October 3, 2025 • 24 mins
The majority of full-time servers and bartenders should see more money in their pockets due to the recently enacted US tax law, TipHaus’ Chief Operating Officer and co-founder Kirk Grogan tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Grogan sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss how the legislation might affect employees, employers and service models. He also comments on so-called tipflation, fraud and the elimination of the tipped wage in Washington, DC.
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Speaker 1 (00:13):
Welcome to Chopping It Up. I'm your host, Mike Hallon,
a senior restaurant food Service analyst at Bloomberg Intelligence. Our
research and that of bi's five hundred analysts around the
globe can be found exclusively on the Bloomberg terminal. If
you enjoy the pod, do me a solid and give
us a five star review on Apple or Spotify. Today
we're joined by Kirk Grogan, chief operating officer and co
(00:34):
founder of tip House. Welcome to the pod, Kirk.
Speaker 2 (00:37):
Thank you, Mike, really excited to be here with you today.
Speaker 1 (00:40):
Man, all right, let's start from the top. What problem
did you and the team set out to solve when
you created tip House.
Speaker 2 (00:46):
That's a great question. So founded by a restaurant consultant,
a good friend of mine, and ultimately it was fined
a tip solution for a couple thirty plus unit groups
located in the Seattle area. Lots of tech challenges. They
were implementing new poss and so they said, as we're
going through a tech change, let's make it easy. Let's
(01:07):
find a tip solution. And that ended up being the
toughest challenge you faced. So contacted me, contacted a few
of our developer friends in the Seattle area and said, ah,
you know it's going to be a weekend project. Let's
build something now, there'll be some passive income for us guys.
It'll be great and it'll be easy. Every restaurant knows
a restaurant, and you know, somehow that turned into us
(01:27):
leaving some some well paying jobs to come and join
a tech startup with nothing. Man.
Speaker 1 (01:31):
Oh that's exciting. Man. Well listen, man, I guess it
comes in handy to have some tech developer friends. I
need some of those.
Speaker 2 (01:38):
Seattle is a great place for it. You know, it's
it's known to have a few talented individuals around.
Speaker 1 (01:43):
Okay, Cole, what was the biggest challenge in turning that
idea into a real business?
Speaker 2 (01:50):
Great question, man. Realistically, it was the idea that every
restaurant is a different tip policy. There is no standard
operating procedure to follow. So you know, some groups are
We've got a tip policy on a napkin that sometimes
gets enforced. Some people, you know, thirty six tab Excel
sheets to manage it. Some are doing whatever the manager
(02:12):
before they're manager before their manager did. So it's understanding
there's a lot of leeway and tips, and therefore a
solution has to be unbelievably flexible to service those needs.
Speaker 1 (02:23):
And just let's talk a little bit about the solution.
You know why your customers love it sure, First and foremost,
I'll always give that.
Speaker 2 (02:31):
You know, our customers love the customer service read fried
as hospitality, So that's one of the things that we
really specialize in. But for our actual product itself, it
saves them a ton of time, it saves them a
ton of money, It automates the piece, reduces their liability,
and it does that We integrate directly with the point
of sale, with your time and attendance platform. If those
are separate, we merge that data and then we allow you,
(02:54):
as a restaurant owner, operator manager, to ensure that you
can layer over whatever tip logic you use. If you
use tip pooling, if you tip share two and a
half percent of alcohol sales back to the bartender, if
you do a lot of catering, banquets, events, all of
those need to be tracked, brought into a system and automated.
Speaker 1 (03:10):
I'd imagine the restaurant.
Speaker 2 (03:11):
Employees love the tool that is our number one proponent,
may be a payroll team as well as they don't
have to go through these thirty six tab Excel sheets.
But employees do you know. I think back I started
at Chili's at sixteen, and I was always doing an
end of shift report, running it to the manager saying, hey,
you know, I brought in two hundred dollars in cash?
(03:32):
How much am I owed? We're doing this awkward exchange
at the end. But the issue there is always there's
no transparency. I know we tip pool technically, I know
I owe three percent to the bus or whatever it
might be, but I don't get to see how that
impact actually plays out over time. And so you know,
it's a manager bringing me to an Excel sheet he
covering with two pieces of paper every other row that
(03:53):
isn't my name, and we're just taking it at face value.
That yeah, I believe that's about how much they made,
and that's you know, how it tipped would work. And
I'll take it, you know, and take it with it.
And so what we've done is the employees all get
a free mobile employee app. It tracks their best shifts,
how much they're contributing, what their net is from the
tip pool, the tip share, and so first of its
tie visibility available to those employees so they can plan
(04:17):
better financials, they can be smarter, they have more faith
than their restaurant, their team members, their management, et cetera.
Speaker 1 (04:24):
Transparency is a beautiful thing. Are your customer seeing reduced turnover?
Speaker 2 (04:29):
They are? I appreciate that, Yeah, absolutely so, you know
ivers if you're in the Pacific Northwest. That's one of
our great case studies we did recently. Fame is famous
Fish and Chips joint thirty five quick service restaurants located
all around the Puget Sound and when they implemented us,
I believe it was a thirty one or thirty two
percent reduction and turnover. Transparency as you touched its key,
(04:51):
and it's one of those things that's hidden. It leads
to a lot of issues. You know, you get into
an argument with your manager. It may not seem like
it's about tips or take home or money, but typically
it is right and so you want to make sure
that people are always blown away. When we implemented this,
everyone kind of came up to the same page. We
started operating like a true team. We did all of
these things that you know, end of the day, it's
(05:12):
how much money you take home it's can you provide
for your family and yourself and a lot of tension
around that you know is mitigated if you can understand
all of these teams, team items and how you work
together in the restaurant as a team.
Speaker 1 (05:24):
All right, good stuff, man, So how do you see
the big beautiful bill impacting restaurants here through your end
and into twenty.
Speaker 2 (05:32):
Six the million billion dollar question? Maybe, man, it's going
to have some impact. As for restaurant operators in an
ideal world, it's going to have very little impact on
them in a negative manner, right, it should make things
streamlined a little easier, So a lot of misconceptions around it.
