Tag: restaurants

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Should You Implement Tip Pooling? Pros, Cons, and Best Practices for Restaurants

Summary

  • 77% of diners say that quality of service influences how much they tip, which begs the question: should tips be pooled and distributed to the whole team? 
  • Tip pooling is an arrangement wherein tips earned are pooled together and redistributed among all eligible restaurant workers. 
  • Payroll software simplifies tip and wage calculations, helping employers stay organized and compliant 

Tipping in restaurants isn’t just about the food; it’s about the entire dining experience—and it relies on teamwork. Serving food is as important as cooking dishes, cleaning plates, and resetting tables. While a study shows that 77% of diners say the quality of service influences how much they tip, it’s worth considering: should tips be shared beyond servers and also among the broader team of restaurant employees that contributes behind the scenes? After all, a good experience is a collective effort involving both front-of-house (FOH) and back-of-house (BOH) staff. This is where tip pooling comes in.

Tip pooling in restaurants defined

Everyone is familiar with the traditional tipping model: diners pay a voluntary but socially expected tip of at least 15% for good service. This is usually a cash tip directly handed to their server and kept by that server. Tip pooling is a formal arrangement that allows the restaurant to collect all gratuities and then redistribute the total amount of tips between workers.

Tip pooling is based on the idea that a gratuity is given for the overall dining experience, not just how quickly and politely the food was served. This means kitchen staff, bartenders, bussers, and front-of-house hosts all share in the reward.

The way the mandatory tip pool is handled can vary from restaurant to restaurant. There is no legally mandated method of working out how tips are pooled. Common ways of working out the tip split include:

  • Percentage-based pooling – Tips are pooled and redistributed according to pre-established percentages.
  • Role-based allocation – Tips are split based on roles, e.g., 60% to servers, 20% to bussers, and 20% to bartenders. 
  • Hour-based distribution – This method is based on the number of hours an employee worked in a shift. The employee will get tips that are proportional to the hours they worked. 
  • Shift-based pooling – Tip pools are created on a per shift basis, and only employees who worked a particular shift are eligible to get tips from the pool. 
  • Team-based pooling – Tips are distributed among teams. For instance, FOH workers get 70% of the pool, while BOH staff receive 30%.
  • Points system – Staff earn points based on their roles, experience, or contribution. At the end of the shift, points are totaled, and each point is assigned a dollar value calculated from the total tips earned.
  • Equal distribution – The most straightforward method wherein all tips are pooled and divided equally among all eligible staff. For instance, a pool of $1,000 is equally split among 10 employees. Therefore, each one takes $100 each.  
  • Combination or hybrid method – It’s the employer’s prerogative how to structure a tip pooling system. Therefore, the option to use a method or two from usual structures may be needed to address specific concerns.

What you need to know about tip pooling laws

Given how central tipping is to the service industry economy, it’s no wonder it’s been a legislative battleground. Federal law governing tips has undergone several significant changes over the years, including who’s entitled to keep their tips, who’s eligible for tip pooling, determining tip-facing occupations, recordkeeping rules for employers, and how tip credits can come into play. 

But after all of the rigorous changes, from new rules being enacted to some being repealed, here are the fundamental principles of federal tip laws:

Tips are exclusive to employees

The US Department of Labor strictly prohibits employers, including managers and supervisors, from keeping any portion of employees’ tips, whether the tips are received directly or via a tip pool. They are explicitly not allowed to demand, request, or coerce staff members to surrender their tips outside a legally compliant tip pooling or distribution system. 

Tip pooling

Employers can establish a system to manage gratuities and require employees to pool tips. However, managers and supervisors are not eligible for tips from these pools. It could include, however, non-tipped employees such as kitchen staff as long as the employer doesn’t take a tip credit and pays employees the full minimum wage. 

Tip credit

Employers can pay employees less than the federal minimum wage through a tip credit. For instance, employers can pay as little as $2.13 per hour if tips bring the employee’s total earnings to at least the federal minimum wage. 

If an employee performs dual roles, the employer can only take a tip credit on the job that has tipped tasks such as serving customers. For instance, an employee is working as a server and a janitor. In this case, the employer can’t use a tip credit for the hours the employee performs janitorial work because that’s not a tipped job. 

Service charges

Unlike tips, service charges are mandatory fees added to a client’s bill and are considered as property of the employer. Should restaurant owners choose to allocate a portion of the service charges to employees, those amounts would be classified as wages, and not tips. However, employers can use those amounts to meet federal minimum wage requirements under the FLSA.

Some states impose additional rules around service charges. For instance, in New York, restaurant owners must explicitly disclose how service charges are allocated in contracts, invoices, or menus. If a portion of the service charge will be shared with employees, the allocation must also be disclosed.

The main thing to remember is that unless a formal tip pooling system is in place, tips belong to employees, not the restaurant. While restaurants are allowed to bring in a tip pooling system, best practice says it should be done with the employees’ agreement and clearly explained in their contracts.As always, with any labor legislation, there may be local or state laws relating to gratuities. For instance, California doesn’t allow employers to take tip credits. Be sure to check your exposure or seek legal advice in this area before proceeding with any decisions regarding the income of tipped employees.

