To tip or not to tip…

To tip or not to tip…

To tip or not to tip…that is the question facing many tasting rooms today.

A few years ago, if you had asked us at WISE how we felt, many of our instructors and our leadership would have been against the notion of tipping. We are hospitality – we eat, sleep, and breathe for the pure joy of serving our guests, for that aha moment of sharing our wines and watching a guest have a once-in-a-lifetime moment. At our very core is the desire to exceed guest expectations at every interaction. It is what is expected of the employee.

Then the horse left the barn (at least in Northern California). One winery started allowing credit card tips, and then another. Soon, the POS companies had that feature built-in. Employees heard that the neighbor down the street allowed their employees to take credit card tips – why couldn’t we? To be sure, wineries had valid reasons. Ownership was not fond of it. It would make Payroll and Accounting have more work to do. But there are as many valid reasons to allow credit card tipping as well. First, for some smaller wineries, it shifts some of the payroll burdens off the winery and allows them to make competitive offers to ideal candidates. Second, it pleases the guest who wants to reward and show gratitude towards a team member that provided exceptional service.

In a tight labor market, wineries are reporting losing long term employees and wonderful candidates to wineries that allow credit-card tipping. What may have been a lost employee for a buck or two an hour is now tens of thousands of dollars in earning potential for that employee. Let’s explore how to set up a tipping program that works for the winery, the guest, and the employee.

First, ensure that employee is working for the winery on your brand, and not for tips or on their personal brand. One of the best ways to do this is to have an incentive compensation plan aligned with the tasting room’s goals. These should be SMART goals (specific, measurable, achievable, relevant, time-bound), and tied to the business objectives – sales, wine club conversions, and data capture. This should be compelling enough to motivate top salespeople and keep their eyes on the bigger picture.

Second, ensure all effected departments are aware of a change in procedure. This will impact Accounting and Payroll, but also may impact other departments. HR should be involved to fully understand the impact on total compensation packages. While it may be a simple as flipping a switch with your POS provider, you will want to ensure the revenue is mapped to the correct account in your accounting software. Some wineries do a percentage tip box, which can be misleading if there is a high wine order attached – and there should be! Others elect to default to a dollar box, and let the guest do the math. We also recommend researching your state’s labor department rules on tip pooling between employees, and management partaking in tips. Be sure to take support staff into consideration as well, as they play a major role in enabling sales and a desirable guest experience.

Yes, there are a lot of details to handle and factors to consider, but the bottom line is this:  in today’s extremely tight labor market, we can’t afford to lose great employees and promising candidates because of process changes that might be difficult nor can we afford to alienate our guests who want to tip. Figuring out how to do this well for your business is in the best interest of all parties. What’s holding you back?