This is the Restaurant Technology Guys podcast, helping you run your restaurant better.
Welcome back to the Restaurant Technology Guys podcast. I thank everyone out there for joining us, as I say each and every time. You guys have got lots of choices on how you guys spend your time, so we appreciate you guys spending time with us. We are joined today by, by Tal, or Tal. He said Tal. I keep saying Tal in my head, and I'm like, ah, I knew I was gonna screw that up. But Tal, can you, can you introduce yourself to our audience?
Tell everybody a little bit about who you are, and then we can get a chance to, to talk about what you get to do for a living.
Yeah, that sounds great, Jeremy. Thanks for having me. look, I am a currently CEO of Instant Financial. I have been in the payments and fintech space for about 20 years, primarily with startups that have provided a means of being paid to employees as part of a group that started to Instant Financial. Prepaid payroll card company called money network back in, 2001.
And, sold that business, spent some time doing some things there with the business that bought us and then, took some time off and, really was interested in the space, both earned wages and tips and how we can continue to. Digitize payments for employees and make sure their access is easier and affordable. And, they're able to access us when they would like to. So that sort of led me to interest in instant.
I spent some time on the board, for instance, for about two years before taking this role. excited about the opportunity in front of all of us in this space.
Yeah, and, I Before we jump straight into what you get to do, for instance, because I'm, over the moon about it, excited. And I told you about this pre show about what you guys are doing and how you guys are helping democratize, those things. when people say FinTech, there's a whole lot of people that throw that it's AI or machine learning. People throw these words around, but I guess, how would you define FinTech? Because there's a lot of different moving parts and pieces inside of FinTech.
And I think a lot of our audience, they have a misconception or some level of conception about what. FinTech actually means. So I'd love to have you define that before we jump into kind of how instant is really solving, restaurant tours problems.
Yeah, look there's probably any number of ways to define it. I think for me it is, using technology in the financial space to enable access, for consumers and businesses and improve the way that people receive and send payments, at the end of the day. I think it all comes back to that. And yeah, so I think for me that would be a maybe oversimplifies it a little bit, but I think that's what it is. It's about moving money to people in businesses and using technology to do it in ever better ways.
Yeah, no. And I think that's a, I think that's a great place to jump off because I think, whether you're talking about credit card payments, whether you're talking about ACHs, whether you're talking about Venmo, whether you're talking about payroll, there's so many different times that money needs to move in order to keep commerce going. Talk to me about the challenge in restaurants today, because whether, actually, why don't we start down the thread of earned wage?
Cause I think, we've had a couple of guests on that have talked a little bit about earned wage, but really that's a piece that has continued to be innovated within the last 10 years or so, 10 years ago, nobody. And in my world had ever talked about earned wages. And now it's now it's something that is a differentiator as it relates to being able to offer it to your team members is earned wages, but define earned wages for us.
And then let's talk about what that process looks like before we jump straight into, accessing tips and all of that.
Yeah, no, that's great. I think for us, it is making sure wages are available to employees when they want them, where they want them and how they want them. And, and that option has not been available until the last few years. as you mentioned, payroll cycles have been, if you go way back in history in the U S it was cash on a daily basis and then it moved to check and then it moved to direct deposit and somehow the employees and a consumer lost out in that whole deal. they're.
Their payroll cycles have been, ever expanding since, since we left the sort of agrarian society in the United States to the point now where, instant is trying to, is being a force and moving us back to. Employees having that access and after all, it is their money and in the restaurant space. we employees need access to that cash for whatever reason, right? We don't know what the reasons are. Always. It could be, a car repair. It could be medical care.
It could be, groceries the day before your paycheck comes, whatever it may be, and we believe they should have access to those funds that they have earned. And, we believe that they should have access to those funds at no cost. And that's been the focus of Instant in delivering that, making sure we have a model to that. I think that ultimately earned wage access becomes a table stakes benefit within the restaurant space. we did a survey, during 2022, towards the end of 2022 and 2023.
