Everything You Need To Know About The State Of Tipping In The Craft Beverage Industry
Are tips here to stay? Let’s dive in.
Tipping is a hot topic in the craft beverage industry these days. Below we deep dive into the state of tipping today, give a definitive answer to the question Are tips here to stay?, and share ways that you as a business owner can help maximize those tips for your hardworking employees.
The State Of Tipping In Craft Beverage Today
There are a lot of stakeholders when it comes to tips, and each one has a lot to say. Here’s why tipping is being discussed so widely right now, broken down by the parties at play:
Guests: Tipping Fatigue Or Intrigue?
As we’ve now crawled out of the pandemic and hunker down instead for an impending recession, rising expenses are on everyone’s minds.
Craft beverage businesses are raising menu prices to accommodate their increased expenses, and guests’ wallets are feeling it. So when a POS device gets passed to them looking for a tip, some guests may second guess being as generous as they were two years ago.
Experts say the pandemic actually accelerated the trend of higher tips. It makes sense, right? Hospitality businesses were hit hard during lockdown, requiring workers to mask up, sanitize often, and continue working their tails off. Consumers, rightfully so, were more generous with tips to those serving the food and drinks that provided a sense of normalcy in that crazy period of time.
But nowadays, guests may be holding their credit cards closer to their chests as inflation skyrockets. Here are the factors leading to tipping fatigue for guests:
- Business types asking for tips are expanding: Businesses you didn’t expect—like Starbucks—to those you really didn’t expect—like mortgage companies—have their hand out now when it comes to tips. This makes consumers feel like the cost of their coffee, which did already go up, is even more expensive now.
- Tip jars are easier to ignore: …and less likely to be used. A fun pun on a mason jar has been replaced by businesses using more digital payment solutions, which often prompt guests for tips when they’re asked to sign.
That said, when done “right” in the guest’s eyes—that is, in exchange for great service and products—guests are happy to tip craft beverage workers. Craft Beer Professionals actually suggest that guests want to reward good service with tips.
“Surprisingly, it was our guests who were most clearly opposed to getting rid of the tipping model. They really value that opportunity to compensate service workers for their performance.”
–Scott SirLouis, COO at The Brass Tap Craft Beer Bar
So while some businesses may be getting a hairy eyeball when they ask for a tip, guests at your craft beverage spot are still happy to thank service staff with those well-deserved tips.
Staff: Tipped Employees Depend On Gratuities
This probably won’t come as a surprise, but tipped employees like tips! And with the federal minimum wage below $3/hour, they depend on tips to earn a reasonable living.
When asked whether a higher hourly wage should replace tips, 89% of servers said they’d rather work for tips. One reason for this is the concern that once guests know service staff are making a full minimum wage, they’ll reduce their tipping generosity.
And despite some split opinions from guests on whether or not they like tipping, Starbucks has proven that asking for them works! The fast casual coffee giant rolled out a new tipping option on credit and debit transactions in December and since then, nearly half of all card transactions have included a gratuity. Imagine how pleased those baristas are!
Businesses: A Balancing Act Of Pleasing Everyone
Of course, opinions among business owners vary when it comes to tipping models.
For the most part, tipping is good for bottom lines. Labor costs already account for 25-35% of sales typically, and tips ensure staff get compensated appropriately without dipping even further into profits.
Plus, because service staff prefer to be tipped, using a tipping model gives craft beverage businesses an advantage when it comes to hiring. Because it’s so competitive to get reliable talent in the service industry, this upper hand alone makes using a tipping model a no-brainer for most business owners.
Where Is Tipping Going, Then?
Wherever you want it to, really. With a majority of guests, staff, and businesses on board, it’s safe to say that tipping isn’t going anywhere if you don’t want it to. As always, decision makers should do what’s best for their individual business, but rest assured that if tipping works for your team, your guests are game.
That said, there are still logistical concerns when it comes to getting staff their tips in a timely and efficient manner. Which brings us to…
Tip Payouts Are A Continued Challenge
The increase in digital payments has resulted in a lot of streamlined efficiencies for businesses, but it’s left them short on one important thing: cash.
Daily Cash Tip Payouts: Preferred By Staff, Hard On Business
Back when a majority of tips were left in cash, staff left shifts with pockets stuffed and smiles big. Now a buzzword in the industry, “instant payment” is a coveted benefit for servers. After all, when tips are a majority of your compensation, it makes sense staff would prefer to have it right away!
