A few years ago, I answered a similar question as to whether “cash is king.” The bottom line: Most servers and owners still preferred a cash tip (which they could declare or not), so the IRS likely didn’t. But how about today?
A related issue came up when a guest left a cash tip on the table, only to see someone other than the server or busser pocket it. I’ve personally seen both fellow diners and strangers swipe tips. While credit card tipping is more convenient, most servers still prefer cash, and if you choose to tip in cash, I say it’s best to hand it directly to your server. Doing so removes the sticky fingers factor and makes a direct and appreciated impact.
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Several restaurant owners offered their opinions. Most were of the same mind.
Tara Gallina, Take Root Hospitality Group: “I’d say it really comes down to a restaurant’s tip share policy (if there even is one). If you’re at a spot where servers don’t pool tips, cash is always nice, as they have something in hand right away to walk out with. It only benefits the establishment if they opt not to report cash tips as this allows them to reduce their payroll tax expense (controversial, but lots of places still do it) and it allows for a marginally smaller credit card processing fee. For restaurants that pool tips, there is no big benefit to tipping in cash vs. card in my eyes. If a customer is concerned about the best way to tip, I think it’s always wise to ask the server or manager honestly, and they will let you know.”
Derek Deaver, Three Kings Pub: “Cash tips are great and appreciated by the staff as they can use it immediately rather than waiting for a credit card tip to be added to their weekly check.”
Stephen Savage, Cottle Village Farmstead + Distillery: “Our staff appreciates cash tips because they go home with their tips. Credit card tips end up on their weekly paycheck… As business owners, we appreciate cash payments and tips since we pay credit card processing fees on both payments and tips. Long story short, everyone—owners and staff—appreciates cash payments and tips over credit cards.”
Paul Hamilton, Hamilton Hospitality: “It is more beneficial for both the business and the staff to receive tips in cash. From a business point of view, we save money from not having to pay the credit card fees associated with the tip amount. The staff benefit by being given the flexibility of what they declare as their cash tip earnings on their taxes. There are minimums that need to be considered, but in the end, it’s the individuals that are responsible for what they claim in cash tips.”
Charlie Downs, Cyrano’s, Sugarfire Smoke House, Sugarfire Pie, operator of The Boathouse in Forest Park: “The cash tip is definitely a benefit to the employee, but when tips are pooled, you run into an honesty issue where the rest of your staff might get shorted unless the server shares all the cash.”
Natasha Kwan, Frida’s, Diego’s Cantina, Station No. 3, Bonito Bar: “Cash is still king for the server and the guest, who benefits by lower credit card balances at the end of the month! By law, employees are required to claim their cash tips at the end of each shift, so the government can take their fair share from the employee and employer. Whether or not that actually happens, we don’t know. In our restaurants, almost all tips are on cards, but if any guest feels like running to the bank for tipping cash, we welcome it!”
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