But the big things are going to affect full time
(05:53):
servers and bartenders, right, No tax liabilities on individuals making
less than fifteen thy seven hundred and fifty. So if
there's less than that, no change to them. Sliding scale
as you go up, and you know the results are
impacted over about one hundred and fifty thousand, you'll start
mitigating down. So really, right in that sweet spot that
i'd say is the majority of your full time servers
in full service restaurants, and from that they should see
(06:15):
more money in their pocket. Realistically, for twenty twenty five,
it is going to be on their annual taxes coming
up that they'll file in twenty six, and then in
twenty six, twenty seven, twenty eight. You should see these
on every paycheck. So we'll get rid of those peaks
and troughs, will stay a little more consistent keeping money
in their pocket. But you know, lots of misconceptions will see.
(06:38):
There's always the idea of how do consumers react and
do they misinterpret the bill? Do they adjust their tipping structures?
Groups that are doing service charge models do those take impact?
Right now, it's looking like no, so we may see that.
I'm really hopeful and optimistic we get a influx of
workforce back into the service industry. Turnovers heavy, it's hard.
(07:00):
Big economy has really taken an impact on the service styles.
So ideally, you know, in a real scenario, seventy five
thousand dollars earned total comp at a restaurant versus seventy
five thousand at an office job, you should have a
higher take home at that seventy five thousand in the restaurant.
So ideally, managers operators are doing a great job at
conveying that the industry comes together to kind of help
(07:21):
build that information and knowledge campaign, and we see some
groups come back and stay longer in the restaurant industry
and provide much needed release there.
Speaker 1 (07:29):
Yeah, that would be great, and it would be great
if they're you know, they spent that money and put
it back into the economy and got things moving, you know,
because things have been slow for the last year and
a half or so and to that point, have you
seen a meaningful decrease in tip size percentage over that timeframe.
Speaker 2 (07:49):
We are tracking heavily, so we run, you know, several
billion dollars in tips annually through a system that will
track and manage. I have not seen a decrease yet,
but I'm always mindful that, you know, the backlash, let's
say it starts online of people sharing what they perceive
to be correct I think, incorrect information. But what we'll
(08:10):
see here is a slight decrease on tips. Potentially there
is people saying, oh, well, if they're not paying taxes
on it, then you know, if I tip eighteen percent
instead of twenty percent, it'll be the same for them.
And again, there's too many scenarios that that's not necessarily
going to be the case. So I'm really optimistic. Industry
needs to get together and you know, a lot of
education going on right now for managers and operators, for employees.
(08:33):
There's a little bit which is great, and there needs
to be more there. But I don't see a lot
for customers or consumers. And I would love to see
us put together and around some information because what we
want are more people working in this industry providing great service,
sticking around longer. And that only happens if those tips
indeed do lead to more take home for the servers.
Speaker 1 (08:51):
Okay, cool and tipflation, it's been a hot topic even
of ripe target for comedians like Sebastian Mask calcol and
Jim gaff Again, are people fed up? Have you seen
any change to the size and frequency of the limited
service tipping over the last couple of years?
Speaker 2 (09:08):
I have, I have, And that's a great topic and
a great distinction you already called out there is I
don't expect inflation to impact and I hope it doesn't
ever full service restaurants, man, that's uh. Those people are,
you know, working hard every single day. That's a tough,
demanding job. Anyone out there who does not believe that
I'd encourage you to go get into a restaurant, man,
(09:28):
give it a go. Those are some rock stars, you know,
this frontline service, so there shouldn't be on the full service.
Where it comes into play is quick service and then
particularly on these industries that you know. At my convenience
store the other day, there was a tip option and
that was crazy to see. So you get in those
awkward scenarios of you know, I'm going to click a
zero here because I went and grabbed my Peanut m
(09:49):
and M's and my Red Bull. You know, I don't
need to need to pay on that behalf, but I
expect quick service, you know. Ideally lands, I think there's
an opportunity to tip there. Five percent under ten percent
great a little something, especially if they're you know, being
delightful to your kids, they're explaining ingredients to you, they're
given recommendations their service there. I don't think it's the
level of a bartender, you know, creating a perfect cocktail
(10:11):
for you and recommending what wine's going to go with
your entree or this ale goes really well here. So
I would like to see this be a responsible scale
of you know, the best service getter getting full up
to twenty plus percent tips and then people are providing quicker, shorter,
less service, you know, to scaling down effort there. So
we'll see if that comes.
Speaker 1 (10:31):
Into play though, Yeah, I think that's a big part
of the frustration. Right, It's like, you know, you go,
you get your penut M and m's and you're drinking.
It's twenty percent is the suggestion, and not five.
Speaker 2 (10:42):
Right, it's And here's the crazy part is that's always
on you know, the management of the place, right, they
can set those presets and so you know, we've run
some studies with it and relatively inconsistent results. But it
was if you show five to ten percent, do you
get more tips? You get a greater quantity of tips,
but not greater denomination. Often so it seems more people
(11:03):
are willing to give five percent, but you get those
let's call them the awkward people who are very afraid
of social interaction and clicking a zero, who are willing
to tip twenty percent. So you know, really though, the
long term impact on the customers, do they start shopping
somewhere else for that? You know, we want to look
short and long, and so I'm a big believer, well
much smaller percentage, make it not a hassle to click
zero in places that weren't traditionally tipped. Let's be a
(11:25):
little more responsible with it.
Speaker 1 (11:27):
Sounds good. What's the latest update on the tip wage
elimination in Washington, d C.
Speaker 2 (11:33):
It's going to be a challenge, so you get a
lot of adjustments. And this is kind of spearheaded by
you know, Danny Meyer was one of the most public
people to say that we should look at these items,
that we should be removing tips, we should go to
service charge models, we should do these items, and I
think great intention. Danny Meyer is a hell of an operator,
right has been for many, many years. That's Union Square
(11:55):
for those not aware, but you know, not many people
realize Danny Meyer himself walk that back right they started
taking tips. They are starting to look at these items,
so you're going to run into scenarios where it doesn't
make sense to pass that cost onto the guest. Guests
like the feeling of control of a tip. They like
the ability to make sure that they feel the service
is directly related to it. And then there's the number
(12:18):
of no tax on tips as what we just talked about,
part of the one big beautiful bill. If there is
not a voluntary tip given that is not eligible for
reduction in taxes, at least to my understanding so far.
