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

4 Ways to Save on Restaurant Labor Costs with Kickfin

In the restaurant industry, profit margins have always been tight — and these days, they’re only getting tighter.

Running a restaurant is a labor intensive business. You need a strong back of house team to push out food, front of house workers to greet and care for guests, and managers to keep everyone in check. Naturally, labor is one of the most significant expenses for restaurant operators. In order to keep costs reasonable for customers, even a slight overage on labor can break your budget — but thankfully there are levers you can pull to reduce labor costs.

If you want to secure your business’s financial future, you’re going to need to streamline scheduling practices and keep a close eye on labor costs… without frustrating employees who want more shifts.

Don’t worry: you can turn to traditional wisdom, sales forecasting, and emerging restaurant technology to make sure that you stay on budget.

Here are a few ways you can save on labor costs at your restaurant:

1. Rethink the schedule

Obviously, the most straight-forward way to cut labor costs is to reduce the number of people you schedule on a given night.

We get it — you don’t want to see hour-long ticket times and poor guest experiences. But you might not need as many folks on the line or servers on the floor as you think — at least, not all the time.

Staffing and scheduling isn’t a perfect science, but there are some tactics operators should test if they’d like to “right size” every shift — including:

Analyze your daily schedule. Don’t make assumptions about your peak times and slow periods. Analyze sales trends and let the data be your guide.
Anticipate seasonal trends. If you’re in a college town, don’t wait until your servers are twiddling their thumbs in July to implement a new summer schedule.
Let your seasoned staff shine. Your veteran employees likely thrive on those super busy nights when they’re running on pure adrenaline (and earning way more in tips). Consider giving more experienced workers more responsibility — assuming they’re willing and able — and you might be able to get away with fewer people on a shift here and there.

>> Learn about scheduling software that helps you manage labor and engage with employees

2. Assess and address productivity

Are you making the most of the team that you already have? There are a few ways you can identify your highest-producing employees and make the most of their success:

Evaluate employee performance. Most employees want to be successful; observe your team and analyzes things like sales per labor hour, table turnover rate, and tip volume to get a sense of your strongest players and those who could use more training (and bonus: this can reduce turnover and boost team morale)

Provide incentives. Create a fun bonus system that rewards strong performance and high levels of productivity. You can use data from the previous data point to set goals.
Cross-train employees. Training your staff to handle multiple roles – or hiring folks with vast service experience – offers flexibility for scheduling and can reduce your need for additional hires.

3. Don’t pay employees to wait for their tips

No, we’re not saying to cut all of your servers early (no matter how much they ask).

But, you can send your servers on their way much quicker when they don’t have to wait around for managers to count out cash tips. Once they’ve finished their sidework, servers can clock out and see their digital tips sent directly to their bank account, instead of hanging around on the clock waiting for the shift manager to do their check outs.

4. Prevent labor overages before they happen

Most restaurants simply can’t afford to pay overtime for staff. But sometimes your full-time staff creep toward 40 hours of work without anyone noticing…and suddenly you’re paying 1.5x what you expected for a single worker.

This, too, goes back to proper scheduling policies. Give yourself a bit of wiggle room for the employee who clocks in 10 minutes early or often takes a long time on sidework by never scheduling anyone for more than 38 hours each week.

5. Pay close attention to clock-outs

People make mistakes, and tired servers often leave their long double shift without clocking out for the night. Usually, they’ll realize their mistake and call the store to have someone clock them out (still adding extra time to their shift).

But sometimes, the clock keeps running all night, and no one notices until it’s time to process payroll. Two weeks later, your admin team is spending way too much time correcting clock-outs so that you don’t end up paying for 8 extra hours of work.

Try using technology that puts guardrails in place to prevent any clock-out mistakes before they happen. Kickfin doesn’t allow you to process and pay out tips until an employee is clocked out, so managers can make sure everyone is clocked out at the proper time.

(We also have some other exciting new features that can make your life easier!)

Not only can Kickfin help you reduce labor costs, but we’re ready to simplify your entire tip management process. Reach out to us to learn more about our instant tip calculations, integrations, and smarter tipping solutions.