The pros of tip pooling

The main benefit of tip pooling is that it addresses the imbalance between front-of-house servers and other staff by pooling gratuities and disbursing them to all staff. Although well established, traditional tipping is an erratic way of being paid. Tips can also be vulnerable to discrimination since they rely entirely on social expectations rather than legislation. This means that even for serving staff who benefit from tips, the amount earned can vary wildly depending on myriad factors.

Tips can also create an “us and them” situation between front-of-house (FOH) and back-of-house (BOH) staff. Most restaurants experience this friction, where cooks and bussers are out-earned by servers simply because one group earns tips and the other doesn’t. Hiring kitchen and other backroom staff is easier when they’re not at a disadvantage compared to tipped front-of-house workers.In theory, tip pooling can strengthen teamwork by encouraging a greater focus on the overall dining experience.

The cons of tip pooling

Anything that impacts how much money staff takes home each shift is bound to cause friction, and tip pooling is no exception. As you’d expect for a system that takes money from one group and hands some of it to others, it’s divisive. Implementing such a system can introduce negativity into the workplace if handled poorly.

While some locations have found a workable tip pooling model, with buy-in from all staff, there is a strong chance that it simply takes a small pool of money and spreads it more thinly. Research has shown that although diners expect and prefer their server to keep all of their tips, a tip pooling system doesn’t change the amount people tip.

Tipped employees mostly rely on their tips more than their contracted salary to make ends meet. This means anything that cuts into that income can have an immediate impact on their quality of life and, by extension, their engagement at work. Introduce a tip pooling system to an existing restaurant, and your best front-of-house staff, the ones used to earning the most in tips, may well leave for a restaurant that uses traditional tipping to maintain their income level.

Tips for implementing an effective restaurant tip pooling system

Implementing a tip pooling arrangement is a balancing act. When done right, it can foster teamwork and fairness. However, if mismanaged, it risks impacting employee retention and morale. If you believe every team member contributing to the guest experience deserves a a part of the tip, getting it right from the start is crucial. Here are some practical tips for building a tip pooling system: 

Create clear and fair policies. 

While there’s no specific FLSA-mandated structure to building a tip pooling system, creating a system that works for your team is essential. Employers must develop a policy that is fair to all employees. Start by assessing your operations and determining the best distribution method. Should tips be allocated based on roles, hours worked, or shifts? Outline clear factors for determining allocations to ensure everyone understands and agrees on the system’s fairness.

Monitor, evaluate, and adjust.

Like any company policy, your tip pooling rules should not be set in stone. Since they directly affect employees’ wages, reviewing them regularly is crucial.  Is the system meeting your team’s needs? Are there gaps in fairness or clarity? Gather feedback and make adjustments as needed to enhance employee reception or ensure compliance with legal updates.

Understand the legal framework.

While you have the flexibility to structure your tip pooling policy, it must comply with federal and state laws. It is essential to understand the Fair Labor Standards Act (FLSA) and any applicable local regulations regarding tip pooling and wage distribution. Maintaining compliance ensures that your system is both fair and lawful, helping you avoid costly penalties.

Communicate with your employees.

Transparency is vital to successful implementation. Explain the policy to your employees during onboarding and provide them with accessible resources for reference, such as an employee handbook. Managers should also be prepared to address questions or concerns along the way. 

Use technology to stay on top of tip pooling calculations

Managing a restaurant involves many complexities, and handling payroll for various staff and teams is challenging on its own. Adding tip pooling to the equation can make it even more demanding.

The good news is that technology can simplify the process, ensuring that eligible employees receive the tips they rightfully earn.

Workforce.com is a system that can do that and more. Here are some of the ways it can help you manage tip pooling and wages.

  • Classifying employees – Workforce.com automatically knows who’s entitled to what. Whether your tip pooling system is based on roles, shifts, or hours worked, it can make accurate and automated calculations based on an employee’s qualifications. This can be easily set as early as onboarding and updated anytime on the system.  
  • Centralized records – Employee profiles created during onboarding sync across scheduling, payroll, and attendance systems, reducing errors and duplication. That means there’s only one source of truth for wages and tip calculations. 
  • Automated tip pooling – Tips can be pooled and distributed automatically, in line with your chosen method, and integrated directly into payroll. Workforce.com even allows integration with your POS to calculate and share tips seamlessly.
  • Streamlined payroll – Simplify payroll calculations, even with pooled tips. Payroll computations even with pooled tips are simpler. Workforce.com’s payroll system automates calculations, from hourly wages, deductions, and tip distributions, using employee data and predefined rules. No complications every pay period, just accurate wages, all the time.
  • Recordkeeping – Employers must adhere to recordkeeping rules regarding tip pooling. Stay audit-ready with detailed records of tip pooling distributions. Workforce.com ensures compliance and provides accessible data for employee inquiries or regulatory checks.

If implementing a tip pooling system feels overwhelming, let Workforce.com simplify it. It can help you comply with wage laws while streamlining the entire process. Ready to see how Workforce.com can help you with tip pooling, payroll, and managing your restaurant team? Book a demo and see it in action.

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SHRM 2024: A Guide to Chicago Restaurants & Bars

oil painting of chicago's skyline

With the 2024 SHRM Annual Conference & Expo right around the corner, HR folks everywhere are understandably beefing up their itineraries for a four-day stay in Chicago, the host city.

