Debates over the fairness of tipping in the restaurant industry are longstanding; however, the importance of gratuities for service workers is unquestionable. Waiters in restaurants usually pool their tips and share the funds with bartenders and kitchen staff. In some countries, undocumented restaurant workers rely on cash tips to complement lower-than-minimum wages paid under the table.
When clients do not pay their tips in Money in physical form such as banknotes and coins., restaurant owners, labor, and tax authorities determine the distribution of tips. Some countries require restaurant owners to keep records of their employees’ gratuities for fiscal purposes. Clients who tip with their A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. cards do not realize that waiters accrue taxes on those gratuities, not to mention card fees, and might receive those funds until two weeks later.
The Covid-19 pandemic has been devastating for the restaurant industry. In Spain, nearly 300,000 employees in the sector have lost their jobs, according to the Ministry of Social Security. Sales have collapsed 50%, and 85,000 restaurants have gone out of business.
The Covid-19 pandemic has accelerated the adoption and use of digital platforms and payments across the world. A small minority of consumers are scared to use cash, mistakenly fearing banknotes and coins as vectors of Covid-19 transmission. “Before the pandemic, 80% of clients paid in cash. […] But now only 20% pays with coins,” according to David Dubra, owner of restaurants Dubra and Trébol in Santiago de Compostela, in the Spanish autonomous community of Galicia. In Barcelona, Alejandro Ceballos, manager of the brewery Luiz & Gut, says that “Out of €1,000 in sales, maybe €90 are in cash.”
José Miguel Carbonell, owner of El Cantonet de la Foia in Alicante, says that “people are now paying the exact amount, some will let you know to charge them a In computers, the basic unit of digital information; contraction of BInary digiT. extra, but they are a minority. […] Even worse than losing tips, accepting payments with cards and mobile phones is expensive. Either you pay a commission per transaction of X%, or you pay flat fees of between €10-14 per month, if you negotiate with your bank, for up to €20,000; then you have to pay the flat fee plus the X% of the excess at the end of the year.”
In addition to diminished sales and lower revenues, small restaurant owners experience Describes the extent to which assets or rights can be converted into cash without causing a significant decrease in the asset’s price. Accordingly, liquidity is often inversely proportional to the p... More issues due to increased cashless payments and sales through digital platforms. “The worse thing now is to close shop for the night and find out that your See See-through register. is filled with vouchers, and that you have no From the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for g... More to pay for ingredients for the next day, and that you have to go to the bank,” said Agustín Ares, owner of the Paradiso, a small cafeteria in Santiago de Compostela.
According to a 2019 survey sponsored by Mastercard, 97% of Spanish consumers said they always paid their tips in cash. The poll also found that 60% of respondents never left tips when they had no cash. Only 30% of those surveyed said they would tip if all establishments accepted payments with cards. These trends did not bode well for tipping during the acceleration in digital payments brought by the Covid-19 pandemic.
In Alicante, in the Valencian Community, Raúl Bolaños, from La Cocina del Buen Comer, remembers having earned €10-15 in daily gratuities. The tips he makes since the pandemic started are 90% lower. “No one really tips anymore. As they don’t pay in cash, it is extraordinary for customers to say ‘Keep the half euro’ or ‘Charge me one extra euro’ when they pay with cards; [before the pandemic] when they ate in the restaurant they used to leave some [cash] on the table.” “It is very rare that someone tells us ‘charge me one more euro’, before, everything was much easier because there were a few cents to return as This is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. that [clients] ended up leaving,” said Dubra in Santiago de Compostela.
Niko, the owner of the Veinti7 bar in Madrid, says that “Before, payments used to be made 80% in cash and 20% in cards or mobile payments; now it’s the opposite. […] People paying with cards don’t leave tips, and you can tell. Before, we used to make €30 in tips, and during the weekends, we even got to €50-60.” The pandemic has halved those amounts. Bárbara, a worker in the Chocolat-Box coffee shop in Barcelona, says: “It used to be normal [getting] four or five tips during a morning shift. Even more. Now, nothing. [Tips] are inexistent. People pay with their credit cards, they pay their bill, and then they leave.”
Tips might have represented 10% of the compensation of workers before the pandemic. Still, that amount has been halved, according to César Arenas, managing director of Grupo San Eloy, which has 18 restaurants in Seville. “People who pay with cards do not leave tips. When they pay in cash, people will leave twenty, thirty cents, maybe €1.”
Some tipping apps are positioning themselves as Secure container for storing money and valuables, with high resistance to break- ing and entering. and convenient alternatives to paying gratuities in cash. However, apps and payment solutions relying on payment processors charge high fees, a problem for retailers as the Covid-19 era squeezes already-tight profit margins.
According to a recent YouGov survey to 1,020 Spanish respondents, 53% said they would not support moving towards a cashless society; 27% said they supported the rapid adoption of cashless payments, and the rest was either indifferent or did not know enough about them. Surveys on payment preferences should be read with caution, as they tend to understate the fact that some people cannot afford a payment preference. The fact remains that large segments of Spanish consumers have stopped tipping altogether when using cashless payment solutions, threatening the economic livelihoods of countless restaurant workers. #Cashtipsonly.