Trade press has widely written about how mobile ordering leads to improved customer loyalty, higher customer spend, more repeat visits and a better customer experience.
However, it’s important not to overlook another key benefit: higher tips.
One of the biggest challenges facing hospitality is the staffing crisis. Paired with inflation and rising food costs, restaurant managers need to be able to retain a great team, as well as attract new talent. There is a huge cost associated with high staff turnover - not just financial, but also time spent training and onboarding new starters, as well as diluting customer experience.
Digital ordering not only bears the brunt of order-taking, meaning staff can focusing on delivering a great customer experience, higher tips have proven to be a key motivator for retaining team members.
How does it work?
Pepper’s mobile apps allow customers to add a tip with a single tap.
There’s no need for a customer to calculate how much to tip - they simply select from your predefined options - 12%, 15%, 18% or 20%. This ease when tipping encourages customers to choose a higher tip amount.
Pepper’s functionality also accommodates mandatory service charges based on the value of the check, which appears as a line on the customer’s final balance.
The design of the basket screen means minimal disruption to the checking out and payment process - there is no ‘extra’ step for customers, and the journey is frictionless.
Not just for restaurants
Mobile ordering essentially is also inserting tipping into a transaction that previously customers wouldn’t have considered tipping for. In a coffee shop for example, customers may add a dollar at the register but through an app, customers feel as though they are being cheap if they aren’t clicking the recommended tip amount of 18% at checkout.
Tipping practices vary across different verticals of hospitality. While it’s a given to tip at a full-service restaurant or while sitting at a bar - many customers wouldn’t tip their barista for a grab-and-go coffee.
Tipping is available in all ordering journeys, so customers in a casual dining environment, those grabbing a coffee or pre-ordering their morning juice, are also prompted to reward their server.
One chain of juice bars in the US now see app tips at a steady 14% of revenue, whereas previously, when customers were ordering ahead by phoning the stores, tips were almost non-existent.
Higher spend = a higher percentage
Customers who order digitally are also likely to spend between 12-15% more per visit. The ability to order an extra round of beers from the bar mid-meal, swap into a premium glass of wine or add a snack to their coffee order - it all adds up to a higher average transaction value.
And when the customer is spending more - inevitably they are tipping more. Even if your customers don’t tip more generously via the app journey, their standard 15% tip is worth more on a more expensive order.
Distributing and pooling the tips
Furthermore, moving to online ordering and payment makes the process of collecting and distributing tips easier, as it’s entirely digital. The system ensures that 100% of the tips go into the same pot, which results in a fairer tipping system overall.
John Evans, Manager of Black Boy Inn, explained that since introducing their app, the team receive higher tips than they would do otherwise. ‘We’ve become more efficient,’ John went on to say, ‘and also for staff on the tipping side, it’s a fairer system, because the tips go into the pot and we divide it out regularly.’
The digital solution
Operators are already experts in building motivated teams and great company cultures, but with cost pressures both for individuals and businesses, the market for hospitality staff is at an all-time competitive level.
The solution is digital ordering; our channel drives increased tips and therefore staff remuneration. A happy consumer who has benefited from a slick mobile journey is happy to contribute to increased team compensation through tips. Staff are rewarded while the operator’s budget is unaffected. Staff are motivated and rewarded for their work, and are less likely to move elsewhere.
To summarise, the convenience of not having to calculate the tip, ATV being 10-15% higher with mobile ordering - so tips are variably increased - and mainly, very few customers wanting to reject the recommended tip amount on their app when checking out, leads to customers leaving a higher tip for their servers.
Get in touch with the Pepper team here, and we can help digitize your ordering journey.
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