That shows that 75 percent of people are a little more than that are more likely to take a job, not just in the restaurant space, but in any of the verticals that we focus on. if they're at have access to pay that day, I was just, employees are showing up now for interviews are showing up, at job fairs. And one of the questions they're curious about is, can I have access to my pay?
So that's what we want to make sure we deliver and look forward to continue innovation around that as we move forward.
I'm going to, I guess double click. It's one of the phrases I use, but, but, double click on that. Cause really, I think it's one of those things that oftentimes, and at least even my own ignorance, when I first learned about this, I'm like, so people want access to the money that they. Earned like, how does that even work? And from a direct restaurant perspective, I'm a cook, I'm making 15 bucks an hour, 20 bucks an hour. I live in California, make them 30 bucks an hour.
And I'm, I work five hours today in theory, I, grossed up that, 30 bucks an hour at five hours is, 150 bucks or whatever, I should be able to get access to 75 or a hundred of those dollars to be able to go feed my family tonight. Is that kind of what, I guess in a purely basic sense, is that what earned way to access? Earned wage access means
That's it. That's it. And it is, it seems it seems like something we should assume, but just due to payroll practices over the last 50 years, it just is not where we are today. I think it's important. It's become even more important in this day and age when we know that, a large majority of the population in the U S is living paycheck to paycheck. and again, these are their wages. They have been earned by that employee. Why not make them available to them?
the alternative to earn wage access have been. Are not good alternatives, right?
payday loans.
payday loans, right? Everybody talks about payday loans and the cost associated with payday loans and that's an obvious cost and they're generally not in places that people want to go. Otherwise, the other alternative is, people, we, this was part of the survey as well. If you need access to cash today and you don't have it, what are you going to do? you're going to go to family or friends.
that's generally embarrassing for someone and it shouldn't be necessary, especially when you have earned wages that you've, that you have, don't have access to. you can sell something on eBay was an option that we saw people, sign, say that was something they'd done in the past or, people work when they're not healthy and, are not, shouldn't be working or extending shifts. And so the alternatives providing access to their wages. are not good alternatives.
So we just think that this space as a whole and Instant in particular, we're doing good work to make sure we get employees there.
Yeah. And, just a couple more threads on this. and I think the, the gig economy has not helped restaurants. restaurants have historically had, they've been a good entry point into the job market and there's been a lot of growth, but now you've got options, whether it's Amazon or it's all of the delivery companies, Uber Eats, DoorDash, they offer earned wage access so I can go make.
a couple hundred bucks driving around, dropping off food or delivering Amazon packages and have access to my cash today. So from that, early stage career person, they're competing with another brand that, you know, with another type of, type of work that allows that access. And so it makes it even that much more critical for especially those entry level positions. Are you guys seeing that same thing on the earned wage access side?
Yeah, no doubt. we all know that the restaurant environment is having challenges in recruiting and retaining, labor. And part of that has been the attractiveness of gig wage opportunities in the marketplace. And absolutely you can, whoever, wherever you're getting your gig wage that is available to you daily.
and so certainly that has been a driver and what we're doing is making sure that we bring that same access, and really transparency to what you've earned, to employees that are in a typical W two type restaurant environment. absolutely. what the changes in the gig economy over the last five, 10 years have certainly led to the point of, we need to make sure in the restaurant industry, we need to make sure employees have access there as well.
Yeah. And so one of the other big pieces, and again, I worked restaurants coming through high school and through college. And a lot of times it was in table service and at least, I don't know, I don't even want to tell you how many years ago it was, but it was more than 10. I got to walk away with cash tips every night. that has also drastically changed within the restaurant industry. they used to be, 40 percent cash or 30 percent cash.
And now, especially the higher dollar you get, it's, less than 10 percent cash in a lot of places. And so they don't want to pay for the Brinks truck to show up with thousands of dollars to pay out their tips every day. So a lot of people have moved those to their paychecks.
Talk to me a little bit about that transition as people have gone to a cashless society and what impact that's had on those, those servers that now, those servers now that don't get to walk away with their one, two, 300 worth of, worth of tips every day.