As fate would have it, our team at Workforce.com is headquartered in the Windy City. As locals, we feel obligated to share our insider information on the best restaurants to hit while visiting the city. Of course, as any true local would know, we can’t share the closest guarded spots with you. But this is still a pretty thorough guide, so don’t worry.

Here is our list of must-tries categorized by neighborhoods from several local, self-proclaimed foodies in our office:

LEGEND:

C = Casual

B = Breakfast

L/D = Lunch/Dinner

D = Dessert

Restaurants

  1. Lakeview

    1. C B Ann Sathers – Iconic breakfast spot that serves some of the best cinnamon rolls you’ve ever had. Get the eggs benedict and some rolls to go.
    2. C L/D Will’s Northwoods Inn – Lively casual sports bar with neighborhood vibes. Don’t miss the chicken ceasar chicken wraps, cheese curds, and onion rings.
    3. L/D Dear Margaret – A very cozy, classic french restaurant, perfect for smaller groups and couples. Start off with the charcuterie, a glass of wine, and the duck bolognese for an entree.

  2. Lincoln Park

    1. C L/D Old Pueblo Cantina – Mexican joint with great tacos and even better margaritas.
    2. C L/D Pequod’s Pizza – Iconic pizza that serves what’s arguably the best Chicago deep-dish style pizza in town.
    3. D Annette’s Italian Ice – Window-service ice cream and frozen yogurt shop that specializes in their Italian ice. Known for their fruit flavors like lemon, blood orange, and passion fruit, don’t forget to bring cash!

  3. Logan Square

    1. L/D Cellar Door Provisions – A chill, laid back wine bar whose menu landed it a spot on the Michelin Guide. Please for the love of God, don’t miss out on the burger. One of my favorites in the city.
    2. B D Sugar Moon – A bakery adored with an overwhelming amount of goods, each one of them more delicious and creative than the next. Don’t skip out on their jalapeno-cheddar scones or their tahini chocolate chip cookie.
    3. B L/D Lula Cafe – New american food served in a very old school manner. For breakfast, get the french toast, the breakfast burrito, and/or the tofu and vegetable scramble. For dinner, the pasta Yiayia, fried mushrooms, and sweet and sour onion focaccia are standouts.

  4. Palmer Square / Bucktown

    1. C B Allez Cafe – If you’re looking for one of the best breakfast sandwiches in Chicago, look no further than Allez Cafe. My suggestion: one breakfast sandwich with a cream top coffee. Thank me later.
    2. D Margie’s Candies – Over 100 years old, this ice cream shop is something to behold. I could drink the hot fudge from their infamous sundaes with a straw…
    3. L/D Giant – This is the place you bring someone to when you’re really trying to impress them. Their ever changing menu makes it hard to recommend specific menu items, however you truly can’t go wrong.

  5. West Town

    1. C L/D Mott St – Asian fusion with a great outdoor space and an even better burger (only served prior to 7 pm!)
    2. L/D Kai Zan – Amazing, fresh, quality sushi served at a reasonable price. If you’re feeling up for it, their 10+ course omakase menu for $90 has yet to be beat.
    3. L/D Lao Peng You – Featured in The Bear, this chinese spot has some of the best dumplings and noodles in the city. With no reservations, I’d recommend going for lunch if possible.

  6. Old Town

    1. C L/D Ranalli’s – Sports bar that caters to huge groups, great outdoor space, and even better food. You cannot leave without having the hot honey soppressata pizza. Also, a special shout out to their chicken fingers… best I’ve ever had.
    2. L/D Topo Gigio Ristorante – When you think of an old school Italian spot, this is it. The perfect order: an espresso martini, the calamari, Conchiglie Alla Sarda pasta, and tiramisu to finish. You might not sleep but it’ll be worth it, I promise.
    3. C B Nookies on Wells – An adorable breakfast spot notable for their french toast, crepes (sweet or savory), and eggs benedict.

  7. Gold Coast

    1. L/D Gibson’s – A classic white table-cloth all-American steakhouse. Known for their surf & turf and their absolutely massive desserts – the carrot cake slice is something to behold.
    2. L/D 3 Arts Club Cafe at RH Chicago – One of the most beautiful restaurants is in the historic landmark where Restoration Hardware resides. Their lobster roll is a 10 out of 10.
    3. C B The Original Pancake House – A breakfast chain that has a place near and dear to my heart. I’ve been getting their 49er pancakes with a side of extra crispy bacon for the past 20 years and I don’t plan on stopping anytime soon.

  8. River North

    1. C B Doma Cafe – Small, european-influenced breakfast spot known for their hash browns, cevapi, olive oil cake, and burek.
    2. L/D Lil’ Ba-Ba-Reeba! – Spanish tapas perfect for big groups. Must-haves: the dates, the brussel sprout salad, and the patatas bravas.
    3. L/D Bavette’s Bar & Boeuf – My favorite restaurant in the city, hands down. Albeit, a more pricey option, but offers immaculate vibes, top-notch service, a french dip that will knock your socks off, a wedge salad worth crying over, and an ice cream sundae that I dream about. Can’t get a reservation, try their sister restaurant just next door: Gilt Bar.

