success team (at no extra cost!). We’re here 24/7 to review and build out your tip policy within the platform, so you’ll be up and running in a flash.

Collaboration with Riot Hospitality Group

This integration was especially exciting because we worked hand-in-hand with one of our longstanding customers, Riot Hospitality Group, to ensure the integration checked every box — and that it could handle their complex tip pooling policies.

“Kickfin has been an outstanding partner to Riot Hospitality Group for years,” said J Goldin, the systems director for RHG.

“They had already helped us go fully cashless, which eliminated a lot of risk for our teams. When we decided to completely automate tip payouts, they were a natural choice to help with that as well. We worked hand in hand with Kickfin and RPOWER to ensure the system could handle the intense complexity of our rules, while still being incredibly easy to use for our operators.”

“Kickfin is easy to implement and easy to use. If you’re thinking about trying it, you’ll be glad you did.”

As our co-CEO Justin Roberts puts it, this integration is a “no brainer for RPOWER users who understand how valuable their managers’ time is.”

RPOWER users, we’re ready for you! Schedule a demo to learn how you can activate your integration.

(Not an RPOWER user but want to take advantage of these time-saving features? See if Kickfin is integrated with your POS!)

Product and Company News

Kickfin Product Updates: New Year, New Features!

We kicked off 2025 with some major (!) updates to our Tip Calculator features.

It was a big release, and we’ll break it all down for you here — but the big headlines are:

More integrations
More speed
More flexibility

If you’re not already using Kickfin — or if you haven’t integrated Kickfin with your POS to automate tip calcs just yet — this is for you! Read on to see how you can use Kickfin’s newest tip calc features to un-clunk your tip pooling process.

More integrations, coming right up

We’re continuing to roll out integrations with the leading POS systems, giving restaurant teams the power to auto-calculate tip pools and shares in a matter of clicks.

(Side note: Kickfin only builds direct POS integrations — not using a third-party solution! — which streamlines your tech stack and keeps your costs lower.)

We were thrilled to add RPOWER to our growing list of integrations, which already includes Toast, Square, SkyTab, SpotOn, PAR and more.

If you’re an RPOWER user and you’re not yet a Kickfin customer, request a demo and we’ll show you the integration in action!

Handle autograts with ease

For servers and bartenders handling large parties, autograts can be great — but for managers, they can turn into a logistical nightmare. Now, Kickfin can help with that…

With this latest release, you can break tips and autograts into separate categories with their own set of rules for distribution. You have the flexibility to manage autograt tip splits completely separate from regular tip outs, so you can fairly reward a hardworking server-bartender-busser trio for a job well done on a 30-top.

Tips & Autograts Broken Out on Tip Data Page

Tips & Autograts Broken Out on Review Screen

With this new set up, you’ll also get more transparency in reporting. You’ll be able to see the breakdown of tips and autograts collected by each user in your reporting dashboards (more on that later!).

Include cash tips in your distributions

You heard that right — we can now distribute shares of cash tips digitally, directly to your employees’ bank accounts. Instead of doing the math on cash tips by hand, you can easily add cash to your tip pool, and we’ll calculate the share among employees for you.

Important note: cash distributions aren’t available for all of our integration partners. Contact us for more info.

Advanced Tip Rules (for even the unruliest policies)

Think your tip policy is extra tricky? Don’t worry — we’ve seen ‘em all. And there aren’t many Kickfin can’t handle, thanks to our Advanced Tip Rules feature.

If you have Advanced Tip Rules enabled, we’ve added a few new capabilities so you can further customize your tip share while we take care of the complicated math behind the scenes. Here are just a few examples of the new features we’re rolling out.

Not using Advanced Tip Rules? Reach out to us if you’d like to enable these features.

Per Segment Tip Sharing

We’ve been calculating tip shares on a check-by-check basis. For example, if you have servers sharing a percentage of tips with bussers, we would only calculate and deduct that percentage if a busser was working at the time that a check was processed. We call this Per Check Tip Sharing.

Now, we’re introducing Per Segment Tip Sharing, which gives you the option to deduct a tip share from every check processed during a shift. Let’s go back to our example — servers sharing a percent of tips with bussers. With Per Segment Tip Sharing, we would deduct a percentage of the server’s tip for every check processed, even if the busser gets cut two hours before the server.

Split Evenly

Would you prefer that all of your support staff take home an even share of their tip pool? We can now make that happen.

Previously, our tip shares entered a pool and were divided among beneficiaries based on how many minutes they worked during a shift, which we call splitting by Time Worked. With our new product update, we’re introducing the Split Evenly option, which enables you to send an equal part of a tip share to every beneficiary that worked within a segment.

More accuracy

In the past, cash autograt payments were lumped in with credit card autograts and credit card tips, resulting in credit card fee deductions on cash transactions. But that is no more!

Now we’re able to deduct credit card fees only where they apply, so you’ll no longer see credit card fee deductions attached to cash autograt transactions.

Plus, we’ve gotten even better at math. With our new update, we can prevent rounding errors, so our tip disbursal should match the tips collected in your POS to the penny.

Revamped and expanded reporting

We added new reporting views to give you more insight into each pay period, individual pay sets, and tip calculations. Here’s a quick look at your new pay period report with expanded filters:

Main Pay Period Report - Filter Bar Expanded

You’ll notice that there are now separate columns for tips and autograts, but you can still view the gross amount earned (tips + autograts = gross).

And it doesn’t stop at the main reporting page. You’ll see this more detailed reporting when you look at individual employee pay period reports, review a specific pay set, or export the information from any of your reporting dashboards.

We know this is a lot of new information to take in — but we’ve got you covered with our full Product Release Recap. Simply log in to Kickfin, click on your name in the upper left corner and select “Support” to access that portal.

Not using Kickfin? Dying to get rid of your old-fashioned gratuity management system? Drooling over these new features? We’d love to have you. Reach out to us today to see how our platform could save you time and money.