Financial Wellness
December 2, 2024

Understanding the Importance of Financial Wellness for the Hospitality Industry

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⏰ Est reading time: 7 mins
💡 What you’ll learn:
  • Financial wellness benefits have become increasingly important, with 77% of workers viewing them as crucial benefits for an employer to offer. 
  • Hospitality workers in particular need benefits that promote financial stability, due to the unique nature of their work, which may include earning fluctuations, a younger demographic, and an already higher risk of burnout.
  • Offering financial wellness benefits like financial literacy resources, same-day digital tip payouts, and digital banking services with fee-free options can be a lifeline to these workers, improving their financial stability while boosting retention in the process.

Understanding the Importance of Financial Wellness for the Hospitality Industry

The current size of the U.S. hospitality market is estimated at $235 billion, and that number is expected to climb to nearly $300 billion by 2029. From hotel and spa staff to quick-serve restaurants and fine dining establishments, the industry employs millions of people across the country. 

Yet despite its size and significance, many hospitality workers are facing financial instability—often juggling multiple jobs or struggling with inconsistent income. In fact, according to a recent article from QSR Magazine, a majority of the 4.7 million people working in fast food today are financially insecure

In this blog, we’ll explore the value of financial wellness programs and benefits in helping hospitality workers face their financial burdens—and how providing these perks can also boost your business. 

What Is Financial Wellness? What Are Financial Wellness Benefits?

First, a quick primer on financial wellness and financial wellness benefits. 

Financial wellness refers to a person’s ability to effectively manage their finances to meet basic short-term and long-term needs.

Financial wellness benefits are benefits, programs, or other offerings a business may provide their workers with, in hopes of helping boost their financial well-being. 

In general, financial wellness benefits go beyond the traditional benefits of retirement or savings plans to deliver more meaningful short-term impact to employees that may need more immediate support. While long-term options like employer-sponsored retirement accounts, Health Savings Accounts and Flexible Spending Accounts are all wonderful options that can benefit your employees in the long-run, it’s also crucial to consider benefits that can help set your staff up for success in meeting their short-term goals, so they can tackle long-term planning next. 

The Importance of Financial Wellness in Hospitality: Why Do Hospitality Workers Need These Offerings?

According to a Transamerica Institute Report, 77% of workers see financial wellness benefits as crucial—even though only 28% of employers actually offer them. Though workers of all industries are demanding financial wellness benefits, there’s an especially crucial need within the hospitality industry. Here are a few reasons why. 

Earning fluctuations

Many hospitality workers are paid hourly or rely heavily on tips, which can fluctuate greatly from day to day or week to week. During the busy holiday season, they may make significantly more than normal, whereas during the typical January lull, they may struggle to make ends meet.

These fluctuations can create cashflow problems, leaving employees with little financial cushion when emergencies arise or during off-peak seasons.

Moreover, some hospitality workers do not have access to employer-sponsored retirement plans or health benefits. These gaps in financial security can lead to chronic anxiety about the future, even when workers are putting in long hours to meet immediate needs.

Younger demographic

Traditionally, hospitality workers skew younger, with the latest data specific to restaurants indicating that 40% of foodservice employees are under the age of 25, and 60% are under the age of 35. Three-fourths of Gen Z workers report that financial stress affects their physical and mental health, meaning there's a large share of hospitality workers struggling with financial stress. There is a crisis of young workers living paycheck to paycheck in food service and other areas of hospitality, struggling to make ends meet—and looking to their employer for answers. 

Risk of financial strain exacerbating burnout

It’s clear from the stat above that financial stress doesn’t only affect a worker’s wallet—it can take a toll on mental and physical health as well. Anxiety over finances is linked to a range of health problems, from insomnia to depression, and can lead to burnout or absenteeism. 

Pair this with the fact that in fast-paced environments like the hospitality industry, workers are already at risk of burnout due to long shifts, irregular hours, and difficult customers—and it becomes easy to see how financial strain might exacerbate an already demanding career, making it unsustainable. In fact, many hospitality workers have been flocking to gig work since the pandemic, in search of a more sustainable, flexible work model. 

How to Implement Financial Wellness Programs and Benefits for Hospitality Staff

You might be on board for offering financial wellness benefits to your team—but where do you start? These days, there is a wide range of possibilities to choose from, allowing you to tailor your offerings to what will be most beneficial for your team and your business. Here are a few ideas to get you started.