And I'll be mindful that ton of gray area on
that bill still, So I'm not going to ever speak definitively.
We'll see things get challenged and play out in court,
but we'll see how it goes from that end. Man.
Speaker 1 (12:38):
Yeah, it's interesting because you know, typically what you hear
is the best servers and the customers in the United
States don't want it, right, but politicians still love to
try to push it. Man.
Speaker 2 (12:50):
I couldn't agree more. Man, it's something I think, it's
a good sound bite, right, It's something that gets attention.
But I couldn't like the best servers when I was serving,
I would have never worked at a place that paid
a flat wage on it, even with the benefits and things,
and so much of that at least on my young
and ignorant mind was lost to me. Right, I'm twenty one,
I'm in great shape. Man. I don't need benefits. I
don't need any of this item. But yeah, your best
(13:13):
servers are killing it because they provide outstanding service. They've
been there for five years. They have the regulars that
love tipping, and you feel like you lose some control
as a consumer. Right, what is my incentive for the
server to be wonderful to my kids to make great
recommendations if they're making the same on this at the
end either way?
Speaker 1 (13:29):
Right, all right? So what's the impact of tips being
received daily versus in cash back in the day or
via paycheck?
Speaker 2 (13:37):
Oh, this is the number one thing I think facing
the industry that it needs to get aligned on. And
the reality is so again, I started at Chili's. Man,
I used to walk out with my eighty one hundred
dollars a night, and I loved that was me as
a server. I was largely not in a spot with
great financial responsibility. Yet I was young and so I
(13:57):
wasn't setting a ton of side for savings. I wasn't
doing things of nature for you know, if my car
had an issue. But that was the beauty of it is. Hey,
you know, I forgot it was my girlfriend's birthday coming up, right,
so I can go pick up a double on Saturday,
walk out with two hundred dollars, take her out to
a nice dinner. All things are great. Obviously, cash is
fading from the economy has been for many, many years.
(14:17):
COVID really amplified that. And now we're in this situation where, Okay,
the big guys in the space, your major or major
players in the restaurant industry, they can afford to keep
fifty thousand dollars cash and a safe. They can afford
brinks armored car deliveries, you know, twice a week to
bring them cash so they can still pay that out.
The vast majority of restaurants said, hey, this is a hassle,
(14:38):
it's cost time consuming. My managers are off site run
making bank runs. They're dealing with these items. I don't
like my servers walking out at night two am in
the parking lot three hundred dollars cash. We had a
string of robberies, you know where our seems like our
former servers or someone who worked here, because they knew
the location of the safe, they knew when people would
be here. All of those are real deal concerns when
(14:59):
you're dealing with cash. And now the flip side of
that is if you're putting those tips onto paychecks, kind
of defeats the purpose of a lot of the service
mentality again, of being able to make that money the
day you need it pick up shifts, and so we
saw a major decrease in servers and bartenders willing to
pick up shifts if it ends up going on to
the paycheck. You know, it's not that instant gratification of
(15:21):
I get to go take that money home. So what
we see now is a big push to move money digitally,
and tip House obviously was one of the forefronts of that.
We pioneered earned tip access not a secret that it's
a play on earned a wage access, of course, but
now it seems like every company's trying to come out
with something recognizing that your servers are more likely to
stay at your location if they're receiving their tips within
(15:44):
a timely manner post shift. If you're making them wait
two weeks a long time, you almost forget. You know
where that tip came from. That's from a great Tuesday
that I had a delightful service, is from a slammed
Friday because there's a ballgame in town. You kind of
remove that incentive and it's a easy to be honest. Now.
It was tough at the beginning, a lot of groups
trying to figure it out. We rolled out a solution
(16:05):
many people have, but it's something now that should be
a simplest click and a button dispatching that money directly
to those serve staff and making sure that they're able
to use that money how they see fit.
Speaker 1 (16:14):
All right, good stuff, and it's interesting. Cash leaving the economy.
I feel like I've been using cash even more in
the last year because everybody's charging me three percent to
use my credit card. Man, I agree.
Speaker 2 (16:26):
You see that cost getting passed on, right, the merchant
processing fees. Businesses are picking up. They want cash, and
I'm in that same boat. I'm a regular ATEM visitor
and that's just you know, selfishly, it's from my own business, right.
I'm a big tipper and always have been. It's hard
for me to be at a conference at an open
bar or something like that with groups wearing my tip
house gear and not leaving tips. So you know, I'm
(16:48):
always got a stack of fives or stack of tens
on me to make sure they go around. But I
like cash man. The digital world on some levels is
its own form of spooky, right, So I hope cash
is always here to remain. Love to see more businesses
except cash. I know we're seeing the digital payments only
type trend. But you know cash should always be available.
Speaker 1 (17:07):
Yeah you're old school like me. I love it has
tip fraud to decrease now that cash tips have gone
away to some degree.
Speaker 2 (17:16):
They it certainly has, certainly has, but I think, like
many things, sometimes it takes shape in different manners. So
one of the things that we see most commonly when
we have a customer who I'm going to say, has
an error. And you'll see where I'm going with this,
which is we get up in a running we're implemented
and you know, maybe one out of one hundred customers
(17:38):
will reach out and say, hey, the numbers aren't adding
up where we should be on tips is not what
you know, my excel sheet that I was running showed
that we had say okay, you know, well, we're integrated
directly into your point of sales, so we're pulling directly
from the source of truth. Let's go in and look
at it. And so now some of the tip fraud
we see as actually people creating separate individuals to clock
in is take a cut of the tip pool, or
(17:58):
we're captain managers that dipping into the tip pool, you know,
five dollars from each server. Each shift adds up quickly,
so we see that piece. From an employee standpoint, it's
definitely dropped tremendously, and so the honest answers. We see
groups that are still cash heavy and they you know,
let's say, we can determine pretty quickly that you're under reporting.
(18:19):
We know your region, we know your category, fsr QSR, CRAFT, casual,
whatever you may fall into. The trick to this is
the IRS has well into the information that we have
plus a lot more. And so you know, we've seen
groups that often contact us after they get popped by
the IRS saying, hey, we got to fill out form.