Restaurant Management

How to Get Your Restaurant Ready for Football Season

Football is back! Whether you’re rooting for your alma mater or just hoping to see massive sales at your restaurant, it’s an exciting — but often stressful — time of year.

If your restaurant has at least one TV, you’re going to have some customers asking you to switch it to ESPN. And if you’re running a sports bar … it’s officially crunch time. Expect your tables to be full (and harder to turn) and your staff to be running on pure adrenaline as the restaurant fills up with fans hoping for a bite to eat.

You probably know the drill: hire more staff, add more servers to game day schedules, and manage your inventory with hungry fans in mind. But if you want to get the most out of football season, get game-ready for some of the busiest weekends of the year with our tips for a successful season.

Consider a game day menu

When your restaurant is at full capacity with hungry football fans, you might want to consider a limited menu for the weekends in order to keep wait times down. Shorten the food menu down to shareable apps, best sellers, and items with the simplest prep so that your kitchen isn’t lined with tickets at halftime.

At the bar, don’t limit your customers to certain cocktails — but consider the power of suggestion and list out some easy-to-batch cocktails that will keep your service bar out of the weeds.

**Make sure they can watch their game**

Is there anything worse than a group of die-hard fans walking in to see their team play — only to realize you don’t have the right subscription service to stream it? Next thing you know, some guy has commandeered the remote to sign into his YouTubeTV account.

Before that embarrassing situation arises, check your cable listings and subscription services to see if you’re missing any important channels. You’re probably going to need to upgrade in order to show games that aren’t carried in your market. Here are just a few channels you might need:

ESPN+
Hulu + Live TV
Peacock
NFL Sunday Ticket
YouTubeTV or cable
Netflix (yep — Netflix will be streaming a few NFL games this year)

If viewing options are limited, or you don’t have enough screens to air multiple games at once, make sure you’ve got a strong wifi connection (free, of course) so that your guests can watch on their phones — or more importantly, talk smack to their fantasy league.

Offer game day deals

Now that you’re logistically ready for the season, it’s time to draw in the customers. Make your restaurant the place for fans to gather by offering drink specials and deals on appetizers.

Leverage social media to get the word out about your game day deals. Consider paying to boost a post or running a giveaway for people who share a post about your game day specials.

Plan for Post-Game

You don’t want the restaurant to empty out as the clock runs down. Entice fans to stay and celebrate (or lick their wounds) once the game ends by extending deals. That could mean a discount for fans of the winning team or an extra-long happy hour.

Pay out your employees — quickly.

After a long game-day shift, your servers and managers are going to be more tired than usual. Let them head home early by using Kickfin to pay out tips instantly. We take care of all of the tip calculations and send tips directly to servers’ bank accounts in seconds, so your exhausted team members don’t have to wait to put their feet up and rest.

Want to see our instant digital tip outs in action? Get a demo of Kickfin today.

Hiring, Training and Retention, Restaurant Management

The Art of the Upsell: Teach Servers to Increase Average Check Amounts

You want to make more profit. Your servers want to make more tips. A crash course on upselling is a win-win for everyone.

Your servers might not realize it, but their words have a lot of power. Knowing how to present a higher shelf vodka or a premium side could make a world of difference for their wallets.

And beyond the increased checks, pro servers who are able to successfully upsell are also recommending your restaurant’s very best for guests. Those bigger ticket items are often your best dishes or most unique cocktails that will stand out in guests’ minds and make for an elevated dining experience.

Here are a few ways your servers can gently suggest some pricier upgrades that will boost their average check size, making everyone a few extra dollars.

1. Consider your memorable dining experiences

Before you dive into our upselling go-tos, take a minute to reflect on your last really good experience at a restaurant and how your server’s language, attitude, and knowledge affected your experience.

Did your server walk right up and ask if you want an appetizer? Or did they take the time to talk through specials, field questions about menu items, and give you the space you needed to make a decision?

Was your server’s demeanor generally excited and upbeat? Or did they actually look a bit disappointed when you said you’d just be having water?

