5 reasons you should use cashless tips

Sponsored by Branch

Cash used to be king, but today it’s become time-consuming, inconvenient, and risky for both consumers and restaurant operators.

According to a recent PYMNTS study, 84% of restaurant transactions are cashless. In response to more consumers going cashless, more restaurants are moving to real-time payments to their staff. Yet, when it comes to adopting cashless tips for employees, many restaurants lag, in part due to misconceptions about the cost or difficulty of implementation.

If your restaurant is among the many still paying out tips with paper money, it could be costing you more than you think. Read on to learn five reasons why every restaurant should implement cashless tips now.

1. Save time, gain operational efficiencies. If time is money, it makes sense to save as much of both as possible. Using cashless tips can make the tip payout process faster and more efficient. Managers, who already have a pile of end-of-shift responsibilities, no longer need to spend time counting cash or risk running to the bank with thousands of dollars to get cash for employee tip outs.

Hop City Craft Beer and Wine was conducting anywhere between $60,000 to $100,000 per week in business and typically tipping out 18%, or $18,000. The large tip outs were incredibly time-consuming, raising red flags with the bank and taking managers away from more important tasks.

“On a Friday night, the manager is responsible for paying out the whole staff at the end of the night, which is maybe 30 people,” says CJ Dimino, Hop City’s director of operations. “In the past, that meant stuffing 30 envelopes with tips—that is time-consuming, just the physical manual labor. I’d say [going cashless] saves between one to two hours of management time each day. Now the process takes 10 minutes, tops.”

Switching to cashless tips has saved countless businesses time, money, and administrative hassle so they can get back to focusing on the customer experience and overall business growth.

2. Keep employees happy. The recent PYMTS Intelligence study, Generation Instant: Hospitality and Tips, found that 85% of hospitality workers are highly satisfied with instant tips payouts, and 82% choose this method when given the option.

Convenience is the most common reason hospitality workers say they favor cashless tip payouts. With cashless tipping, employees no longer wait days—sometimes weeks—to access their earnings, which is of particular importance to minimum wage workers who rely on tips for most of their income.

“[Branch] makes my job easier, and my manager’s jobs easier because we keep a happy staff,” says Dimino. “We’ve gotten zero negative feedback on it, which has been awesome. It’s been very, very smooth.”

3. Lower employee turnover. The restaurant industry has long ranked among the highest in terms of turnover. According to the Bureau of Labor Statistics, the 2023 quit rate in hospitality was nearly 5% higher than in any other industry.

With the Center for Hospitality Research at Cornell University estimating the average cost of losing a front-line employee at $5,864, it pays to implement strategies such as cashless tipping that can help retain—and attract new—employees.

Cashless tips can help with that. ¾ of today’s workers want to get paid every day; being able to get their tips paid out instantly and digitally helps improve cash flow for workers and can keep them from going to a competitor.

“Some restaurants go about cashless tipping by adding tips to their employees’ paychecks—those restaurants have high turnover,” says Fati Mixha, owner of Fairview Farmers and Jessica’s Restaurant in Texas and Illinois. “They can’t retain employees to the same level. Their employees aren’t as happy. So that was out of the question; no server wants that.”

4. Reduce manual errors, increase peace of mind. Cashless tip outs can reduce the register discrepancies that often plague restaurants, which can save operators money, reduce managers’ stress, and give employees more confidence in the accuracy and fairness of their tipped wages.

“The register has been right ever since we started using Branch,” Mixha explains, “since there are fewer hands in the till and Branch makes it easy to digitally tip out employees at the end of each shift. As a result, Jessica’s has saved an average of $3,000 a month—allowing for cost-savings and all-around peace of mind.”

Those savings extend to employees as well, Mixha adds . “Some of our previously underbanked employees had these accounts that might charge them a bunch of fees just to keep their account open. They just use Branch now and it’s been a positive change in their lives. They can get paid and use their money instantly—even if I’m not in town.”

5. Ease of implementation. Once you choose the cashless payment solution that’s right for you, make sure it’s one that is easy to implement for both you and your staff. With Branch, employees can self-onboard, and you receive personalized paycards for employees, a stack of instant issue paycards for new hires, educational materials for employees, and a dedicated customer success representative with you every step of the way.    

For more information and practical tips about implementing cashless tip payment solutions here.