Digitizing $77M in Tips: Cotton Patch’s Fintech Shift With Stephanie Callihan

Tal Clark: Welcome to the Instant Payments Podcast, I’m your host, Tal Clark. I serve as the CEO of Instant Financial, a FinTech company that modernizes payments and payroll for hourly workers and their employers. I’ve worked in the payments industry for 30 years, and I’m glad you’re tuning in today. If you like what you hear, please subscribe, leave a review or suggest a future guest for us to talk to. This podcast features industry leaders to discuss some of their challenges and the technologies they’ve used to improve the workplace. 

Today’s guest truly, truly understands the ins and outs of the hospitality industry and finances. I’m joined by Stephanie Callihan the CFO for Cotton Patch Cafe, a Texas based casual dining chain known for scratch made Southern cuisine and people first culture. Cotton Patch Cafe has 47 locations across Texas and New Mexico and employs more than 1000 employees. Stephanie has worked with Cotton Patch for over 11 years, overseeing the company’s accounting, payroll, strategic planning and technology functions. She also worked six years at PF Changs. Stephanie, thank you so much for joining us. Where are you calling in from today? 

Stephanie Callihan: Thank you so much for having me. I’m here in South Lake, Texas today. 

Tal Clark: Beautiful. All right, and that’s where your office is correct. 

Stephanie Callihan: That is correct. 

Tal Clark: Well, look, I provided a quick intro, but you spent nearly two decades in the accounting and restaurant industries. Tell us a little more about your background, just in your own words. 

Stephanie Callihan: Absolutely. So again, my background started out in accounting. I started my career, actually, with Mr. Car Wash company out in Tucson, Arizona. We had 100 Car Wash locations when I first started working for them. Now up to 500 locations. They’re now publicly traded. I think they’re the only publicly traded company based out of Tucson, Arizona. So that’s really great. Yeah. And then, as you mentioned, I went up to PF Changs and PeiWei in the Scottsdale, Arizona area, for six years. The first three years in accounting, the second three years, doing FP&A financial planning strategy type work, but then a year at GoDaddy before joining Cotton Patch and starting the finance function. 

Tal Clark: Okay, that’s interesting. A great background. So did Cotton Patch bring you to the Dallas area, or did you move there and then find Cotton Patch? 

Stephanie Callihan: The private equity company that bought Cotton Patch back in 2015 recruited me and brought me out to Texas. My husband’s originally from the Austin area, and we met out in Arizona and kind of talked about, maybe someday we’ll have an opportunity and we’ll get to move back to Texas. I had moved here before my parents were in the military. We lived in San Antonio on one of our deployments so Texas was always a place we’re interested in coming back to, and somebody just gave us the opportunity. Here with Cotton Patch. 

Tal Clark: Well, that’s great. And I know your husband is in law enforcement, so I want to thank him for his service. That’s great. In Flower Mound, correct, correct? 

Stephanie Callihan: In Flower Mound and an Air Force veteran. 

Tal Clark: Oh, that’s right, yeah, absolutely. So, well, look what is Cotton Patch Cafe? Some people may be familiar with cotton patch, but there may be some listening to this that are not. So it’s an award winning restaurant chain? Just talk to us about the company. From your perspective, what makes Cotton Patch special? 

Stephanie Callihan: Yes, we are award winning. We did just win three best of DFW awards this year, gold for best comfort food, best chain restaurant, and best kid friendly restaurant. Like you said, we’re people first. We’re here to inspire more smiles. So people really are what makes Cotton Patch to life, the hospitality. We’re built on connection and experience. Another call out recently out in our Longview location. We just had a customer write in and create a news article about them, about Jaleel, how good his hospitality is. He takes care of people, and so we’re proud of all of our employees. And then, except right now, Jaleel getting some special kudos out there in the Longview location. In addition to the people, though, scratch made cooking, abundant portions. We have really well flavored food. It’s, I think, rivals what you’re going to get most other places: really good, Southern Comfort classics, chicken fried steak, chicken fried chicken meat. Things, what you were raised on, right, Tal? 