  9. West Loop

    1. C L/D Green Street Smoked Meats – Open concept BBQ hidden in an alleyway offering some of the best BBQ Chicago (& beyond) has to offer.
    2. L/D Duck Duck Goat – From Top-Chef and Chicago icon, Stephanie Izard’s take on Chinese fusion is done beautifully here. Please get the goat slap noodles, xiao long bao, braised short ribs, and the duck fried rice. Oh and save room for the seasonal soft serve ice cream.
    3. L/D Au Cheval – All I have to say is they are known for their burger for good reason. Be sure to get it with their bacon.

  10. Greektown

    1. C L/D Greek Islands – Arguably the best Greek restaurant in Greektown, this place lives up to its name. Keep it classic with some saganaki, moussaka, and grape leaves.
    2. D B Lou Mitchell’s – Opened in 1923, this old school diner is perfect for the classics: silver dollar pancakes, waffles, a Denver omelet (hobo style), and a side of raisin toast.
    3. L/D Monteverde – One of Chicago’s most popular Italian restaurants. Hard to get a reservation with their handmade pasta and amazing appetizers. If you are able to snag a spot, start with the Burrata E Ham, any of their pastas for your main will most definitely suffice, and end with the butterscotch dessert or the tiramisu.

  11. The Loop

    1. L/D Cindy’s Rooftop – This rooftop restaurant and bar has incredible views of the lake and Grant Park. I recommend going for happy hour and grabbing a drink or two with a couple starters.
    2. C B L/D Revival Food Hall – This place caters to everyone and anyone. A huge food hall that truly has the best of the best. From their on-site cafe for your coffee, to artisan sandwiches at Danke, fresh poke from Aloha Poke, health-focused bowls from Fare, and so much more. Definitely worth just checking out if you’re in the area.
    3. C B L/D The Exchange – This place is pretty unassuming on the outside, but once you’re sat inside their atrium, you’ll understand why I strongly recommend this place. I encourage going for lunch and grabbing their turkey club sandwich with a side of fries.

  12. South Loop

    1. C L/D Nepal House – Authentic Nepalese Indian food can be found here. Keep it simple with their garlic naan, chicken makhani, and Momo’s.
    2. L/D Bistro Monadnock – This french bistro is located in the historic Monadnock building. I strongly suggest grabbing a french onion soup to start as well as their croque madame for an early lunch.
    3. C B Eleven City Diner – Another iconic Chicago diner serving up some old-school Jewish favorites. Think matzo ball soup, pastrami on rye, and a brisket sandwich on brioche-like Challah. Beyond good.

  13. Bridgeport

    1. D Runaway Cow – Newly opened vegan ice cream spot that serves oat-based soft-serve. I swear non-vegans won’t be able to tell the difference. It’s that delicious. Get a snowstorm; their take on a Dairy Queen Blizzard.
    2. C L/D Kimski – This casual korean-polish fusion sounds like it might not work, but I promise it does. Don’t believe me? Get their Maria’s Standard and report back to me.
    3. C L/D The Duck Inn – Worth it simply for their outdoor space. I’d sit outside and order the duck for two, prawns, and the mushrooms and polenta.

  14. Chinatown

    1. C L/D QXY Dumplings – This place is worth the wait. Put your name down, walk around Chinatown, and be prepared to feast on some unreal soup dumplings. Specifically the pork and cabbage, beef and onion, and the lamb and coriander. I also recommend getting a side of kimchi, wood ear mushrooms, and cucumber salad.
    2. C L/D Go 4 Food – This casual Chinese seafood spot has been awarded a Michelin star for good reason. Be sure to get the bao taco, the walnut shrimp, and of course, the dungeness crab.
    3. D Chiu Quon Bakery – A classic Chinese bakery that almost always has a line. Known for their pork buns, Portuguese egg tarts, sesame balls, and so, so much more. Be sure to bring cash with you!

  15. Bronzeville

    1. D Shawn Michelle’s Ice Cream Shop – One of our claims-to-fame when it comes to ice cream. The honey cinnamon ice cream and the banana pudding are incredible. But truly… you can’t go wrong with any of their flavors.
    2. C L/D Cleo’s Southern Cuisine – This creole spot is known for having some of the best chicken wings Chicago has to offer. Order the sauced six with the mac & cheese. You won’t regret it.
    3. L/D Bronzeville Winery – Whether or not you’re partaking in their wine list or cocktails, be sure to get the sweet potato ribbons, brussel sprouts, and watermelon steak (I know, just trust me).

Bars

There’s nothing better than a productive day at the SHRM conference; connecting with others in HR, checking out the latest in tech, and learning from some knowledgeable speakers. But the best part? Rounding it all out with a drink at a beautiful cocktail lounge, beer garden, or a rooftop bar. Here is a list of great spots to grab a drink near the McCormick Center for your next team happy hour or solo nightcap:

  1. Moody Tongue Brewery
  2. M Lounge
  3. Best Bar
  4. 16th Street Bar & Coffee Lounge
  5. Skylark
  6. Mitchell’s Tap
  7. Turtle’s Bar & Grill
  8. VU Rooftop Bar
  9. Reggies Chicago
  10. Spoke and Bird
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8 Top Hospitality Trends & Statistics (2023)

Summary

  • The hospitality industry is growing at a steady rate. – More

  • Hospitality businesses face seven supply chain challenges. – More

  • Unemployment rates in the sector have decreased significantly. – More

  • Restaurant profit margins and revenue are increasing slightly. – More

  • Hotels saw record-high average daily rates and revenue per available room in 2022. – More

  • 853 million passengers flew with US airlines in 2022. – More

  • Leisure travel is a priority for most people. – More

  • The outlook for business travel is looking similar to 2019. – More

The hospitality industry is one of the fastest-growing industries in the US. With over 15 million people employed in various roles and sectors, this industry plays a critical role in driving economic growth and providing customers with unforgettable experiences. 