These small, unspoken cues are what make or break a server’s night. Leading with confidence, positive energy, and genuine concern for your guests’ experience is what will build trust between server and customer, so they’ll be more open to suggested upgrades.

2. Value authenticity

Upselling just for the sake of a higher tip is not a successful strategy.

Remind your servers that while upselling can improve guest experience and your tip, it’s important to flex to the needs of your guests. Don’t continue to push higher priced items if guests are starting to look uncomfortable.

They say the most successful salespeople believe in what they are selling — and the same goes for servers. Your servers should have tasted all of the higher priced menu options and be able to explain to guests why this upgrade brings their dining experience to the next level.

3. Start with the drinks

Alcohol sales are restaurants’ bread and butter. So when a table orders the first round, servers should make it count.

Scenario #1: A customer orders a simple spirit + mixer drink

If a guest asks for a vodka soda, this is an opportunity to turn a $10 drink to $15 or even $20 — which will add up after a few rounds.

Naturally, most servers would ask what vodka the guest prefers. Teach your servers to resist that urge! Instead, servers should offer them a selection of higher-shelf options. For example, a server could respond with, “Vodka soda? Sure, would you like that with Tito’s, Ketel One, Grey Goose…?” And keep listing options until one resonates with the guest. That gives the guest the impression that they have a seasoned, well-informed server, but this framing also leads the customer to choose from the higher-shelf suggestions, rather than just asking for the house vodka.

Scenario #2: Ordering a glass of wine

We’re not suggesting you hire a sommelier, but getting more familiar with common flavor profiles and notes in wine can be a game-changer for servers’ nightly tip income.

Customers often ask for something similar to pinot grigio, cabernet sauvignon, or a pinot noir, and if their server can give a detailed description that makes a wine sound irresistible, they’re probably going to splurge for the higher-end wine. Bonus points for servers who can successfully suggest splitting a bottle (because once they taste it, they’ll want more than one glass!).

Consider hosting a weekly wine training to help your servers get more familiar with what your bar has to offer. Another pro-tip: Teach your servers about beer and wine pairings! When servers let guests know which entrees pair well with the drink they’ve ordered, guests may opt for a higher-priced entree to match their favorite beverage.

Don’t skip over the apps

Not everyone is going to order an app — but there are a few small changes servers can make to their dialogue with customers to convince those who wouldn’t normally spring for a first course.

For one, servers shouldn’t just ask if they’d like anything to start. Instead, teach your servers to approach tables with a suggestion for a specific menu item. For example, they could say, “Would you like a charcuterie board to start? We just added a really delicious local cheddar to our rotation.”

Offering patrons a specific menu item and talking up the details makes it a lot easier to add that extra course to their meal — increasing their check size and making it more likely that they’ll order a second beverage.

Taking the order

When it’s time to take the entree order, this is your servers’ time to shine. Just like the previous courses, they should know how to create opportunities to upsell guests by making entree upgrades too enticing to pass up.

From fine dining to fast casual, many American restaurants offer a burger on their menu. Rather than simply asking, “Great, are fries ok with that?” task your servers with turning a simple cheeseburger into a deluxe meal with several upsells.

First, make sure your staff knows your menu options well, so they can pass along those options to customers. Here are a few common upgrades that servers should be asking guests if they would like:

Pretzel or gluten-free bun
Added cheese
Premium toppings, like bacon, egg, avocado, etc.
A premium patty, like bison or imitation beef

Rather than asking if fries are okay, instruct servers to say, “What side would you like? We have french fries, macaroni and cheese, caesar salad…” and continue with options until one piques the guest’s interest. If they succeed in getting at least one upgrade to a customer’s burger and a premium side, the check can increase by around $4 per person, depending on the pricing at your restaurant.

Higher-end restaurants should follow the same formula, subbing in an option for steak oscar rather than a bacon cheeseburger. The goal is for servers to provide options for guests who may not realize that their favorite accoutrement is on the menu — and will gladly pay for the upgrade.

The grand finale

“Did you save room for dessert?”