Tal Clark: Absolutely, I love that food. That is outstanding, and there’s not and there’s not enough of it either. So you guys need to move eastward a little bit as well. Do you, do you have any expansion plans in the future?

Stephanie Callihan: We are working on it. Yeah, our eastern locations. We have one in the Houston market area out in spring Texas. We were founded out in Macedoches and Far East Texas. But core, we’ve got some growth plans coming up here now, in the couple of years, and I think more eastward expansion to that neighborhood would be great. We’re really focused on affordability, big portions, really good price point with really good value and good service.

Tal Clark: Okay, that sounds great. That sounds great. Well, yeah, I look forward to seeing more, maybe closer to us at some point as well. And you guys employ, as we mentioned earlier, 1000 people across the state, from a financial and payroll perspective, what kind of complexities come with supporting a workforce at that size across dozens of locations, you know? What do you see as challenges and and talk a little bit about some of the technology you’re using today.

Stephanie Callihan: Yes, I think compliance is always something that we’re, you know, really focused on, first and foremost, to make sure, you know, from the finance and the payroll perspective anyway, making sure that people are, you know, paid accurately, timely for the time that they’ve worked. With a very large hourly workforce, keeping an account, you know, over time, multiple job positions that people may work a lot in terms of ACA compliant, making sure that we give people the benefits that they’re eligible for, for 1,000 clients, and making sure that we get everybody benefits. A lot of legislation is, if you still have a nine to five type job, those of us who work in offices and things and a lot of complexity comes with a really large workforce, multiple locations, seasonal sometimes workforces as well. We have a lot of students come and work, you know, at one location, at home, and then while they’re at school, they may come and work for another one of our locations. So keeping track of those ins and outs when they’re in rehires and benefits. But with some of that complexity, I think the good thing with restaurants is there’s lots of career growth trajectory, and that’s a really exciting thing about the industry. I was just looking at, as I mentioned, I’ve been at the company for 11 years. Our support center staff is about 25 people. Even at 11 years, I’m the ninth most tenured person in our support center organization. So our VP of Operations started, I think, as a server over 16 years ago. Director of ops services has been with the company 16 years. My controller is going to be hitting 20 years this year. So it’s a really exciting place to be in. Some people who really let the company, love the industry and are passionate about what they do.

Tal Clark: That’s great. That’s great. And your employees within the restaurant locations as well. Talk about your mission and tenure and your support center there. What are some of the things you’ve done in regards to tenure and maybe reducing turnover, increasing retention in the market, in your restaurant locations.

Stephanie Callihan: So we’re really focused on employee feedback, what’s important to them, trying to understand where they’re at, and fitting our benefits to what makes sense to them, to what’s actually going to benefit them, versus what we think that we need or we think we should provide from the corporate office versus so we do monthly Town Hall call with all of the field leaders, and we’re able to present to them. Here’s our results, here’s some new projects, here’s things we’re working on. Here’s what we want to give to you. What else do you need? What would make it easier to run a Cotton Patch? What would make it easier to light your guests and create good experiences. How do we remove complexity? What else is going on in your life that you have to think about or you’re struggling with that we might be able to help support and take care of for you? Okay?

Tal Clark: And is that, and as it seemed, have you? Have you guys been able to build momentum in regards to retention using some of those tools? Do you feel like you’re in a good place? I know it’s always a little bit of a challenge in the restaurant space, but you guys feel like you are ahead of the curve and building some momentum there. I think so.

Stephanie Callihan: Again, the restaurant industry tends to have really high turnover. I think we’ve put again, a lot of these strategies in place. Now, over the last several years, we’re seeing increased retention in our hourly workforce, you know, kind of in this low 100% hourly turnover rate. With that, we’re really focused on the management teams, keeping them in place. One of the main metrics we had for 2025 was a reduction in management vacancy. So where do we have a position that’s not filled, where there’s not an active General Manager or assistant general manager in there running the ship, because managed restaurants should run better, so focused on reducing turnover. Making more effective training so that when people come in, they’re well positioned to be able to take over their store, and then just Yeah, keeping more managers in the pipeline, having more promotional opportunities from within. So with that, we saw a 70% reduction year over year, in days where a cafe didn’t have one of their three management positions staffed, you know, over 1000 days or so. You know, previously, across 48 locations, a 70% reduction in days without somebody in staff. We’ve got growing tenure with the management teams, growing tenure with the hourly teams, which, again, the people who are in their jobs, more familiar with how they’re doing, can give better service, and then they earn more money, which makes someone come back and they stay with us longer. We have up to 30 year tenured employees at our hourly staff. Wow.