Hospitality covers a number of sectors, including the hotel industry, the travel industry (including business travel), and restaurants. For HR professionals and employers in the hospitality and tourism industry, staying informed about trends and statistics is crucial for making informed decisions that can positively impact their businesses. 

In this article, we will be presenting some insightful industry statistics and trends that will help you gain a better understanding of the current landscape of the sector.

The hospitality market continues to grow despite inflation

The hospitality industry, like practically any other sector, is experiencing a slow and steady recovery from the effects of the coronavirus pandemic. The market grew from $4,390.59 billion in 2022 to $4,699.57 billion in 2023, presenting a compound annual growth rate (CAGR) of 7.0%.

The Russia-Ukraine war has proven to be a hurdle for economic recovery as the conflict brought about sanctions across countries leading to inflation and supply chain disruptions. Despite this, hospitality sectors are expected to grow to $5,816.66 billion by 2027 at a CAGR of 5.5%.

The industry faces 7 supply chain challenges

Research by the AHLA and Avendra shows that there are seven market forces that have an impact on commodities and the supply chain:

  • Inflation – hospitality-related products will continue to see inflation rates between 5 and 10% for the next few quarters. This is more than twice the historical average.
  • Tight labor market – while the unemployment rate might be improving in the hospitality sector, other industries that it relies on, such as manufacturing and the retail trade, are still dealing with labor shortages. They have had to increase wages to retain workers, and this cost will be reflected in the cost of the goods and services they provide to the industry. 
  • Product availability – manufacturers and producers are rationing their products to catch up to their demand backlog. To avoid delays, hospitality businesses need to communicate well in advance with distributors. 
  • High product demand – has contributed to increases in the price of energy and items like seafood, beef, cooking oil, coffee, and to-go packaging. 
  • Russia-Ukraine war – has had an impact on inflation. 
  • Energy prices – Oil and energy prices are volatile due to supply constraints and the possibility of a recession.  
  • Transportation challenges and lead times – we are seeing high levels of US national average freight rates. Ocean and freight rates are decreasing but are still higher than pre-pandemic levels. Lead times on equipment and textiles are longer due to delays in the Asia-Pacific region.  

Leisure & hospitality unemployment rates have reduced drastically

According to data from the US Bureau of Labor Statistics (BLS), the average annual unemployment rate in the leisure and hospitality industry in 2022 was 5.8%. This represents a 43% drop from the previous year and the third lowest in 10 years. 

The lowest rates were recorded in 2018 and 2019 at 5.7% and 5.2%, respectively. The COVID-19 pandemic saw unemployment rates skyrocket to 19.4% in 2020, largely due to the mandatory closures of many hospitality businesses. Last year’s decrease means that the industry’s unemployment rate has reached pre-pandemic levels, which is particularly impressive considering the country was also going through labor shortages and the Great Resignation. 

Restaurant profit margins and revenue have increased slightly since the pandemic

In the past year, restaurants experienced increases in both profit and revenue since the pandemic. 

Food service establishments reported an average revenue of $1.5 million in 2022 – a 7.4% increase from the year before. This increase was not felt across the board. Restaurants with over 80 seats were more likely to experience a revenue increase. A number of restaurants with smaller capacities actually experienced a decrease in revenue compared to 2021. 

Average profit margins were at 10% in 2021 and saw a slight increase in 2022 to 10.6%. Once more, higher-capacity restaurants were more likely to see an increase in profits. Establishments of 120 seats or more reported profit margins as high as 13%.

The food service industry is reported to see continued growth in 2023. The National Restaurant Association forecasts $997 billion in restaurant industry sales in 2023. This is partly due to higher menu prices. 

Hotel industry rates and revenue are reaching new heights

According to hotel industry statistics by STR, 2022 saw record-high average daily rates (ADR is the average paid for hotel rooms in a specific period) and revenue per available room (RevPAR). In 2022, ADR was up 13.6% from the pre-pandemic levels (2019) and reached $148.83. 

RevPAR is a crucial KPI for most hoteliers and owners in the hotel market. It is calculated by multiplying a hotel’s ADR by its occupancy rate (the ratio of rooms rented to the total available rooms). In 2022, the industry’s revPAR was $93.27, 8.1% higher than in 2019. 

Hotel occupancy rates, on the other hand, were still 4.9% lower than pre-pandemic levels at 62.7%. 

The report showed that hotel bookings and overall industry growth were not linear or even. The occupancy rate varied greatly depending on the month and season. In January 2022, the rate was 12 to 14% lower than 2019 levels, while less than 1% lower in October. 

Watch: The 2023 Hotel Industry Outlook with AHLA President & CEO

US airlines carried 853 million passengers in 2022 

The airline industry is on the road to recovery as domestic and global travel continues to increase, but air travel has yet to reach pre-pandemic levels. 

In 2019, US airlines carried a record-breaking 928 million passengers right before the onset of the pandemic. Travel restrictions brought these numbers down to just 3 million in April 2020.  

