Restaurants Improve Gratuity Payouts as Tipping Increasingly Becomes the Norm

Restaurants’ efforts to optimize payouts come amid a generational shift toward tipping, per PYMNTS data.

The Context

As restaurants look to boost employee retention, many are seeking ways to improve the tip-divvying process, both reducing labor needs all told by taking time out of the payout process and making it easier for staff to get their payments.

These moves come as tipping catches on across more parts of the foodservice industry.

“When we look at the total addressable market of digital tipping, call it a few years ago, it has grown in multiples,” Brian Hassan, co-CEO of instant cashless tip payouts platform Kickfin, said in a conversation with PYMNTS. “What used to be only in full service is now in full service, quick service, airports, stadiums, personal services, and the list goes on. It touches our lives every day and almost every transaction we might encounter outside of retail.”

Plus, last year, restaurant team management platform 7shifts announced the addition of instant digital tip payments to its platform.

Jordan Boesch, founder and CEO of 7shifts, told PYMNTS in an interview that, with digital tipping, additional kinds of gratuity are possible — not just adding a given percentage to the check at the end of the restaurant experience, but also chipping in some money for people who are consumer-facing, behind-the-scenes, or even across various parts of the hospitality industry.

“Certainly, more consumers are tipping, but I would also say that we’re also seeing more restaurant brands looking at tipping more equitably across the organization,” Boesch, explained. “Some of the great brands are looking at how they can make these processes more equitable to all of their staff, not just specific departments, and maybe not just specific seniority levels.”

By the Numbers

Certainly, there has been a generational shift toward tipping not only the wait staff at full-service restaurants (FSRs) but other kinds of restaurant workers as well.

For PYMNTS’ study “Connected Dining: Inflationary Pressure Squeezes Restaurant Tips,” the first edition of PYMNTS’ Connected Dining series, we surveyed a census-balanced panel of more than 2,200 U.S. consumers in December, asking about how they tip at different kinds of restaurants. The results revealed that, while only 36% of baby boomers and seniors tip at quick-service restaurants (QSRs), nearly two-thirds of millennials and Generation Z consumers do the same.