Custom tipping screens from Toast, Square, and similar digital point-of-sale systems can, in some cases, double an employee’s paycheck. In an extremely tight labor market, it can be a big selling point.
— Erika Adams
Five years ago, employees at the Paris Creperie in Brookline, Massachusetts, a quick-service restaurant just outside of downtown Boston, didn’t see much come across the counter by way of tips.
It wasn’t that their customers were especially stingy. Brookline is an affluent neighborhood — according to 2010 U.S. census data, the average household income ranges up to $170,000 — but 90 percent of the creperie’s customers pay with a card instead of cash. “The staff was working with a legacy point of sale system and a nice tip jar with various attempts at clever signs,” Henry Patterson, head of finance and administration at the creperie, explained. At the time, tips weren’t a meaningful part of the staff’s paychecks.
In 2015, the restaurant switched its point of sale technology to Boston-based Toast and set up a custom tipping screen, similar to what other digital point of sale systems like Square and Revel offer. The difference in customer tipping behavior was instantaneous.
“We went from almost nothing to averaging $4 an hour per employee,” Patterson said, noting that employees can average more on the weekends when the restaurant does the majority of its business. Customers will generally tip between 10 to 15 percent on their checks, which typically range from $10 to $15.
The creperie’s staff starts at a base wage of $11 an hour, the minimum wage in Massachusetts. With tips, wages can easily exceed Brookline’s minimum living wage, calculated at $14.26 per hour for one adult with no dependents, according to the town government’s current living wage by-law.
“There is an option to say, ‘No, thank you,’” Patterson said of the tipping screens. “But c’mon, these kids are making a fraction of what their guests are making.”
Since 2017, quick-service restaurants using Toast’s custom tipping feature receive tips on nearly 60 percent of credit card orders, compared to 28 percent previously, according to data compiled by the company.
[Editor’s note: An earlier version of this story included an additional data point, provided by Toast, regarding the average tip percentage per customer. After publication, Toast contacted us to say the data was miscalculated and could not provide additional insight. We removed the statistic.]
Yi Chen, Toast’s vice president of product, said that he’s seen operators record a 50 to 100 percent increase in employee wages when using the custom tipping screens.
At Square, which has offered the ability to set up custom tipping screens since the company first rolled out point of sale capabilities, quick-service restaurants see an average tip amount of 13.8 percent, compared to 15.9 percent at full-service restaurants.
“It’s up to the seller if they want to set it up,” Alyssa Henry, Square’s seller lead, told Skift Table earlier this year. “But there’s some interesting data there. We actually do hear from sellers that when they adopt default tipping that it does increase the overall tip their staff gets at their business and that it increases positive feedback from their staff.”
A Significant Wage Boost
Ross Jett, the co-owner of Second State Coffee (formerly Black Tap Coffee) in Charleston, South Carolina, has been using Square’s point of sale system since 2012. In that time, he’s seen the software go through plenty of iterations; the custom tip screen now is much more conducive to leaving a tip. Those updates, combined with Second State’s own growth as a company and increase in revenues, significantly contribute to the average tip amount that each employee receives per shift.
Currently, fully-trained employees at Second State start at a base wage of $10 per hour and average another $10 per hour with tips, making an average wage of $20 per hour. (South Carolina’s minimum wage is $7.25 per hour.)
Jett knows that he could pay a lesser base wage and his employees would still average far above minimum wage, but says he won’t take a tip credit because of how the current wages contribute to the company’s high retention rate. Second State’s employees currently stay with the business for two years, on average.
“I pay a premium for my employees,” Jett explained. “[Our wages] have contributed to low turnover rates, and it’s also a result of how closely my partner and I work with our employees. They feel treated as equals. It’s not an absentee-owner type deal.”
Like Jett, others find it meaningful to pay a substantial base wage and then offer significant tip averages on top. Andrew Ghetia, owner-operator for 4505 Burgers & BBQ in San Francisco, says that entry-level employees start at $15.50 per hour and each share equally in a tip pool added on to the base wage.
“We don’t think of the tips as supplementing the wages in any way,” Ghetia said, explaining that they still keep base wages above the city’s minimum wage ($15 per hour), and don’t hold back on raises because of how much employees are earning in tips.
Café Grumpy, a string of eight coffee shops across New York City (and one location that just opened up in Miami), was one of Square’s beta partners back when they first launched a counter service point of sale system. Before that, the business used a legacy register system, according to operations manager Shaak Shatursun.
Shatursun has seen tip averages on Square’s system go up “a little” over time, which he credits not only to the technology but also to the fact that the coffee industry has gotten more hospitality-oriented. “It’s more associated with not just a cup of caffeine, there’s more of a service element to it,” he explained. Currently, Café Grumpy starts employees at a base wage of $13 an hour and they typically make $6 an hour in tips, although exact averages vary by location.
“We do our best to make sure that no one feels guilted into it,” Shatursun added. “Tipping is the customer’s option, it’s their choice. In our business, while it’s great for our staff to receive tips, if it doesn’t happen, it doesn’t happen.”
Not a One-Size-Fits-All Answer
At Fluff Bake Bar in Houston, Texas, owner and chef Rebecca Masson pays her six employees starting wages of anywhere between $9.50 to $11 an hour, depending on experience. (The minimum wage in Texas is the same as the federal minimum wage, $7.25 an hour.) Each employee makes an extra $4 to $5 an hour in tips.
Masson estimates that 90 percent of her regular customers leave a tip, usually in the dollar range. “Across the board, my employees average 12 percent of the sales in tips,” Masson said. “I think it’s pretty good. And you don’t have everyone tipping, and by all means that is each customer’s prerogative.”
But when it comes to decreasing turnover, Masson said that retaining staff in the current job market in Houston has gotten so difficult that Fluff Bake Bar’s tip averages don’t make a substantial difference in convincing new employees to stick around.
“I don’t think it’s made a difference in keeping staff,” Masson said. “You could pay someone $16 an hour and they will still leave you.”