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Yeah, let's don't forget about the wait staff and those that are working for tips, right? Because that's about what 60 percent of a typical, restaurant and, instant was, led the way in moving cash, out of restaurants and, making sure we digitize tips. today we are the leading provider for tips in regards to volume. moved, both historically and real time. And it's very important. and we think, that we, we got to make sure that weight staff is taken care of.
we believe that cash is, has a cost associated with it. And most restaurants believe that now as well. And so we're looking for ways to move cash out of restaurants. There's a few ways you can do that. We think some are better than others. for us, we immediately move. those tips and make those available. 100 percent of your tips available to any employee that's on the wait staff or receiving tips for pay same day. And it's a service we, we get excited about providing.
and we do that without the restaurant so that a restaurant then doesn't have to bring cash in. And the way staff gets what they've always Been used to receiving, which is pay each day they leave the restaurant. an alternative to that, that we see in the marketplace is loading tips onto a bi weekly paycheck, right? that's That's in direct contradiction to everything we believe in Instant, right?
Is, as wait staff, historically, they've been able to work and earn good wages as tips and leave that restaurant with cash in their pocket. We believe they should still be able to leave that restaurant with their pay in their pocket, right?
virtual cash, but
That's right. virtual accounts, via Instant. we don't think that, there may be good reasons for doing this and maybe providing the option to employees to do this, but to move their wages from that everyday sequence every day they work to a biweekly cycle is the opposite of everything we work for. we hope to continue getting that word out. we've got great restaurant clients that work with instant today. We want to continue to spread that word, and there's no reason.
That those wages should have to go on a paycheck for that waitstaff member to get their pay two weeks, two weeks later. So that's our goal. We'll continue working on that. And I think, I think the industry's evolving so that we see, tips being made available real time.
yeah, and I again talking to some of our restaurant clients That's a huge piece is it's hard to retain staff It's hard to get staff and then it's hard to retain staff if you don't figure out a way to make sure that they have access to those tips You said something that's intriguing to me about the cost of using cash. I'd love to have you educate our listeners a little bit about what that means. We, you said cash is expensive to keep and move around. I'd love to, to have you.
Cause you know, I know people that think the opposite, with the credit card fees and the FinTech fees, that's expensive to use credit cards. And I have my own opinion, but, nobody comes here to listen to me talk. They come here to listen to people like you talk. So talk to me a little bit about what that means.
Yeah, you might have to keep me from going off on a tangent here, because that's something that, I've been in the payment space and both credit card, gift card. for quite some time. So I understand interchange, the impact of cards and the ability to use all those things and those tools. in regards to how it relates to tips, no, no one's using cash in a restaurant anymore, right? you're going there as a consumer. You're having a great meal. one of our great restaurants in the US.
just, we've got great food right at the end of the day. And you're paying for that using your credit card. Or a debit card, but in any case, you're not leaving cash behind. and so restaurants up until just a few years ago to fill that cash gap, they needed to pay their waitstaff.
They literally had, trucks dropping off cash, typical brings trucks, armored cars, dropping off cash at the restaurant, on at least a couple of times, two or three times a week to meet their cash needs for payout of tips, right? that, that cost is significant, right? The cost of, of paying for those trucks, paying for that cash to be brought into the restaurant, it's a significant cost.
I don't have the ROI in front of me, but happy to share that with you or anyone else that listens to this later. but it's significant in most of our major restaurant brands in the U. S. have recognized that and it had moved away from that, with help from this done and a few others. the other thing about the cost of cash itself is from an employee perspective. We also better understand the risk associated with handling and carrying cash out of a restaurant. especially table service restaurants.
they're doing significant dollar volume and paying out nice amounts and tips. we know that in the U. S. restaurant staff have become targets, for those who would, wish them ill will and want to take their money because they know they're walking out the door with cash. And so it's just simply. not the best way to do it anymore. and so those are both, they're both physical costs and financial costs associated with both of those things that, that, that need to be moved away from in many cases.