I believe it's eighty twenty seven. We have a preset
(18:41):
build for it. But where you're reporting everything, but they
know the averages. If your restaurants in your nearby area
or you know, twelve percent and you're reporting at four percent,
expect to get a visit. Not a good time for you.
You know, no one likes that. And so you know,
even if you're doing things on the up and up,
or you think you are and your staff aren't, you
can get it some dicey situations there, so best to
(19:02):
keep a track of it. Employees are only hurting themselves. Man,
we see this where they need credit in the future,
they need to prove income for housing or for cars,
whatever it may be. And suddenly all that thirty thousand
dollars you buried in cash last year, you really wish
that showed up so that you could have gotten that
apartment you just got declined for. You know, so it's
best to get it all on the up and up,
(19:22):
make it legitimate. And now again no tax on tips
hopefully gives another incentive to stop trying to hide things
like they did in the old days with cash.
Speaker 1 (19:30):
Yeah, it's interesting when Dominos shifted, you know, to more
digital and really saw their you know, digital sales growth grow.
Their seam source sales got a bump because a lot
of franchises were under reporting the cash piece of it.
Speaker 2 (19:45):
Right, I can buy it. And you know, Domino's was
a pioneer in the digital space. Man, they're their pizza
track or all the things they did there. But we
see that time and time again, as things go into
the electric records of you know, filing, you'll start to
see a total change in the numbers. And how'd you
grow revenue seventeen percent this year? Well, you know, we'll
talk about it later, right, so very cool.
Speaker 1 (20:08):
Hit me with your fun tipping facts. What do you got?
Speaker 2 (20:11):
Ooh, okay, there are plenty, man, and so some of
them are you know, where is the best tips in
the US, And typically, no surprise, it's going to be
in your major outdoor area. So you see a lot
in Miami, that's huge in Miami, you see New York,
you see Dallas, you see some major areas there. And
then it's always, you know, what are the actual tip
(20:33):
averages for fsr QSR all the fun stuff that you
might encounter, and I think you know, it's higher and
lower than most people would expect. So always I can
pull up some stats here for you. And what that
looks like is, if we were to dive into quick
service restaurants, average monthly tips right out about fifteen hundred
dollars on scale across the entire board. So nice. It's
(20:55):
a good help for your servers, your you know, counter
workers that are working there, maybe two three dollars an
hour extra, which is excellent to trying to keep overhead.
Low craft casual, so that's the term now for counter
service that also has beer and wine, sometimes full liquor
but you'll see a massive jump there seven thousand dollars
average monthly tips, so you can see the impact of alcohol, obviously,
(21:16):
license and regulations going around it. Full service is leaning
right around fifteen thousand, and then fine dining, no surprise,
a huge jump just at forty thousand dollars is your average.
And we take this across each one of these sections.
We pulled five hundred of our customers data, we anonymized it,
we ran it through, but we accounted for geographical regions,
(21:37):
everything else included. So expect to see that if you're
significantly above or below that, you know, good job. If
you're above, If you're below, there's some areas I'm sure
you have room for improvement on. And then you know
funny stories. Man, I got a good one, which is
a bar in Miami, called our customer success team and said, hey,
you know, we had a I won't name a celebrity,
(21:59):
but I mean a list profile celebrity, very very popular
individual in the music industry come in and left no
tip dift our staff. Can you help us figure this out?
How much should it have been? Can you run some
numbers on their table, their bar tabs. All of these
items and we said, you know, of course we can.
We can pull that real easily. And so we showed
it to them and didn't hear anything for about a week,
(22:21):
and pure curiosity I followed up man. I said, hey,
what did you do with that info? You know, like?
And he said, oh, we called them, We called their manager.
We started shaming them online. They reached out immediately when
we shamed online. They pulled every asked us to pull
it all down, and I think they ended up cutting
them a check for ten or fifteen grand, which was
just the tip. I mean, it was one hundred thousand
dollars tab that got stiffed. And that's just not awesome. Man.
(22:46):
Those people are working for that money. They're out there,
they're trying to be impressed with you, and you're throwing
one hundred thousand dollars that you obviously have at the
bill and then you just walked out. Man. So that
was a once in a lifetime call. I've never had
another scenario like that. But good on the manager for
taking in protecting his staff.
Speaker 1 (23:01):
Oh yeah, and that must have been heartbreaking for the
staff when we know that check.
Speaker 2 (23:07):
Oh they're working what two three hours on that table.
I'm sure. You know they're trying to. I mean, they're
busting ass on it. They're taking care of everything they can,
and they look at the end. You know, it's always
that exciting moment as a server you open the check
to see what was written on that credit card slip
after a huge and yeah, I'm sure that was a
matter of shock and frustration and fury. So again, really
(23:27):
ups to that manager who took it on himself. And
so I'm calling everyone, I'm shaming you online. We're doing
this thing until you make my staff hole. So he
went and did it. Good for him, man, We're not
going to top that. So let's wrap it there. Thanks
for doing this, Kirk. Hell yeah, man, I appreciate your Mike.
I love the podcast, man. I really appreciate the opportunity
and thanks again. You got it man.
Speaker 1 (23:49):
I want to thank the audience for tuning in as well.
Check out tip House t I, P H A U
S dot com to find out more about what Kirk
and his team are up to. If you liked our discussion,
please share it with your friends and colleagues. Check back
soon for an interview with Chris Brandt, chief brand officer
at Chipotle.
Welcome to Chopping It Up. I'm your host, Mike Hallon,
a senior restaurant food Service analyst at Bloomberg Intelligence. Our
research and that of bi's five hundred analysts around the
globe can be found exclusively on the Bloomberg terminal. If
you enjoy the pod, do me a solid and give
us a five star review on Apple or Spotify. Today
we're joined by Kirk Grogan, chief operating officer and co
(00:34):
founder of tip House. Welcome to the pod, Kirk.
Speaker 2 (00:37):
Thank you, Mike, really excited to be here with you today.
Speaker 1 (00:40):
Man, all right, let's start from the top. What problem
did you and the team set out to solve when
you created tip House.