In 2022, US airlines carried 853 million passengers, a 30% year-to-year increase from 2021 and 8% lower than the record-breaking 2019 numbers. Of these, domestic travel accounted for 751 million passengers, and international travel accounted for 102 million. 

Most people are prioritizing and planning leisure travel this year

According to the American Express 2023 Global Travel Trends Report, the appetite for travel and tourism is alive and well. Eighty-five percent of respondents indicated that they plan on taking at least two leisure trips in 2023. Seventy-eight percent stated that they consider leisure travel as an “important budget priority.”

The research uncovered four major trends in travel tourism:

  1. Tourists want to discover hidden gems and “lesser-known destinations” while also supporting local communities.
  2. Travelers are looking toward pop culture when making decisions on where to travel and why. 
  3. Food is an integral part of the travel experience. 
  4. Restorative vacations are increasing in popularity, where travelers prioritize mental and physical self-care. 

These trends were found to be particularly prevalent among Gen Z and millennial respondents. 

Business travel is nearly back to “normal”

In a survey of 100 global corporate travel managers, Morgan Stanley found that business travel has bounced back from the COVID-19 disruptions. Many respondents believe that business travel budgets and expenditures are either back to pre-pandemic levels or, at least, very close. This is despite the fact that the costs of airfare and lodging are higher than pre-pandemic levels. 

Furthermore, there is an expectation that travel budgets in 2023 will be anywhere between 6% to 10% higher than 2019 levels. Corporate airfare budgets, for example, are expected to be 9% higher.

Three other trends affecting the business travel industry are:

  1. Global hotel room rates are expected to rise by an average of 8%. 
  2. In an attempt to cut costs, travel managers are looking for cheaper alternatives to upscale hotel brands for business trips. Thirty-one percent of respondents are disregarding hotels altogether and opting for short-term rentals instead. 
  3. Virtual meetings are still considered alternatives to business trips. It is expected that nearly 18% of business travel will be replaced with virtual meetings. The digitalization of business trips is not just a cost-cutting measure. Sustainability is also a driving factor as companies are looking to be more eco-friendly.  

Simplify & streamline hospitality operations with Workforce.com

The hospitality industry shows promising signs of recovery after what has been a turbulent few years. It has never been more important for businesses, from neighborhood restaurants to hotel chains, to find ways to improve labor efficiency and maximize profits. 

Our workforce management software for hospitality helps you simplify hospitality employee scheduling, improve communication, and optimize labor costs.

To find out more, get in touch with our team today.

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Preventing employee time theft in restaurants

Summary

  • Employee time theft is when employees are paid for work they did not do

  • Employee time theft can come in various forms

  • Restaurant managers can prevent time theft with workforce management software

As a manager of a restaurant, when you think of employee theft in the workplace your mind may automatically go to blatant examples, such as staff stealing equipment, cash from the register, or even snacking on supplies. However, there’s a less blatant form of workplace theft: employee time theft.

While employee time theft is not always easy to spot, the impact is. Employee time theft directly impacts labor costs, and sadly, it’s not uncommon. Time theft can be prevented by investing in innovative time tracking software that ensures maximum employee productivity at all times.

What is time theft?

Time theft is when an employee is paid for time they didn’t work. It typically applies to hourly employees rather than exempt employees. Therefore, as a restaurant manager, you are at a high risk of being a victim of employee time theft.

What does the law say about time theft?

Unfortunately for employers, there are no explicit federal time theft laws, which puts businesses in a vulnerable position. While there are ways some businesses may be able to recoup losses through a civil suit, there is no guarantee this will be successful. So, employers need to make sure they’re doing everything they can to prevent time theft in the work environment.

Recognizing time theft in restaurants

There are different forms of time theft. Here are the major ones to look out for:

  • Falsifying timesheets: This is when employees misrepresent work hours. For example, an employee only worked 30 hours in a week, but they doctor their timesheet and say they worked 45 hours. If your restaurant uses temporary staff from staffing agencies, this is something to watch out for. A restaurant in Florida found it had $10,000 added to its payroll costs when a temp agency worker fraudulently misrepresented his work hours.
  • Buddy punching: This is when an employee clocks in and out for a coworker. If an employee is running a few minutes late and doesn’t want this to be recorded, they may ask a coworker (who’s already in the restaurant) to clock in. The reverse can also be true, employees can leave their shift earlier than scheduled, but have their buddy clock out for them.
  • Extended breaks: Employees may take too long on lunch breaks or go for unauthorized breaks like smoke breaks. This is likely to happen where there’s easy access to a back door.
  • Doing personal tasks during the workday: Instead of clearing tables, wait staff are surfing social media on company time or sneaking off to the restroom to take personal calls. A 2020 Digital Distraction & Workplace Safety survey revealed that the average employee spends 2.5 hours each workday looking at digital content that is unrelated to their job.

Uncovering time theft in your restaurant

While time theft can be difficult to prove, here are a few pointers that you may realize at your workplace:

 How to prevent time theft

Prevent time theft by using innovative scheduling and timekeeping software that ensures there’s no lost productivity from employees.

Use accurate scheduling software

According to the Fair Labor Standards Act (FLSA), employers must pay staff according to what’s recorded on the timesheet. Therefore, it’s important that your scheduling software creates the right shifts in the first place. Moreover, all schedules should properly align with hours reflected on timesheets, as this will prevent paying employees for hours they didn’t work.

