When did cash lose its crown in restaurants?

This is the first post in our new weekly ASK ME ANYTHING Series.In it we will answer questions submitted to us by our subscribers and readers about issues impacting their restaurants and bars. Feel free to ask us any question you have about your operations, marketing, management, promotions, etc.

So, what does all this mean for you in your operations?   The subscriber, who contacted us about it, referred to several concerns that are relevant to all of us.  Chief among them was the issue of tip payouts.  It turns out that their location is doing so little cash business that they are forced to go to the bank regularly, not to deposit revenue, but to withdraw cash to pay their staff tips daily.  He complains, quite rightfully, that the additional exposure and administrative hassle is creating a burden for his management team.

Additionally, there are two issues that must be addressed as pertains to staff tips and cash.  First, if you don’t have cash to pay out, then you have to put staff tips through your payroll system.  This is unpleasant for staff because of their expectation of leaving with their money at the end of the shift.  This is a cultural phenomenon in our business and can’t be dismissed because of the disruption that changing it will cause.  Second, you are also paying the tax liability on that additional income.  Albeit small (only about 10% of their tip value), it’s still very real.

To be frank, some of this is just a case of the times.  Of course it’s colossally inconvenient to get to the bank to GET money, but it’s just another job out of many.  Recently a restaurant in NYC went totally cashless.  They reckon that the time and energy set against, preparing for and managing of, making change for cash payments validated the choice.

Also, a recent lawsuit decision will allow you to charge a fee for CC payments in about 40 states.  Consequently you have some choices.  While the happiness of your staff is important, they will survive the change and the culture will change.  Since We all pay taxes on our entire income and wait patiently to get paid, we should have little sympathy for the server who wants to evade them or needs money now.

No matter how you respond to this new world of cashless tender, be thoughtful.  Communicate with your bar and server staff so they aren’t surprised by changes.  Publish your policy changes in advance and with clear intent.  Most importantly, stick to your guns.  Whatever the decision you make follow through on it and things will equalize quickly and without too much stress in the end.

Image by TaxCredits.net.