Speaker 2 (00:46):
That's a great question. So founded by a restaurant consultant,
a good friend of mine, and ultimately it was fined
a tip solution for a couple thirty plus unit groups
located in the Seattle area. Lots of tech challenges. They
were implementing new poss and so they said, as we're
going through a tech change, let's make it easy. Let's
(01:07):
find a tip solution. And that ended up being the
toughest challenge you faced. So contacted me, contacted a few
of our developer friends in the Seattle area and said, ah,
you know it's going to be a weekend project. Let's
build something now, there'll be some passive income for us guys.
It'll be great and it'll be easy. Every restaurant knows
a restaurant, and you know, somehow that turned into us
(01:27):
leaving some some well paying jobs to come and join
a tech startup with nothing. Man.
Speaker 1 (01:31):
Oh that's exciting. Man. Well listen, man, I guess it
comes in handy to have some tech developer friends. I
need some of those.
Speaker 2 (01:38):
Seattle is a great place for it. You know, it's
it's known to have a few talented individuals around.
Speaker 1 (01:43):
Okay, Cole, what was the biggest challenge in turning that
idea into a real business?
Speaker 2 (01:50):
Great question, man. Realistically, it was the idea that every
restaurant is a different tip policy. There is no standard
operating procedure to follow. So you know, some groups are
We've got a tip policy on a napkin that sometimes
gets enforced. Some people, you know, thirty six tab Excel
sheets to manage it. Some are doing whatever the manager
(02:12):
before they're manager before their manager did. So it's understanding
there's a lot of leeway and tips, and therefore a
solution has to be unbelievably flexible to service those needs.
Speaker 1 (02:23):
And just let's talk a little bit about the solution.
You know why your customers love it sure, First and foremost,
I'll always give that.
Speaker 2 (02:31):
You know, our customers love the customer service read fried
as hospitality, So that's one of the things that we
really specialize in. But for our actual product itself, it
saves them a ton of time, it saves them a
ton of money, It automates the piece, reduces their liability,
and it does that We integrate directly with the point
of sale, with your time and attendance platform. If those
are separate, we merge that data and then we allow you,
(02:54):
as a restaurant owner, operator manager, to ensure that you
can layer over whatever tip logic you use. If you
use tip pooling, if you tip share two and a
half percent of alcohol sales back to the bartender, if
you do a lot of catering, banquets, events, all of
those need to be tracked, brought into a system and automated.
Speaker 1 (03:10):
I'd imagine the restaurant.
Speaker 2 (03:11):
Employees love the tool that is our number one proponent,
may be a payroll team as well as they don't
have to go through these thirty six tab Excel sheets.
But employees do you know. I think back I started
at Chili's at sixteen, and I was always doing an
end of shift report, running it to the manager saying, hey,
you know, I brought in two hundred dollars in cash?
(03:32):
How much am I owed? We're doing this awkward exchange
at the end. But the issue there is always there's
no transparency. I know we tip pool technically, I know
I owe three percent to the bus or whatever it
might be, but I don't get to see how that
impact actually plays out over time. And so you know,
it's a manager bringing me to an Excel sheet he
covering with two pieces of paper every other row that
(03:53):
isn't my name, and we're just taking it at face value.
That yeah, I believe that's about how much they made,
and that's you know, how it tipped would work. And
I'll take it, you know, and take it with it.
And so what we've done is the employees all get
a free mobile employee app. It tracks their best shifts,
how much they're contributing, what their net is from the
tip pool, the tip share, and so first of its
tie visibility available to those employees so they can plan
(04:17):
better financials, they can be smarter, they have more faith
than their restaurant, their team members, their management, et cetera.
Speaker 1 (04:24):
Transparency is a beautiful thing. Are your customer seeing reduced turnover?
Speaker 2 (04:29):
They are? I appreciate that, Yeah, absolutely so, you know
ivers if you're in the Pacific Northwest. That's one of
our great case studies we did recently. Fame is famous
Fish and Chips joint thirty five quick service restaurants located
all around the Puget Sound and when they implemented us,
I believe it was a thirty one or thirty two
percent reduction and turnover. Transparency as you touched its key,
(04:51):
and it's one of those things that's hidden. It leads
to a lot of issues. You know, you get into
an argument with your manager. It may not seem like
it's about tips or take home or money, but typically
it is right and so you want to make sure
that people are always blown away. When we implemented this,
everyone kind of came up to the same page. We
started operating like a true team. We did all of
these things that you know, end of the day, it's
(05:12):
how much money you take home it's can you provide
for your family and yourself and a lot of tension
around that you know is mitigated if you can understand
all of these teams, team items and how you work
together in the restaurant as a team.
Speaker 1 (05:24):
All right, good stuff, man, So how do you see
the big beautiful bill impacting restaurants here through your end
and into twenty.
Speaker 2 (05:32):
Six the million billion dollar question? Maybe, man, it's going
to have some impact. As for restaurant operators in an
ideal world, it's going to have very little impact on
them in a negative manner, right, it should make things
streamlined a little easier, So a lot of misconceptions around it.
But the big things are going to affect full time
(05:53):
servers and bartenders, right, No tax liabilities on individuals making
less than fifteen thy seven hundred and fifty. So if
there's less than that, no change to them. Sliding scale
as you go up, and you know the results are
impacted over about one hundred and fifty thousand, you'll start
mitigating down. So really, right in that sweet spot that
i'd say is the majority of your full time servers
in full service restaurants, and from that they should see
(06:15):
more money in their pocket. Realistically, for twenty twenty five,
it is going to be on their annual taxes coming
up that they'll file in twenty six, and then in
twenty six, twenty seven, twenty eight. You should see these
on every paycheck. So we'll get rid of those peaks
and troughs, will stay a little more consistent keeping money
in their pocket. But you know, lots of misconceptions will see.
(06:38):
There's always the idea of how do consumers react and
do they misinterpret the bill? Do they adjust their tipping structures?
Groups that are doing service charge models do those take impact?
Right now, it's looking like no, so we may see that.
I'm really hopeful and optimistic we get a influx of
workforce back into the service industry. Turnovers heavy, it's hard.
