Challenge
For decades, Lou Malnati’s Pizzeria, a Chicago institution with 70+ locations across the Midwest relied on a cash-based tip payout system. While traditional, the process became increasingly unsustainable:
- Mounting Costs: Due to the rising popularity of credit card tipping, the business had to order cash from banks, incurring specialty fees, just to have enough on hand to tip out staff.
- Manager Burden: Managers spent 15–20 minutes per shift calculating and distributing tips, logging paperwork, and reconciling discrepancies.
- Employee Frustration: Staff were left waiting until end-of-shift or longer to access their tips, often receiving inaccurate payouts.
- Security Risks: Two locations were robbed at gunpoint—with accessible tip cash in the front safe, employee safety was on the line.
“We had a couple high-profile robberies… That gave us the green light to say, ‘It’s time to fix this now.’” — Bryan Batson
Solution
Lou Malnati’s implemented Fourth’s tip payout solution to digitally distribute tips to their staff. The move integrated seamlessly with their existing tech stack, including HotSchedules, their POS system, and payroll process with zero implementation costs.
Key Features & Benefits
- Automated Tip Calculations: Replaced manual spreadsheets with system-generated reports tied to real hours and roles.
- Real-Time Digital Payouts: Employees can access their tips within hours—or even as they walk out the door—to the account or card of their choice.
- Improved Compliance: Tracked funds simplify wage garnishment, child support, benefits eligibility, and 401(k) contributions.
- Eliminated Cash Costs & Risk: No more ordering, storing, or handling large sums of cash in-store.
“The tip payout process is much cleaner and more accurate. Because tips are digital, our employees see more funds on their paycheck and that gives them access to benefits they never had with cash.” – Bryan Batson
Results: Safer Stores, Happier Teams, and a Lot Less Hassle
- Improved Employee Happiness & Financial Wellness: Employees who opted into the digital tip payout process were drawn to instant payouts, improved financial visibility, and gained access to more benefits such as retirement contributions.
- Big Time Savings for Managers: Managers now spend minutes, not hours, on tip-outs. Time saved is reinvested into guest experience and team coaching, not spreadsheets. Lou Malnati’s managers saw an 80% reduction in time handling tips, from 20 minutes per shift to just 2-3 minutes on tip-outs at every location.
“No more arithmetic under duress after a 10-hour shift. Managers are on the floor faster and more driving more value for the business” – Bryan Batson
- Cleaner, Simpler Payroll: Payroll processing is faster and more accurate. No more retroactive corrections or compliance risks. Central teams now have full visibility into tip flows, garnishments, and taxable income.
“We put the analytics in the right place. Payroll handles exceptions, not managers working 10-hour shifts.” – Bryan Batson
Cost Reductions & Risk Mitigation
Lou’s eliminated:
- Costly bank fees for ordering cash,
- On-site cash security risks
- Tip payout errors, over/under payments
Why it matters: A Retention & Culture Advantage
As a 13-time Chicago Tribune Top Workplace and national award-winner, Lou Malnati’s knows that operational success starts with people. As Bryan put it, “we want our managers with their teams and guests not buried in admin.”
The digital tip rollout reinforced a culture of:
- Choice: Employees could opt in or receive tips via paycheck or Fuego app.
- Fairness: No more manual errors or missing tips.
- Financial wellness: Staff can budget better, qualify for benefits, and invest in their futures.