Use an automated time clock solution

Eliminate the risk of falsifying time cards with a time clock app. Here’s how it works:

    • Staff clock in and out in an app with their personal IOS and Android devices.
    • Managers can guarantee the right worker is in the right shift, at the right place, at the right time with unique clock in/out passcodes, electronic photo verification, and GPS location data. This will directly eliminate buddy punching.
    • All clock-in data is automatically recorded, and the app generates electronic timesheets — the perfect solution for business owners who are tired of using stacks of binders full of paper timesheets.

Give your managers the ability to manage operations during the day

Provide your managers with a time and attendance system that stays on top of employee productivity. Managers should be able to monitor employees remotely — all from a computer or mobile device. This kind of monitoring should take the form of a live timeclock feed and tardiness notifications.

Managers should also receive notifications when employees clock in and clock out for breaks. With these instant notifications, it’s possible to cross-reference clocking in and out with the shift schedule to make sure there are no discrepancies in break times. Giving managers the ability to manage operations during the day ensures they can easily spot time theft.

Create and enforce firm time and attendance policies

Create attendance policies and communicate them clearly to your staff. Your staff might be unaware of their actions and how they can be perceived as time theft, so it’s important they know what time theft is and how they may be breaking company policy.

Make sure time and attendance policies include clocking in and out procedures, break periods, and cell phone and social media usage when on the clock. It’s crucial that employees know what time theft is and understand that it will not be tolerated. If necessary, make sure policies are enforced with disciplinary actions, as they may act as a deterrent.

Provide an enjoyable work environment

Burnout, low pay, and minimal benefits may make employees more likely to commit time theft. Employers should provide staff with enjoyable working environments where they feel valued, taken care of, and respected – this always helps reduce time theft. Consider implementing something like an employee reward system to create a culture of positivity and motivation. You could also regularly grant time off — or add in an extra shift — for workers who excel in their roles.

Prevention is better than a cure

While you can’t go back in time to stop prior time theft, you can certainly take steps to prevent it from continuing. Use automated workforce management software to empower employees to make the most of the hours they’re scheduled for. Contact us today to learn how you can get started.

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Restaurant Tipping Laws [Federal + State]

Business owners in the restaurant industry are in a unique position when it comes to employee tips. As an employer, it is important to create a fair system for employees that makes sure employees are rewarded for their service, and also comply with IRS regulations.

There are a lot of nuances when it comes to federal and state wage laws and restaurant owners have a responsibility to implement policies that are legal yet rewarding for staff. Consider these two strategies to ensure your business remains fair but compliant.

What are tips?

Tips are optional payments received by employees from customers, typically in exchange for good service. Tips make up a large part of earnings as approximately $36.4 billion is earned in tips by tipped workers annually. A tipped employee is an employee that earns more than $30 a month in tips.

What does the law say about tips?

The law around tips differs on the federal, state and local levels. However, there are characteristics that remain the same throughout:

  • A tipped employee is an employee that earns more than $30 a month in tips
  • Employees who do not earn tips —also known as “non-tipped employees” (cooks, cleaners, dishwashers etc) must be paid the minimum wage
  • Tips are considered wages
  • Tips are strictly the property of the employee— there is no legal arrangement where an employer receives part of an employee’s tips. This is considered wage theft.

Federal Law

Federal law concerning tips is dictated by the Fair Labor Standards Act (FLSA) as mandated by the Department of Labor (DOL). This law tackles wages, work hours and minimum wage requirements.

You are required to pay $2.13 per hour in direct wages on the basis that what your employee earns in tips will equal the federal minimum wage. For example, your waiter works 30 hours a week and receives $200 in tips for that week. Your employee’s earnings look like this: $2.13 x 30= $63.90 ( which is called the cash wage) plus the tips of $200, which brings the total to $263.90. Their hourly wage works out to $8.79, (earnings divided by total hours) which exceeds the federal minimum wage.

In another week, your waiter works a 30-hour week again, but this time only receives $100 in tips. The waiter’s earnings look like this: $2.13 x 30=$63.90 plus the tips of $100, making the total $163.90. The hourly wage is $5.46. This does not exceed the federal minimum wage, so you must pay the waiter a tip credit to fill the gap and fulfill the minimum wage requirement ($7.25).

Tip crediting is the process of applying the tips towards your employee’s wage to ensure you are paying the full amount. In the example above, the $5.46 hourly pay does not meet the minimum wage, so the employer must fill that gap by paying the waiter an additional $1.79 per hour.

State Law

It is always important to check your local state laws on the Department of Labor (DOL) website.

Some states such as Minnesota, Oregon and California —do not allow tip credits under any circumstances. In California, the minimum wage is $14 per hour for employers that have more than 26 employees and $13 per hour for employers with 25 and below employees. Employers in these states must pay the full state minimum wage to their employers. Therefore your employees receive tips on top of their wages.

Although wage laws require employers to ensure that employees’ tips bridge the gap to make the $7.25 per hour minimum wage, it may improve employee morale and reduce turnover to go beyond that rate of pay. Especially now, when there’s a labor shortage, attracting restaurant employees is difficult and workers are demanding better working conditions. It’s not uncommon to see workers walking out or refusing to work for such low wages.

