Someone on p.w thinks that tips are still taxed. This is technically correct -- but not really.
If the employer keeps track of tips for each employee, then they might have to report it to the IRS. Even if they do, tipped employees need to make a large amount of tips before they are even taxed. If you fill out your W-4 correctly, which for most hourly employees is "0" then the employer doesn't have to withhold for taxes. (Just SS and MC.)
HOWEVER, if no employee reports that they received tips, and the employer doesn't keep track of tips, then there is nothing to tax or report. I believe this is true for the VAST majority of people who are receiving tips. They never tell their employer, if they did they don't keep track, and if they did they won't report.
This is ESPECIALLY true for cash tips, since there is no record anywhere that the cash was received as tips.
So pay your bills in cash if you can, and leave a generous tip. The employees get paid more than if the employer would've given them a decent wage, and Uncle Sam gets less.
But cash is king. I'm getting in the habit of paying off debts by withdrawing cash from the bank and handing it to people in person. The area where I live in, that's a fairly common practice. A lot of bad checks go around in our community, so people prefer cash.
In reality, I wouldn't mind a quid-pro-quo. IE, someone offering my restaurant a service will get store credit rather than cash assuming they actually like our food. I'd probably offer them the food at cost too. IE, you do $100 of services, I offer you $130 in-store credit.
I need my wait staff to understand our food and if they like it, all the better. That means they need to eat it. When I hire a new person, I tell them that they should go through the menu and try everything on it one at a time, eating the food on their breaks or taking it home with them. If there's something on the menu they haven't tried yet I look at them sternly and say "Why haven't you tried that yet?" Usually they say something like "but X is so good!"
The truth is I can prepare food more cheaply and better than they ever could. Economies of scale make restaurants work after all. I should consider sending them home with meals for their entire families rather than just themselves. It'd save them money and give them better food too.