Financial literacy resources

Offering regular workshops on topics like budgeting, saving, investing, and debt management can be an excellent way to empower hospitality workers to take control of their financial lives. These workshops can be in-person or virtual and should cover practical advice that is relevant to workers in the industry. You might also offer free one-on-one financial counseling to help employees develop personalized financial plans. A financial advisor can guide workers through short and long-term financial strategies, creating a tailored plan that fits their unique situation.  

Same-day digital tip payouts

Part of what can make cashflow so irregular and unpredictable for hospitality workers is that their income may be largely dependent on tips. Not only may workers earn different amounts of tips on any given day, but some establishments choose methods for tip payouts that are slow and cumbersome for everyone involved.

Putting tips onto bi-weekly paychecks requires workers to wait to take home what may be their most important source of income; issuing them in cash may cause additional cash management headaches for your business.

Opting for the perk of same-day digital tip payouts can be a great tactic for boosting the financial wellness of your staff. With Branch, you can pay out employee tips after each shift to their Branch account, providing them with immediate access to their earnings in a safe, digital way. This also opens up the door to providing a comprehensive digital banking solution for your staff.

Fee-Free digital banking

Some hospitality workers, whether due to being part of a younger demographic, having limited work experience, or possibly working with limited documentation, may fall into the category of those who are “unbanked.” This refers to people who do not have a bank account or cannot open a bank account, which limits their access to financial services. After all, a banking history is necessary for things like obtaining a loan, apartment, or house, so remaining unbanked has the potential to limit an employees’ financial opportunities in life. 

There are also people who may be considered “underbanked”—those who are using a traditional account, but hit hard with excessive fees and requirements, unable to take full advantage of the financial services they need. 

Employees who receive their earnings through Branch get so much more than a traditional pay card: they get access to a comprehensive digital banking experience, complete with a debit card and digital bank account* that comes without overdraft fees, inactivity fees, monthly fees, or minimum balance requirements. Plus, there are fee-free ways to transfer funds to other accounts if they wish along with free ATM options. Providing access to fee-free financial services and banking can be incredibly meaningful benefits to offer your unbanked or underbanked workers. 

The Benefits of Financial Wellness in Hospitality

When you implement financial wellness programs for hospitality workers, the benefits are staggering: not just for your workforce, but for your business as well. Let’s explore some of the potential benefits that might come from offering financial wellness perks.

Improved cash flow + reduced financial stress

Providing access to financial wellness perks—specifically fast access to pay—can improve cash flow for employees who may live paycheck to paycheck. In turn, this may provide more financial stability to deal with unexpected expenses. Instead of defaulting to a high-interest loan or credit card, employees who have consistent, fast access to their earnings may be in a better position to handle those unexpected expenses. 

Increased productivity

Financial stability is linked to increased productivity. When workers are less worried about their bills or future financial challenges, they’re better equipped to show up energized, focused, and engaged. Financial wellness perks can encourage employees to take a more active role in their own financial planning, which translates to greater overall job satisfaction.

Moreover, when workers are better able to show up as energized and productive at work, that may translate to a better customer service experience for your guests. 

Related: How Employee Satisfaction Generates Customer Loyalty

A boost for recruiting + retention

Offering competitive wages alongside financial wellness support can help attract skilled workers who might otherwise consider leaving the hospitality sector for higher-paying jobs in other industries. Providing these types of financial wellness incentives can not only help recruit top hospitality talent, but keep them satisfied and engaged, ultimately boosting retention rates.

Higher retention rates may ultimately save you time and money, since the costs associated with constantly hiring and training new employees can add up quickly. 

Investing in the Financial Wellness of Hospitality Workers Is an Investment in Your Business

It’s clear to see that providing financial wellness offerings to hospitality workers isn’t just a nice gesture—it's a strategic investment that can pay long-term dividends for both your workforce and your business. By providing perks like financial literary resources, fast access to tip payouts, and access to fee-free financial services like digital banking, you’re showing a commitment to your workers’ future, creating a more stable, engaged, and loyal workforce.

It’s time for the hospitality sector to take the lead in offering workers the tools they need to build a secure financial future—because when workers thrive financially, businesses thrive as well.

Learn more about how Branch helps restaurants and other hospitality businesses thrive. 

*Banking services provided by Evolve Bank & Trust, Member FDIC 

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