I can touch on my feelings that were, or regards to a credit cards and credit card acceptance that you want to go there, but I know that's not what we're here to talk about.
yeah, I think we'll, save that for another time. but the other costs that I'm just thinking about while you were talking about that is, is even the cost of having to manage the distribution of the cash, you talked about get bringing the cash in, but now I've got to get a manager that's going to be. Giving you the cash and making sure that it balances and making sure that you got the right amounts and all of that outside of the reporting of that, did I really give it to you? Did I not?
And all of those kinds of pieces, those are all different, difficult pieces to, to manage, especially as you get to scale.
Yeah, if you take, you take two, a couple hours a day for a manager and managing tips, that's part of the ROI as well. You're absolutely right. a couple hours a day of managing tips and then if you're in a, a large restaurant environment and you multiply that times the number of rooftops you have and that manager actually doing the things you just mentioned, which is distributing tips, managing those tips, calculating those tips, it just, It's a, it's just something that's not necessary today.
And it's a cost that should come out of all these businesses you would think.
I'm going to go down another thread just cause I heard a statistic recently, and I'd love to have you talk about it. And then I want to talk about the tactical ways that Instant goes to market. But I heard a statistic about the U. S. and how, what a large percentage of the U. S. is either underbanked or unbanked. And I'd love to get access to your experience on that. large percentage of people keep money in Venmo.
Large percentage of this next generation is not using traditional Bank of America, Wells Fargo, Chase Bank for their banking needs. They're using other forms of alternative payment. And traditionally, at least in my understanding is as payroll companies typically want to ACH to a traditional bank. And, I know products like instant.
Will allow for people to send to these pay card type companies or transfer to these types of accounts that allow them to live their life the way that they might want to. Can you talk a little bit about what your guys experience has been in that?
Because, I do think it's something that restaurants need to be aware of the amount of people that are unbanked or under banks, meaning they don't have a traditional, checking and savings account that I might've had, when, my parents got me when I was, 10 years old or whatever.
Yeah, it's very significant. And it's, in amongst the minimally banked, we're also seeing a turn towards, alternative banks, as you mentioned. so first of all, consumers are very comfortable today in a sort of alternative bank environment, prepaid bank environment. Whereas, five, six, seven years ago, it was still a lot of focus on your sort of brick and mortar banks. but today we see coming to market. Millennials and Gen Z are very comfortable with a number of neo banks out there.
The fastest growing from an account perspective. The fastest growers are not, the brick and mortar banks that we historically think about. they're more along the lines of cash app and chime and some of those that are out there today that consumers choose to use. We see employees, excited about the opportunity to use, Instant as a banking instrument. and we see that in the majority of cases becoming their predominant, bank, or tool of choice. They also have the alternative to move it.
And we see those funds move to those, alternative financial institutions that, that I just mentioned and others. So that's definitely happening. and they're very comfortable with that. millennials in Gen Z are the majority of the workforce today. they love having the flexibility to choose how they want to bank and when they want to bank, and where they would like to see their funds, sent. So we continue to make sure we're serving those needs and make sure that they have that access.
It will be, we will always have the market in the U. S. that is underbanked in the restaurant environment today. generally speaking, it's probably at least 15, 20 percent of a given employee base in a table service restaurant environment and a quick service restaurant environment. you could see dramatically more than that, maybe 35 to 40 to 50%. are under banked. and so we think it's important to provide solutions that give employees all access.
That's one of the things that we do that's a little bit unique is we're not because of the way we provide our services, we don't turn away any employee. 100 percent of employees will have access to their wages. Using instant or their tips using instant and that's unique in the space. And we want to continue to make sure we can deliver that as we go forward as well.
and I think that brings me to, it brings us to a great point to talk about tactically, how does this happen? Whether it's the earned wages or it's the tips. Talk to me a little bit about how you guys do this. Cause a lot of restaurant tours. When I talk to them about this, they go, Oh, it's too good to be true. You're telling me I don't have to deal with all of this craziness.
And people coming to me, I can't afford gas to get to work or I got a flat tire and I can't afford to get there and all of that other. all of those other things that do come up and, understandably they can't afford it. And I've had restaurant people that we've worked with that have a ledger and they give people payday loans so that they don't have to go to the loan sharks at the payday loan places. But this is the way people have solved it that are good employers.
