By Evgeniy Chuikov, CEO and Co-Founder of EasyTip
The hospitality industry has indeed reached a tipping point. While consumer spending has finally returned to pre-pandemic levels, it is not keeping pace with overall inflation. Add to that the impending recession and the 75% increase in hospitality job vacancies.
Due to the sector’s prolonged closure at the height of the pandemic, former employees are likely to have moved to different roles and industries in search of more stability. Employers in the hospitality industry are struggling to hire and pay their employees, while current employees are dealing with more work for the same pay.
Employers in the industry must reconsider their work structure and benefits in order to regain their appeal. Consumers can also play an important role: in addition to supporting local businesses, a simple act of tipping could reinvigorate the sector, and I see it in two parts.
Tipping can boost recruitment and retention of employees
With the employment crunch, hospitality employers need to have a good look at how it is conducting its work practices and identify ways to enhance the staff’s experience and wellbeing. As tips comprise an important proportion of a hospitality worker’s income, it is more important than ever for employers to take responsibility in delivering tips fairly and quickly.
Fortunately, the government is backing a new law that makes it illegal for employers to withhold tips and service charges from staff. This is a good start to safeguard workers and give them the confidence to consider the industry again. However, the next step is for employers to identify a way to account for and distribute these tips quickly – be it through a more structured process or utilising technological innovations like cashless tipping solutions.
Hospitality and services industries can at times be slow to innovate but cashless tipping has firmly entered the inflexion point. From point-of-sale providers like Samtouch Software, to beauty salons like Gielly Green, businesses are empowering their employees to receive tips directly from the customers. Some examples of cashless tipping include venues printing a QR code on receipts or merchandising so that customers can tip their server without needing to download an app. In fact, we found that such cashless tipping solutions have produced an increase in staff tips of as much as 30%. The greater transparency and discrete tipping experience benefits the customer, employee, and employers all around.
The hard work of hospitality staff is recognised
We must not forget the simple yet powerful gesture of tipping. It is a tangible way to show appreciation, and it goes a long way in benefiting the staff. It acknowledges the hard work they’ve put in and potentially helps to alleviate any financial stress.
Anyone whose service you utilise – be it servers, hairdressers, or delivery drivers – deserves a tip. In two of the most challenging years of our time, these are the workers who kept going and who could very much do with a small financial boost to keep going.
A reinvigorated hospitality industry
According to the circular flow of income model, money will always move from one sector to another and back again in an endless loop. Whatever we inject will inevitably return and help to boost the wider economy. This concept is especially relevant when it comes to tipping in the hospitality industry.
Hospitality employers who can boast such equity in the world of gratuities can boost their recruitment and retention rates because it demonstrates that they care about their employees, whereas tippers can encourage and make a world of difference in a worker’s life.
If we can make transparent tipping practices an industry standard, for both consumers and employers – the hospitality sector’s appeal will increase, new workers will want to join or re-join it, and its resilience will be strengthened.