Reduce costs and labor with automated tip distribution

As labor costs soar and the labor shortage persists, it has never been more critical for operators to ensure their employees are being paid correctly and that morale is high.
Photograph: Shutterstock

As labor costs soar and the labor shortage persists, it has never been more critical for operators to ensure their employees are being paid correctly and that morale is high. Inaccuracies in wage distribution, particularly in regards to tips, can not only cause legal issues for restaurants, but they can also alienate workers if they aren’t being paid properly—which can exacerbate labor woes even further. In fact, there are a number of recent examples of restaurants facing legal action and other controversies over wage issues: being sued for large amounts of money over improper tip distribution; staff walkouts over tip pooling; and lawsuits involving the U.S. Labor Department

Ensuring wages and tips are distributed properly is crucial, not just for employee morale but for avoiding issues such as these.

However, tip distribution is highly time-consuming for managers—and because of human error, can become even more laborious if inconsistencies need to be fixed and corrected down the line. 

Labor saving techniques, such as tip distribution automation, can help ease this issue for operators. But in order to see just how helpful tip distribution solutions can be, it’s important to get the big picture about the state of restaurants right now.

The state of labor in restaurants

It’s not news that operators in all segments are feeling the crunch with labor. Between the COVID-19 pandemic leading to many workers changing industries, minimum wage increases across the country and several other factors, restaurants in every city are facing shortages. According to Statista, there were 11.2 million workers in the restaurant industry as of May 2021—a sharp decline from the industry’s peak of 14.7 million workers in 2016, and a significant dip from pre-pandemic numbers, about 13.5 million workers.

With so many restaurant jobs being vacant despite demand beginning to return to pre-pandemic levels, it’s understandable that operators are feeling the pressure. 

In order to keep morale high and retain their existing employees, operators should focus on ensuring their employees trust management and that things like tip distribution are transparent.



Importance of customer experience

With recovery being the top priority for restaurants the past year or so, enhancing customer experiences will be key going forward. Ensuring guests have a positive experience at restaurants is a great way to boost loyalty and help ensure repeat business. And, of course, one of the most effective ways to ensure customers have a good experience is by having happy, helpful staff on the floor. High morale among workers is key not only for providing customers with a good time, but also helps limit turnover—which can also have a lasting effect on guest experience. 

One way to boost morale that operators may not be employing is giving workers access to their tips on a daily basis. 

When staff have access to their tips on a daily basis, research has shown that operators receive a 30% increase in job applicants, a 20% improvement in employee retention and 13% lower absenteeism—all of which contribute to guests having a better time when they visit a restaurant.

TipHaus, a software suite offering restaurants comprehensive tip distribution support, helps lower turnover—keeping staff knowledge and expertise higher—and also promotes trust and transparency, which again lowers turnover and improves productivity. 


With these stats in mind, it’s important to ensure that staff have the chance to learn the ins and outs of the menu and the restaurant as a whole, as well as have good morale so that they’re friendly to diners. To improve morale, operators need trust and transparency. An article from Harvard Business Review notes that highly transparent and trusted workplaces enjoy 50% higher employee productivity, 74% less stress among employees and 28% of employees would extend their tenure if transparency was practiced more seriously within the organization.

How can operators create good staff morale—and free up labor? There are a few ways, but one thing that takes up more time than most operators think is tip distribution. Thankfully, there’s a solution.

Automation for tipped workers

Tip distribution takes a lot of time out of managers’ days— it is often a major pain point of their jobs, with employees asking about tips often and, of course, the time it takes to distribute tips every day/every shift.  By instead utilizing software that automates the entire process with transparency and gives employees access to their tips on the same day they work, operators can improve morale and boost tenure/reduce turnover, all while protecting themselves against potential labor violations.

TipHaus is a software suite that syncs with restaurants’ POS, automates all calculations, distributes tips accordingly to specific employees and deposits that money into bank accounts affiliated with the suite. 

TipHaus ensures accurate tip distribution, eliminating the likelihood of tip misallocation, which can not only cause employee unrest but can also cause legal issues for business owners. 


By using TipHaus software, operators can boost employee morale, save on labor and increase efficiency.

TipHaus can help reduce the amount of labor used for tip distribution, and ensures accurate, fast payments to staff—allowing for better morale and higher staff retention. What’s not to love?

To learn more, visit today.

This post is sponsored by TipHaus


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