Every week we comb through the news to find employment trends affecting the hospitality industry so you don’t have to. This week’s topic: digital tipping.
Over the past couple of years, with many pushing to increase minimum wage, the topic of tipping foodservice and hospitality workers has been resurfacing. Employees like servers, bartenders, and some hotel staff typically rely on tips from customers to make up for the fact that they make less than minimum wage – a common practice at restaurants and hotels. But in an increasingly cashless world, managers are finding that employees are losing out on tips that customers want to give.
Think of the times when you wanted to tip someone but didn’t have any cash on you. Maybe it was a valet or a housekeeper, or a barista who went above and beyond. For you, it may be insignificant, but for the worker, it can add up. The ability to give/receive tips can make all the difference, particularly during the pandemic where thousands of workers were furloughed or laid off.
In order to ensure that workers are able to receive tips, more companies are beginning to think about digital tipping, which is exactly how it sounds: distributing electronic tips as opposed to cash. With restaurants across the country going increasingly cashless and concerns surrounding exchanging money during the pandemic, it makes sense. Some hoteliers have turned to youtip, a platform that scans a QR code and allows you to tip electronically without having to download an app to your phone. Managers affix a QR code to employee’s badges or name tags, and voila! You can now tip without even having to make a transaction.
Hospitality isn’t the only industry looking for technology-driven tipping methods. Businesses like hair and nail salons began shifting towards digital tipping as many go cashless. One company, Tippy, offers digital tipping specifically to the salon industry and launched a new online tipping platform at the start of the pandemic. In just over a week, they brought in over $40,000 in tips for furloughed workers to help support their favorite stylists.
If your business is considering a digital tipping platform, weighing the pros and cons will help you decide if it’s the right choice for your team. We’ve outlined some of them below:
- Customers can tip whether they have cash or not.
- Employees will likely have more job satisfaction if they’re receiving more compensation.
- Keep employees safe by reducing the amount of cash they’re carrying and minimizing the cash touch points.
- Reduce cash flow problems – don’t run out after tip-out at the end of the night.
- Customers may not want to go through the process of using a tipping platform.
- Customers may be uncomfortable not knowing if the worker actually gets the tip.
- Businesses will have to spend time (and possibly money) getting their team trained and on the platform.
As the economy transforms into a more technological landscape, transforming with it is the best way to stay ahead of the competition. While digital tipping may not be right for every business, it’s a good solution to the “I don’t have any cash on me” problem.
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