(07:00):
Big economy has really taken an impact on the service styles.
So ideally, you know, in a real scenario, seventy five
thousand dollars earned total comp at a restaurant versus seventy
five thousand at an office job, you should have a
higher take home at that seventy five thousand in the restaurant.
So ideally, managers operators are doing a great job at
conveying that the industry comes together to kind of help
(07:21):
build that information and knowledge campaign, and we see some
groups come back and stay longer in the restaurant industry
and provide much needed release there.
Speaker 1 (07:29):
Yeah, that would be great, and it would be great
if they're you know, they spent that money and put
it back into the economy and got things moving, you know,
because things have been slow for the last year and
a half or so and to that point, have you
seen a meaningful decrease in tip size percentage over that timeframe.
Speaker 2 (07:49):
We are tracking heavily, so we run, you know, several
billion dollars in tips annually through a system that will
track and manage. I have not seen a decrease yet,
but I'm always mindful that, you know, the backlash, let's
say it starts online of people sharing what they perceive
to be correct I think, incorrect information. But what we'll
(08:10):
see here is a slight decrease on tips. Potentially there
is people saying, oh, well, if they're not paying taxes
on it, then you know, if I tip eighteen percent
instead of twenty percent, it'll be the same for them.
And again, there's too many scenarios that that's not necessarily
going to be the case. So I'm really optimistic. Industry
needs to get together and you know, a lot of
education going on right now for managers and operators, for employees.
(08:33):
There's a little bit which is great, and there needs
to be more there. But I don't see a lot
for customers or consumers. And I would love to see
us put together and around some information because what we
want are more people working in this industry providing great service,
sticking around longer. And that only happens if those tips
indeed do lead to more take home for the servers.
Speaker 1 (08:51):
Okay, cool and tipflation, it's been a hot topic even
of ripe target for comedians like Sebastian Mask calcol and
Jim gaff Again, are people fed up? Have you seen
any change to the size and frequency of the limited
service tipping over the last couple of years?
Speaker 2 (09:08):
I have, I have, And that's a great topic and
a great distinction you already called out there is I
don't expect inflation to impact and I hope it doesn't
ever full service restaurants, man, that's uh. Those people are,
you know, working hard every single day. That's a tough,
demanding job. Anyone out there who does not believe that
I'd encourage you to go get into a restaurant, man,
(09:28):
give it a go. Those are some rock stars, you know,
this frontline service, so there shouldn't be on the full service.
Where it comes into play is quick service and then
particularly on these industries that you know. At my convenience
store the other day, there was a tip option and
that was crazy to see. So you get in those
awkward scenarios of you know, I'm going to click a
zero here because I went and grabbed my Peanut m
(09:49):
and M's and my Red Bull. You know, I don't
need to need to pay on that behalf, but I
expect quick service, you know. Ideally lands, I think there's
an opportunity to tip there. Five percent under ten percent
great a little something, especially if they're you know, being
delightful to your kids, they're explaining ingredients to you, they're
given recommendations their service there. I don't think it's the
level of a bartender, you know, creating a perfect cocktail
(10:11):
for you and recommending what wine's going to go with
your entree or this ale goes really well here. So
I would like to see this be a responsible scale
of you know, the best service getter getting full up
to twenty plus percent tips and then people are providing quicker, shorter,
less service, you know, to scaling down effort there. So
we'll see if that comes.
Speaker 1 (10:31):
Into play though, Yeah, I think that's a big part
of the frustration. Right, It's like, you know, you go,
you get your penut M and m's and you're drinking.
It's twenty percent is the suggestion, and not five.
Speaker 2 (10:42):
Right, it's And here's the crazy part is that's always
on you know, the management of the place, right, they
can set those presets and so you know, we've run
some studies with it and relatively inconsistent results. But it
was if you show five to ten percent, do you
get more tips? You get a greater quantity of tips,
but not greater denomination. Often so it seems more people
(11:03):
are willing to give five percent, but you get those
let's call them the awkward people who are very afraid
of social interaction and clicking a zero, who are willing
to tip twenty percent. So you know, really though, the
long term impact on the customers, do they start shopping
somewhere else for that? You know, we want to look
short and long, and so I'm a big believer, well
much smaller percentage, make it not a hassle to click
zero in places that weren't traditionally tipped. Let's be a
(11:25):
little more responsible with it.
Speaker 1 (11:27):
Sounds good. What's the latest update on the tip wage
elimination in Washington, d C.
Speaker 2 (11:33):
It's going to be a challenge, so you get a
lot of adjustments. And this is kind of spearheaded by
you know, Danny Meyer was one of the most public
people to say that we should look at these items,
that we should be removing tips, we should go to
service charge models, we should do these items, and I
think great intention. Danny Meyer is a hell of an operator,
right has been for many, many years. That's Union Square
(11:55):
for those not aware, but you know, not many people
realize Danny Meyer himself walk that back right they started
taking tips. They are starting to look at these items,
so you're going to run into scenarios where it doesn't
make sense to pass that cost onto the guest. Guests
like the feeling of control of a tip. They like
the ability to make sure that they feel the service
is directly related to it. And then there's the number
(12:18):
of no tax on tips as what we just talked about,
part of the one big beautiful bill. If there is
not a voluntary tip given that is not eligible for
reduction in taxes, at least to my understanding so far.
And I'll be mindful that ton of gray area on
that bill still, So I'm not going to ever speak definitively.
We'll see things get challenged and play out in court,
but we'll see how it goes from that end. Man.
Speaker 1 (12:38):
Yeah, it's interesting because you know, typically what you hear
is the best servers and the customers in the United
States don't want it, right, but politicians still love to
try to push it. Man.
Speaker 2 (12:50):
I couldn't agree more. Man, it's something I think, it's
a good sound bite, right, It's something that gets attention.
But I couldn't like the best servers when I was serving,
I would have never worked at a place that paid
a flat wage on it, even with the benefits and things,
and so much of that at least on my young
and ignorant mind was lost to me. Right, I'm twenty one,
I'm in great shape. Man. I don't need benefits. I
don't need any of this item. But yeah, your best
(13:13):
servers are killing it because they provide outstanding service. They've
been there for five years. They have the regulars that
love tipping, and you feel like you lose some control
as a consumer. Right, what is my incentive for the
server to be wonderful to my kids to make great
recommendations if they're making the same on this at the
end either way?