Servers often bring out this line while pre-bussing tables, usually expecting guests to say that they’re far too full to even think about dessert. If you want to convince more guests to stick around for a final course, ask your staff to remove that phrase from their vocabulary.

Dessert is a rich treat for the senses that most of us crave at the end of the night, so servers shouldn’t treat it like an afterthought in front of customers. As they’re clearing away dishes, servers can tap into their senses by talking about your pastry chef’s perfect chocolate cake with buttery layers of icing, or the warm peach cobbler served with house-made vanilla ice cream on the side.

Even if guests seem like they’re truly full, your team can still offer them a slice to-go, since they’ll surely be wishing for something sweet in about an hour anyway.

Reap the rewards

After putting on their best smiles, connecting with guests, and using these upselling tricks, your servers should ring in above-average size checks — and an above-average amount of tips.

Once your servers see their huge tip out for the night, they’ll want access to those funds ASAP. At Kickfin, we provide instant digital tip payouts, so managers don’t have to waste time counting cash and servers can clock out of their shifts sooner.

Check out a demo of Kickfin today.

Product and Company News

Kickfin Ranked Fastest Growing Restaurant Tech Company | 2024 Inc. 5000

Kickfin ranked in the top 3% of Inc.’s 5000 fastest-growing companies — and we’re leading the charge for tip management software.

Every year, Inc. identifies 5,000 U.S.-based companies that have seen the highest rate of growth over the past three years based on revenue — and this year, Kickfin was at the top of the top.

A few stats we’re pretty proud of:

🏆 Kickfin ranked 189th overall.
🏆 We’re the fastest-growing restaurant tech company on the list.
🏆 We’re in the 💥 top 3%💥 of all 5000 companies.
🏆 We ranked 24th in the Software category.

Since 2020 — in spite of a pandemic, supply chain disruptions, The Great Resignation, and record-setting inflation — we’ve grown by 2,066%.

Our Keys to Success

We’ll cut right to the chase: We owe our success to our customers. (It’s not cliche if it’s true, right?)

The bottom is that we know the way you pay your staff matters, a lot. Thousands of restaurants are trusting us to handle that for them, and we don’t take that trust lightly.

And of course, we might be biased, but we think we’ve got the best team and partners in the biz. Thanks to everyone who has helped build, support and evangelize Kickfin. This has been a big year for our small but mighty company — and there’s a whole lot more to come.

This kind of growth doesn’t happen overnight. We’ve been putting in the work to make Kickfin even better for the thousands of restaurants we serve. Here are just a few ways we’ve expanded to better serve Kickfin customers.

Integrations

We’re making it easier to access and use Kickfin by integrating with dozens of leading POS systems, including Toast and SkyTab. Using our integration, managers can pull tip data directly from their POS and Kickfin will handle even the most complex tip calculations in a matter of minutes.

Thanks to our POS partnerships, we’re able to bring a further simplified version of Kickfin to new and existing customers so they can kick cash to the curb. As an early adopter of our Toast integration, Bar Louie has already saved around 15,000 hours in labor annually by cutting their tip calculation time from hours to minutes.

>> See more customer success stories

Find out if your POS integrates with Kickin, and reach out to our support team to learn how you can activate the integration.

New Features

Kickfin is no longer just an alternative to cash tip-outs — we’re a holistic solution to your entire tip management system.

In case you missed it, 2024 has been a big year for our product. In addition to our new integrations, we’ve rolled out some exciting new tip management features, including:

Splitting large party tips
Increased security
Reallocating manager tips
Preventing labor cost mistakes

>> Learn more about Kickfin’s newest features

Each of these new updates is inspired by requests from operators, managers and restaurant employees who use our product daily — and that’s something that will never change. As we continue to innovate our best-in-class tip management solution, we’ll always be listening to and learning from our customers so we can ensure every need is met and every expectation is exceeded.

What’s next for Kickfin?

We’re not stopping anytime soon. Expect to see more POS integrations, more user-friendly features, and more guidance from our amazing customer support team.

Not a Kickfin user yet? Now’s the time to rise with us! Get a demo of our restaurant-revolutionizing product today.

We’ll see you next year on the Inc. 5000!