How are taxes reported on tips?

Tips are subject to employment taxes including Federal Insurance Contributions Act, (FICA), Federal Unemployment Tax Act, (FUTA) and Federal income tax withholding. This makes you liable for different payroll and tax obligations. You must pay the employer’s portion of FICA and FUTA taxes. This can influence your decision on which tipping policy to implement for your staff. Here’s the basics of tax reporting on tips:

  • Your employees are responsible for reporting all cash tips to you if they exceed over $30 and this must be done by the 10th of the following month of when the tips were received. For example, a waitress earned $550 in tips in February, so this needs to be reported to the manager by March 10th.
  • It is important you create an open environment for your employees to declare their tips to you, so you can fulfill these tax obligations.
  • If your employee refuses to report their tips to you, you are not liable for the employer’s share of FICA until the IRS is notified.

What are the options for tip policies in restaurants?

As a restaurant owner, here are three tip policies you could implement:

Everyone keeps their tips

Each employee keeps the amount of tips they earned at the end of the shift. Whilst this is a straightforward policy, it can be considered unfair. Only customer-facing staff (waitstaff and bar staff) would receive tips, this excludes back of house staff like dishwashers and bussers—who are also integral to the hospitality industry. This policy could lead to less back of house employees as they do not see any extra benefits.

Tip splitting or tip sharing

Tip splitting involves splitting the tips between tipped and non-tipped employees based on hours worked or by role-based percentages. Tip sharing is voluntary and there are no guidelines or laws. This policy ensures all employees receive tips, creating a fair environment.

Tip splitting can be confusing from a payroll perspective because you have to ensure your non-tipped employees receive the minimum wage plus their tips (which will also be taxed). Plus you have to ensure that you are applying the correct tip credits to the tipped employees’ wages even though their tips are being split. You also want to ensure that the non-tipped employees are not out-earning the employees who actually earn the tips due to the tip credit rules.

Tip pooling

Tip pooling consists of collecting the tips earned during a shift and evenly distributing the tips at the end of the shift. The tip pool is shared between both front and back staff.

Tip pooling is covered by the FLSA. You cannot apply a tip credit to employees’ wages who share tips with non-tipped staff, therefore you must pay the full minimum wage. For instance, normally you can apply a tip credit to the front-of-house staffs’ wages. But if they are part of a valid tip pool agreement where they will be sharing their tips with back of house staff, you cannot apply tip credits.

This policy is equitable, employees receive a fair hourly wage and the tips are also shared amongst all employees. But tip pooling may not be a sustainable solution when there are slow periods and you are operating with less turnover. Your staff may be disappointed that their tips are being split when there are fewer tips going around.

Which is best: tip splitting or tip pooling?

From a compliance perspective, tip pooling may be the best option. It is easy to calculate the tips and wages—you can easily keep up with your employee earnings. Everyone is earning the minimum wage plus tips, there are no calculations for tip credits.

A tip pooling policy also might help you attract staff—you are offering a benefit to prospective employees. A fair wage plus the potential of earning tips for all staff. However, it might be a good idea to let your employees choose which policy they want to be implemented. This gives your staff a voice and agency to set the conditions that they want to work under.

Manage tip calculation headaches

Whichever policy you decide to implement, the bad news is there are some calculations waiting for you. The good news is, workforce management software can help. Oftentimes you can connect it to your POS system, set the percentage of tips to be shared, and your employees automatically get what they’re owed based on hours worked. Learn more about how proper time and attendance tracking can help you manage tip calculations by contacting us. We’d love to talk you through it.

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Tipped restaurant and other service workers at high risk for ‘maskual harassment’

construction, mask, mobile technology, COVID-19
Everyone has been hit hard during the COVID-19 pandemic. Service industry employees, however, have been hit particularly hard. Many are out of work. And those who are able to work are working fewer hours and earning less in wages and tips.
Moreover, according to this survey (h/t: NPR), a majority of service industry workers are being forced to choose between earning valuable tips and staying safe by wearing a mask.

Consider these statistics regarding tipped employees:

  • 78 percent report experiencing or witnessing hostile behavior from customers in response to staff enforcing COVID-19 safety protocols.
  • 83 percent report that their tips have declined during COVID-19, with two-thirds reporting a decline of more than half.
  • 58 percent report feeling reluctant to enforce COVID-19 protocols out of concern that customers would tip them less.
  • 67 percent report actually having received a lesser than usual tip after enforcing COVID-19 protocols.
  • 84 percent report being within six feet of at least one person who is not wearing a mask in every shift, and one-third report being within six feet of 30 or more maskless individuals on every shift.

The kicker: 37 percent of tipped workers reported that their employer had not conducted mandatory training on COVID safety protocols and 69 percent reported that their employer is not consistently following all COVID safety protocols.

This is unacceptable. Restaurant workers are on the front lines of this virus working inside one of this pandemic’s most dangerous spreading environments.

They shouldn’t have to be de facto safety sheriffs, enforcing mask mandates and other health rules. Yet, that is the position in which many of their employers have put them, which, according to the above survey, is often without training or the enforcement of COVID safety rules.

Employees should not be placed in the position of enforcing COVID safety rules with a customer, especially when they risk the loss of tips and revenue as a result. Employers, do your part. Train your workers and set up a system of enforcement that takes your front-line workers out of the enforcement equation.