Speaker 1 (13:29):
Right, all right? So what's the impact of tips being
received daily versus in cash back in the day or
via paycheck?
Speaker 2 (13:37):
Oh, this is the number one thing I think facing
the industry that it needs to get aligned on. And
the reality is so again, I started at Chili's. Man,
I used to walk out with my eighty one hundred
dollars a night, and I loved that was me as
a server. I was largely not in a spot with
great financial responsibility. Yet I was young and so I
(13:57):
wasn't setting a ton of side for savings. I wasn't
doing things of nature for you know, if my car
had an issue. But that was the beauty of it is. Hey,
you know, I forgot it was my girlfriend's birthday coming up, right,
so I can go pick up a double on Saturday,
walk out with two hundred dollars, take her out to
a nice dinner. All things are great. Obviously, cash is
fading from the economy has been for many, many years.
(14:17):
COVID really amplified that. And now we're in this situation where, Okay,
the big guys in the space, your major or major
players in the restaurant industry, they can afford to keep
fifty thousand dollars cash and a safe. They can afford
brinks armored car deliveries, you know, twice a week to
bring them cash so they can still pay that out.
The vast majority of restaurants said, hey, this is a hassle,
(14:38):
it's cost time consuming. My managers are off site run
making bank runs. They're dealing with these items. I don't
like my servers walking out at night two am in
the parking lot three hundred dollars cash. We had a
string of robberies, you know where our seems like our
former servers or someone who worked here, because they knew
the location of the safe, they knew when people would
be here. All of those are real deal concerns when
(14:59):
you're dealing with cash. And now the flip side of
that is if you're putting those tips onto paychecks, kind
of defeats the purpose of a lot of the service
mentality again, of being able to make that money the
day you need it pick up shifts, and so we
saw a major decrease in servers and bartenders willing to
pick up shifts if it ends up going on to
the paycheck. You know, it's not that instant gratification of
(15:21):
I get to go take that money home. So what
we see now is a big push to move money digitally,
and tip House obviously was one of the forefronts of that.
We pioneered earned tip access not a secret that it's
a play on earned a wage access, of course, but
now it seems like every company's trying to come out
with something recognizing that your servers are more likely to
stay at your location if they're receiving their tips within
(15:44):
a timely manner post shift. If you're making them wait
two weeks a long time, you almost forget. You know
where that tip came from. That's from a great Tuesday
that I had a delightful service, is from a slammed
Friday because there's a ballgame in town. You kind of
remove that incentive and it's a easy to be honest. Now.
It was tough at the beginning, a lot of groups
trying to figure it out. We rolled out a solution
(16:05):
many people have, but it's something now that should be
a simplest click and a button dispatching that money directly
to those serve staff and making sure that they're able
to use that money how they see fit.
Speaker 1 (16:14):
All right, good stuff, and it's interesting. Cash leaving the economy.
I feel like I've been using cash even more in
the last year because everybody's charging me three percent to
use my credit card. Man, I agree.
Speaker 2 (16:26):
You see that cost getting passed on, right, the merchant
processing fees. Businesses are picking up. They want cash, and
I'm in that same boat. I'm a regular ATEM visitor
and that's just you know, selfishly, it's from my own business, right.
I'm a big tipper and always have been. It's hard
for me to be at a conference at an open
bar or something like that with groups wearing my tip
house gear and not leaving tips. So you know, I'm
(16:48):
always got a stack of fives or stack of tens
on me to make sure they go around. But I
like cash man. The digital world on some levels is
its own form of spooky, right, So I hope cash
is always here to remain. Love to see more businesses
except cash. I know we're seeing the digital payments only
type trend. But you know cash should always be available.
Speaker 1 (17:07):
Yeah you're old school like me. I love it has
tip fraud to decrease now that cash tips have gone
away to some degree.
Speaker 2 (17:16):
They it certainly has, certainly has, but I think, like
many things, sometimes it takes shape in different manners. So
one of the things that we see most commonly when
we have a customer who I'm going to say, has
an error. And you'll see where I'm going with this,
which is we get up in a running we're implemented
and you know, maybe one out of one hundred customers
(17:38):
will reach out and say, hey, the numbers aren't adding
up where we should be on tips is not what
you know, my excel sheet that I was running showed
that we had say okay, you know, well, we're integrated
directly into your point of sales, so we're pulling directly
from the source of truth. Let's go in and look
at it. And so now some of the tip fraud
we see as actually people creating separate individuals to clock
in is take a cut of the tip pool, or
(17:58):
we're captain managers that dipping into the tip pool, you know,
five dollars from each server. Each shift adds up quickly,
so we see that piece. From an employee standpoint, it's
definitely dropped tremendously, and so the honest answers. We see
groups that are still cash heavy and they you know,
let's say, we can determine pretty quickly that you're under reporting.
(18:19):
We know your region, we know your category, fsr QSR, CRAFT, casual,
whatever you may fall into. The trick to this is
the IRS has well into the information that we have
plus a lot more. And so you know, we've seen
groups that often contact us after they get popped by
the IRS saying, hey, we got to fill out form.
I believe it's eighty twenty seven. We have a preset
(18:41):
build for it. But where you're reporting everything, but they
know the averages. If your restaurants in your nearby area
or you know, twelve percent and you're reporting at four percent,
expect to get a visit. Not a good time for you.
You know, no one likes that. And so you know,
even if you're doing things on the up and up,
or you think you are and your staff aren't, you
can get it some dicey situations there, so best to
(19:02):
keep a track of it. Employees are only hurting themselves. Man,
we see this where they need credit in the future,
they need to prove income for housing or for cars,
whatever it may be. And suddenly all that thirty thousand
dollars you buried in cash last year, you really wish
that showed up so that you could have gotten that
apartment you just got declined for. You know, so it's
best to get it all on the up and up,
(19:22):
make it legitimate. And now again no tax on tips
hopefully gives another incentive to stop trying to hide things
like they did in the old days with cash.