But doing daily cash tip payouts is hard on businesses:
- No cash on hand: As mentioned, more and more guests use digital payments, leaving businesses short on cash. Running to the bank just adds another to-do on an already full plate for owners.
- Added labor: If there is cash on hand, it’s added labor to divvy tips out to everyone after a shift.
- Added risk: It can be dangerous for a business to keep a large amount of cash on hand, and it’s also risky for staff to walk out of there with a bunch of cash in their pockets.
- Privy to mistakes: Manually counting out tips leaves businesses at the risk of making mistakes.
Point Of Sale (POS) Tipping Tools
There’s clearly no perfect solution when it comes to tipping. As long as you’re offering other benefits that make staff feel valued, they’ll work with you to find a tipping method that works best for everyone.
Arryved’s Employee Time Card Report includes the following to make compensation a piece of cake:
- Each employee’s regular, overtime, total hours, and pay
- Allocated tip totals using tip pools, if you’d prefer
- Labor roles as well as clock in and out times
- Easy filtering by day or range of days
- Automated calculation of tip totals based on weighted tip assignments
- Ability to add cash tips to the pool
How To Maximize Tips For Your Craft Beverage Team
No matter how your business chooses to payout tips, this is surely a way to satisfy staff: Ensure those tips are optimized for maximum compensation! Here are 3 ideas that guarantee higher tips for your deserving team:
1. QR Code Menus, Ordering, & Payments Are Proven To Boost Tips By 24%
QR codes are being used in craft beverage spots everywhere, and it’s because there are so many benefits for guests, staff, and business.
Guests have an enhanced ordering experience with QR codes. Being able to view the menu, order, and pay all from your own smartphone makes it easier to get whatever you want quickly.
Staff can better manage a packed house with assistance from QR codes, too. Because guests can order and pay on their own, staff service a larger number of people with a smaller team, which inherently means there are more tips to divide among fewer people.
Not only that, staff improve the guest experience even more because they have time available to greet guests with a story of the business, offer thoughtful upsells, or invite them to an upcoming event. That enhanced 1:1 time boosts tips further!
But, it gets even better. Since it’s easier than ever to order, guests order more and ring in higher tab sizes. That’s good for your business’s bottom line and means guests are tipping on a higher bill.
Hello, maximized tip size!
2. Service Fees Ensure Both Front Of House & Back Of House Staff Are Tipped
Do you know what more and more craft beverages businesses are implementing? Service fees! You’ve probably seen these yourself: They may be at the bottom of a bill listed as a hospitality fee, kitchen fee, health and wellness fee, or simply an auto-gratuity.
If you’d like to guarantee boosted tips for your team, adding an auto-gratuity is a great option. Consider using a higher percentage than you normally would for expected tips so you can compensate back of house staff too.
Savvy POS systems, like Arryved, make it easy to apply auto-gratuity quickly. So, if you know you’re hosting an event where guests are going to be especially demanding, such as a Super Bowl party, you can turn auto-gratuity on for that night only. Then you ensure no sore loser forgets to tip their lovely beertender!
3. Optimize Tip Amounts In Your POS Interface
You’ve likely been handed a POS device with a handful of tipping percentage options—say, 15%, 18%, 20%, or Custom %. More often than not, you probably pick 18%, or the middle-of-the-road option.
Craft Beer Professionals (CBP) argue there’s science behind that! Guests don’t want to be too generous or too cheap, so they often choose the middle option when deciding how much to tip.
So, here’s our tipping maximization advice: Bump those percentages up! Shoot for the moon with 25%/30%, or stay modest by starting the set percentages at 18%. It’s not slimy—your guests still have the option to customize the amount—and your staff deserve it. CBP, among other humans lazy with button pressing at checkout, are willing to bet your guests won’t even notice. And suddenly you have even more satisfied staff members!
Regardless of what tipping model you and your team choose to use, your POS system should be there to make compensating staff as easy as possible. Arryved POS offers:
- Easy-to-read reports that make quantifying employee compensation a breeze
- Profit-boosting QR code technology that your service model can flex between using
- Customizable tip tools like auto-gratuity and dynamic tip percentage options
Plus, Arryved is built and run by industry veterans, so we’re happy to help you choose the best tipping model fit for your business. Request a free, custom demo today to see the system in action!