How a POS Integrated Tip Management System Benefits Restaurants

How a POS Integrated Tip Management System Benefits Restaurants

Here in the USA, the tipping culture is quite prevalent. Even though protests have risen regarding the legitimacy of the system, the practice as of now is nowhere to go. It is a culturally given thing to tip your wait staff at least 15% of your food bill and 20% or above in case the service was that great. Given the importance of tipping your wait staff, next comes the question of what happens to the tips when the bill is paid via card. You may feel that it is no big deal but when you come to think of it thoroughly, in terms of all the servers and the number of tips that will get accumulated even over the span of a day, keeping a record of tips can be very troublesome. It is thus a good idea to have a POS software with an inbuilt tip management system.

How an Integrated Tip Management System Helps You Manage the Server Tips Easily

Tips are paid directly to the wait staff and are solely their income. Then as a restaurant owner, you may wonder why tips are essential to you. There are two significant reasons why you should employ tip management in your restaurant POS software. These are-

1. Measure Of Performance

While there are loopholes in the system, the tips that your staff earns are an excellent way to measure their performance. Indeed, the tips cannot be the only way to measure the performance of an employee, but given the simple rule with which they work (better the service, better the tips) they can be effectively used as one of the measures of your staff performance. Now, most tips are cash and go unreported. Not reporting tips can have a variety of reasons ranging from forgetting to report a tip to not reporting it for taxes.

Either way, your metrics will be hurt, and you may end up taking wrong staffing, hiring or promoting decisions based on these rough calculations. As your staff is the most critical part of your restaurant business and an extension of your restaurant brand identity, any poor decision while dealing with your team can cost you your restaurant itself. Thus, it is all the more critical for you as a restaurant owner to keep track of which employee is earning more tips, why and how much is the difference between him/her and others.

2. Designing Training Programs

Apart from making hiring and promoting decisions, keeping track of tips will also allow you to understand what level of service is best satisfying your customers, what upselling techniques are not pushing them away or what sort of attitude they expect from their servers. You can further train your staff based on this data to raise the overall performance of your restaurant staff. When your POS software directly manages tips, at least those extended on a non-cash basis, this analysis becomes all the easier and produces sharper results.

3. Track Of Difference

Tips are so crucial to waiters because the wages they are paid only cut it to taxes since they are below minimum wage level. The tips are literally all they live on. In most American states though if the waiters do not earn enough, the restaurant is supposed to pay the difference. Accounting for tips becomes extremely important here given that you as a restaurant owner will be paying an extra difference from your pocket. Coming back to the major problem of tips going unreported. When tips go unreported, it creates a problematic scenario for the restaurant owner who now has to rely upon the word of the employee solely. This creates a massive window for internal theft. A tip management system which is integrated with your POS software can go a long way in resolving the issue.

4. Better Customer Experience

Automation in restaurant technology has done wonders to elevate the customer experience. The final portion of that experience is giving tips. When the customer pays in cash, it is but obvious to expect a tip in cash but where card payments are involved, keeping track of a decent tip gets difficult. Not only do the customers now need to pay a separate tip in cash, but most customers end up tipping less in this scenario. Moreover, when some tips are deducted from different cards throughout the day, tracking exactly which tip goes to which staff member can be difficult. Ultimately such an activity which happens daily requires a systematic approach which your restaurant POS software can provide through an integrated tip management system.

How A POS Integrated Tip Management System Works

Now that you understand how having a POS integrated tip management system will benefit you, the next step is understanding how the technology will work.

Running a tip management system integrated with your POS software is the easiest restaurant operation that you will run. All the bills are calculated and generated through your POS Software. So when a customer’s card is swiped for a certain amount- including the bill amount which they mentioned, your POS will automatically separate the bill amount from the tip. The bill amount will be deducted as payment and the tip will go under the name of the server. You can pay your servers the cash equivalent of each of their tips. This solves the problem of tip calculation and unreported tips as far as card payments are concerned.

Though the tipping culture in the USA has come under a lot of scrutinies, and the authenticity of the system is up for debate. As for now, the system is not moving and having a POS integrated tip management system can work wonders for your establishment.    

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Nikunj is the Communications Lead at Restroworks, a global leader in cloud-based technology platforms. In his role, he oversees global marketing and branding initiatives for Restroworks across APAC, the Middle East, and the US.


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