Speaker 1 (19:30):
Yeah, it's interesting when Dominos shifted, you know, to more
digital and really saw their you know, digital sales growth grow.
Their seam source sales got a bump because a lot
of franchises were under reporting the cash piece of it.
Speaker 2 (19:45):
Right, I can buy it. And you know, Domino's was
a pioneer in the digital space. Man, they're their pizza
track or all the things they did there. But we
see that time and time again, as things go into
the electric records of you know, filing, you'll start to
see a total change in the numbers. And how'd you
grow revenue seventeen percent this year? Well, you know, we'll
talk about it later, right, so very cool.
Speaker 1 (20:08):
Hit me with your fun tipping facts. What do you got?
Speaker 2 (20:11):
Ooh, okay, there are plenty, man, and so some of
them are you know, where is the best tips in
the US, And typically, no surprise, it's going to be
in your major outdoor area. So you see a lot
in Miami, that's huge in Miami, you see New York,
you see Dallas, you see some major areas there. And
then it's always, you know, what are the actual tip
(20:33):
averages for fsr QSR all the fun stuff that you
might encounter, and I think you know, it's higher and
lower than most people would expect. So always I can
pull up some stats here for you. And what that
looks like is, if we were to dive into quick
service restaurants, average monthly tips right out about fifteen hundred
dollars on scale across the entire board. So nice. It's
(20:55):
a good help for your servers, your you know, counter
workers that are working there, maybe two three dollars an
hour extra, which is excellent to trying to keep overhead.
Low craft casual, so that's the term now for counter
service that also has beer and wine, sometimes full liquor
but you'll see a massive jump there seven thousand dollars
average monthly tips, so you can see the impact of alcohol, obviously,
(21:16):
license and regulations going around it. Full service is leaning
right around fifteen thousand, and then fine dining, no surprise,
a huge jump just at forty thousand dollars is your average.
And we take this across each one of these sections.
We pulled five hundred of our customers data, we anonymized it,
we ran it through, but we accounted for geographical regions,
(21:37):
everything else included. So expect to see that if you're
significantly above or below that, you know, good job. If
you're above, If you're below, there's some areas I'm sure
you have room for improvement on. And then you know
funny stories. Man, I got a good one, which is
a bar in Miami, called our customer success team and said, hey,
you know, we had a I won't name a celebrity,
(21:59):
but I mean a list profile celebrity, very very popular
individual in the music industry come in and left no
tip dift our staff. Can you help us figure this out?
How much should it have been? Can you run some
numbers on their table, their bar tabs. All of these
items and we said, you know, of course we can.
We can pull that real easily. And so we showed
it to them and didn't hear anything for about a week,
(22:21):
and pure curiosity I followed up man. I said, hey,
what did you do with that info? You know, like?
And he said, oh, we called them, We called their manager.
We started shaming them online. They reached out immediately when
we shamed online. They pulled every asked us to pull
it all down, and I think they ended up cutting
them a check for ten or fifteen grand, which was
just the tip. I mean, it was one hundred thousand
dollars tab that got stiffed. And that's just not awesome. Man.
(22:46):
Those people are working for that money. They're out there,
they're trying to be impressed with you, and you're throwing
one hundred thousand dollars that you obviously have at the
bill and then you just walked out. Man. So that
was a once in a lifetime call. I've never had
another scenario like that. But good on the manager for
taking in protecting his staff.
Speaker 1 (23:01):
Oh yeah, and that must have been heartbreaking for the
staff when we know that check.
Speaker 2 (23:07):
Oh they're working what two three hours on that table.
I'm sure. You know they're trying to. I mean, they're
busting ass on it. They're taking care of everything they can,
and they look at the end. You know, it's always
that exciting moment as a server you open the check
to see what was written on that credit card slip
after a huge and yeah, I'm sure that was a
matter of shock and frustration and fury. So again, really
(23:27):
ups to that manager who took it on himself. And
so I'm calling everyone, I'm shaming you online. We're doing
this thing until you make my staff hole. So he
went and did it. Good for him, man, We're not
going to top that. So let's wrap it there. Thanks
for doing this, Kirk. Hell yeah, man, I appreciate your Mike.
I love the podcast, man. I really appreciate the opportunity
and thanks again. You got it man.
Speaker 1 (23:49):
I want to thank the audience for tuning in as well.
Check out tip House t I, P H A U
S dot com to find out more about what Kirk
and his team are up to. If you liked our discussion,
please share it with your friends and colleagues. Check back
soon for an interview with Chris Brandt, chief brand officer
at Chipotle.
Host
Michael Halen
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I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Ruthie's Table 4
For more than 30 years The River Cafe in London, has been the home-from-home of artists, architects, designers, actors, collectors, writers, activists, and politicians. Michael Caine, Glenn Close, JJ Abrams, Steve McQueen, Victoria and David Beckham, and Lily Allen, are just some of the people who love to call The River Cafe home. On River Cafe Table 4, Rogers sits down with her customers—who have become friends—to talk about food memories. Table 4 explores how food impacts every aspect of our lives. “Foods is politics, food is cultural, food is how you express love, food is about your heritage, it defines who you and who you want to be,” says Rogers. Each week, Rogers invites her guest to reminisce about family suppers and first dates, what they cook, how they eat when performing, the restaurants they choose, and what food they seek when they need comfort. And to punctuate each episode of Table 4, guests such as Ralph Fiennes, Emily Blunt, and Alfonso Cuarón, read their favourite recipe from one of the best-selling River Cafe cookbooks. Table 4 itself, is situated near The River Cafe’s open kitchen, close to the bright pink wood-fired oven and next to the glossy yellow pass, where Ruthie oversees the restaurant. You are invited to take a seat at this intimate table and join the conversation. For more information, recipes, and ingredients, go to https://shoptherivercafe.co.uk/ Web: https://rivercafe.co.uk/ Instagram: www.instagram.com/therivercafelondon/ Facebook: https://en-gb.facebook.com/therivercafelondon/ For more podcasts from iHeartRadio, visit the iheartradio app, apple podcasts, or wherever you listen to your favorite shows. Learn more about your ad-choices at https://www.iheartpodcastnetwork.com
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.