You guys have solved it in a digital way, let's start on the earned wage side, back to that cook that worked five hours, 30 bucks an hour, he earned 150 bucks. How does that. How does that transaction actually take place? Because traditionally I'm punching it on a time clock. I'm punching it on the point of sale. And now you guys need to know that he earned this. How do you mitigate the risk? Talk to me a little bit about what that looks like.
And then we'll talk through a kind of how you guys solve the tip piece.
Yeah, that sounds good. I don't, I'm not going to give you all our secret sauce, Jeremy. But, so anyone that's working with instant, any employee, when they come on board at an employer, they have the opportunity to participate with instant a hundred percent, right? they don't need to walk in the door with a bank account. Right? Where in many cases to participate with E. W. A. You're going to need a bank account with us.
You don't, they're going to have access with an instant virtual card and, that they are able to access the other instant app. So they download the instant app. They're able to give us the information that we need. and we can send them a virtual card, right away. if they'd like to have a hard plastic card, they'll have access to that as well, depending on the employer's choices and how they would like to receive that.
And, and then they go to work and, we receive census data and time and attendance data in a few different ways. Depending on the employer and depending on the employer's payroll provider and our partners. but we receive census data and time and attendance data and based on that we make an offer to the employee each day that they work. And they receive that offer. as they leave work and, from there they can choose to accept it.
that's the other thing about instant is, you're not required to accept it. It'll still be there and, they can choose to accept it. If they do, then it's immediately loaded, within the instant app. And then they have access to those funds using their instant account at no cost to them. They can go make purchases, do whatever they need to do with those funds, and no cost. if they have another account they would like to move it to, they can transfer the funds to another account as well.
we just want to make sure that, primarily, for instance, as it always has been, they have access to those funds at no cost.
No, I'm now a restaurant owner and I'm sitting here listening to this and going, you know what? I know that this guy didn't really work those hours. Those adjustments weren't there. There's some wage garnishment. There's something going on with this payroll. How do you guys mitigate that detail? Because, I earned 150, but I've got a wage garnishment. I need to pay 50 bucks out of that shift for.
some child support or something along those lines, or I've got taxes or any of those kinds of pieces on the earned wage side, or maybe I falsified my punch, transaction and somebody punched in for me and I really wasn't working that shift. How do you guys get around solving for all of those technical reasons? And, because those are things that come up every day in payroll. you guys live it every day. So sure. I'm sure you guys.
You guys have had to deal with these and I'd love to, to put our restaurant owners minds at ease that says you guys have figured all of this stuff out.
Yeah, I think we can that we have, I will tell you there's been a lot of investment in software and development of what we do to make sure we do all that in the right way. if you're earning a hundred dollars a day and you want that to be available to you. today, what we generally offer is 50 percent of that, which ends up being about, 70 percent or more of your net pay at the end of the day, right?
We also have methods for on the, on behalf of the business monitoring, Those that might be flagged for garnishments and other things as well so that we understand that if we're not able and instance responsible for advancing and recovering these funds There's no risk to the employer and anything that we do And so if there is if we have someone that for due to garnishment or whatever reasons We don't receive the funds to recover all the advances then We understand that and we'll continue to try
to recover from the next payroll And, but that's all part of the software that we've put together, understanding sort of the metrics with each given employer via the census file, and time and attendance data. generally there's, there are not issues with anything that we do and it's something that we manage through and, at the end of the day, the employer has no risk in what we offer.
This is something that we're offering on behalf of the employer to the employee and it's just responsible for making sure that it's right.
and you said, earlier in your description about kind of the access to my tips that I get a hundred percent of the tips on the end of my shift, again, working in restaurant point of sale, I've had somebody put a 50 tip that. They typed in 500 onto there and now they get access to that tonight. do you guys have any stop gaps for those kinds of things?
tell me a little bit about how tips might differ because you guys do offer a hundred percent of the tips, whereas the earned wage, you guys might offer, as you said, 70 percent of net, net, proceeds to that.
