To tip or not to tip… - Wine Industry Sales Education
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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?

Comments

  • John S
    August 6, 2019

    If you read the research conducted by the world authority on tipping Dr. Micahel Lynn at Cornell you will discover that the only correlation with the amount of the tip is revenue. If you would like to increase the number of tips your staff earns read his research (Megatips2).
    The other issues surrounding tipping are basic hospitality management of personnel whether you allow tipping or not. If a north bay winery does not enable tipping via CC in the next three years they will see an increase in staff churn, lower yelp ratings, and related turmoil. The direct cost to the winery of a tip is the credit card charge. The impact on the person receiving the tip is an increase in pay of about 30% if they keep 80%+ of the tip. The quality of your staff improves as does their attitude and hospitality improves. Research also clearly demonstrates that the quality of hospitality improves because the server believes they may get an additional reward (tip) for great service. Better hospitality equals more sales. If you think it is a good idea to get rid of tipping read the research on what has happened to Danny Myers experiment.

  • RAYMOND RINGHOFF
    August 6, 2019

    yes I worked at a winery tasting room in California where the original owner let us take tips for giving that extra service. I was giving that extra service an was rewarded by the wine tasters. they gave me the tip directly because I was serving them. I gave them a wine lesson overall an injected my experiences that eventually lead to wine sales an wine club membership in general. also many always came back with their friends to see me. what I didn’t like is when the new owner made it that there was a tipping jar an everyone had to share the tips even those who didn’t give that extra to deserve it. I got annoyed because some were doing more then others an those who slacked got the same share to me no good. so I eventually made a decision. There are slackers who take advantage from others who give extra. rest my case.

    • Butter Stevens
      August 7, 2019

      Not to be snide or snarky Raymond Ringhoff, but what is the case you rest? I mean it’s a nice story you tell, but there is no real point that you begin with that fluidly connects to your final statement.

      One can infer from the beginning of your anecdote that you are for tipping. But the second portion of your anecdote one could infer that you’re against tipping. So which case are you resting?

  • MALANI ANDERSON
    August 7, 2019

    I think Raymond is for tipping but against pooling. I agree. From the back end I can see that some people are much more successful at bringing in tips than others. We started out pooling but quickly stopped when we saw the disparity. Now everyone keeps their own except that we take a little off the top for support staff.

  • Dana Hunter
    August 23, 2019

    As a supposedly useful source for the wine industry I’m shocked that this is something at any point was not fully understood and supported by WISE Academy. I have work in tasting rooms for 9 years in Lodi, Livermore, Napa, and Sonoma and am pretty disappointed that so much stock is placed in institutions like this who apparently have not been in touch with the real world for years. The math is super simple. If a Winery does not want to make tipping an option they should be pay their staff enough to pay rent and live in the area. Since very few of them do so tips are the only way to make living remotely close to where you work possible.

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