Yep, yeah tips is different and we really work closely with our restaurant partners there to determine how they would like to manage that They will in many cases. They won't manage our oversight. So the manager is able to see the tips before they push go And, make sure those tips are funded the way they want to. In some cases, there can be a secondary oversight set up, within the payroll department or finance department, however they would like to set that up.
but, and then the restaurant pushes those tips based on, using instant and using our back office and the. what we've built for them to use. and then, yeah, that's how they get distributed. And generally it's the same process as if it was like, if it was a cash payout, right? If it was a cash payout and there was an overpayment, then they would work that out with the employee, at some point after that.
but generally again, we don't see those challenges and whatever the challenges, we do see are typically much less significant than they would be if they were in a cash environment.
Absolutely. Absolutely. I guess one last piece on tips, you've got directly tipped employees. So you've got the bartender, you've got the server, you've got the busser. maybe not the busser, you've got the server, you've got the bartender, they get directly tips. It's, I got a hundred dollar transaction. I got a 20 tip. I see it in the point of sale data, but now you've got the busser, you've got the bar back, you've got the cook that might be getting.
Indirectly tipped, do you guys deal with the indirectly tipped employees and how does that all get managed? Is that just part of your census data and your file that comes through the point of sale for those indirectly tipped employees, because that's become a bigger piece of not only legislation, but also really just a lot of people that are dealing with these indirectly tipped employees and making sure that, they can stay competitive, in those job classes.
That's right. Yeah. So and you're right. We do use census data to validate and verify who we're paying. even on the tips level. And then, the managers are able to use our software to allocate tips however they would like to allocate tips. And so there's a split or whatever it may be. that's available as part of our back office, to managers to do that. So again, they're able to, they're able to see the tips.
Yes. make sure the tips are set as they would like them to be and then push send and send the tips. and again, it's a hundred percent funded, and there's a reconciliation process we help them manage through as well, depending on the restaurant, how they would like to do that. those are all services that we try to provide in regards to just making sure they get tips effectively to their employees when they need to get them there.
I love what you guys are doing.
I genuinely I know I told you this pre show I didn't I'm jacked you know super geeked about all of these different solutions because I think the democratization of the earned wages as well as the tips is a huge piece that Many of our listeners if you guys aren't Already on board with something like this like instant you guys got to figure it out And you know while these guys aren't the only ones that do it These guys do a fantastic job of solving this problem and doing it for a long time.
So For those that want to learn more about what you guys do, Talk to me a little bit about how they would get engaged with you guys what that might look like from an engagement perspective I'm now a restaurant. I'm sitting here listening. I'm driving on my car. I pull over to the side of the road All right. I gotta go figure out what to do. tell them where to go and How they can expect the, the experience to look like working with your team.
Yeah, no, that's great. I, first of all, just you can go to our website, instant.co, and get all of our information there. You can actually register, to send, to have information sent to you and we'll definitely follow up. I'm not shy about, Hey look, you can have my email address too, so anybody that's listening wants to reach out and email me. They can at [email protected]. I'll make sure that I'll follow up with you or have somebody else on our team follow up as well.
yeah, we look forward to working with as many of the restaurant, operators out there as we can and believe we can, certainly get them in the right spot.
Awesome. Is there anything that we missed in today's show that you would want our listeners to hear more about that, that I forgot to ask you about? Cause I think it's, I'm super excited to get this episode out there and to get people, at a place where they're doing that, but is there anything that I missed?
I look, we want to be available and visible. we're going to attend as many restaurant and, restaurant events as we can this year. So I would urge you to, if you're attending any restaurant events to, to find instant there and come by and talk to us. We'd love to meet you. one of the things we don't do enough of, I think, in 2024, still a little bit of holdover from COVID is we don't see each other enough, And we love to meet with our clients and those that are interested in instance.
So I hope, hope they'll reach out and, or come see us wherever we may be. thank you for your time, Jeremy.
I appreciate you being on and educating us. And, again, you had lots of choices as to where you could be spending your afternoon. So I appreciate you, you spending time with us to our listeners, guys, as I said on the onset, you guys have a lot of choices, so I think I appreciate you guys spending time with us. Thank you for the education and to our listeners, make it a great day.
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