Tal Clark: Yeah, that’s great. And it’s great to hear that you’re making progress there, because I know that is a challenge, one of the, probably one of the top challenges in the restaurant space. It sounds like you guys have a great plan. So Well, look, you were there, and when you guys adopted instant, you guys have been a client since 2019 What led you to adopt instant at the time? What were you hoping to solve at the time? Because that was a little bit before my time. What were your goals when you adopted instant then?

Stephanie Callihan: Yeah. So back in 2019, pre pandemic, we were seeing, still a shift in people paying more on credit cards and less on cash. So traditionally, in a restaurant environment, you bring in sales to come in and cash, and we were handing cash to our servers at the end of the day to tip them out. But as we got more and more credit card payments coming into the system, the cash wasn’t enough to be able to pay out all of the credit card tip in cash to our employee. And so it started having conversations around, can we continue to give servers daily cash tip out? Do we need to change our process to where they only get tips on their paychecks at the end of each two week paid cycle. And we were really nervous about that, because serving and waitressing is the original daily pay option, right? Like, that’s a big reason why people get into that as a job is because they want to have that liquidity and that cash and money in your pocket every day. And so we’re really nervous about, you know, making that big of a change to then only giving the server staff their money every two weeks. And so, fortunately, we heard about instant right as we were having all these conversations with Charlie McGinty, who used to work for me. He just happened to impact things in the back of a room at a conference. And I made note of who he was, and said, I have to find this person somewhere in this conference and find out more about this. And this is kismet. He sat down at my table at lunch, and I said I was wanting to talk to you. And so it was a perfect fit for, you know, exactly that original problem we were trying to solve for at the time. So now on instant employees are still getting daily instead of a stack of cash at the end of their shift, we load their money onto the instant card, which they’re able to then guys shift to at one o’clock. Here’s your money on you can leave from the store to the gas station or the spend just as real with cash without some of like the safety and security risk of I’m walking out of this restaurant with a stack of cash, or I set it down in my glove box, and, oops, where did it go? Probably that. And, you know, the workforce now, especially the younger generation, they don’t know what those green folding things are anymore. Digital, first payment generation?

Tal Clark: Yeah, well, that’s a great shout out to Charlie McGinty. Charlie’s a great guy. We still stay in touch with him, and I’m glad he ran into you that day and and by the way, so now you mentioned they are digital first. Everyone we hire today probably is digital first. Yes, both you and us as well. And so now those cards are moving to virtual so they can load them into their Apple wallet or Google Wallet. So excited about that and excited that they don’t want to carry a card. They don’t even have to do that any longer. So it’s great. You know you mentioned the value that you guys were bringing to them and to yourselves by removing the cash. You know, there are some restaurants, and we’re gradually getting into those and changing them, the did decide to go to that two week paycheck cycle with the wait staff, and you go in and I’ll eat dinner at one of those restaurants and talk to the way staff, and they don’t like it. It drives them crazy, you know. And it’s just as you mentioned, it’s not what wait staff expect, and that’s not the reason that you want to be wait staff, just like you said. I mean, part of the benefit is getting your money every day. So super glad we can. We’ve had the opportunity to do that with you guys for tip. So you’re a numbers person. So let’s talk a little bit about numbers. Since joining Instant, Cotton Patch has dispersed nearly $77 million in pay and tips. That’s crazy. That includes over 78,000 payment transactions and 15,000 digital tip payouts, with the average tip being right around 60 bucks. How is this to just change your overall approach to payroll and tip payouts, both for your financial team and for your employees. What does it meant? I think we talked a little bit about the value of what it means to the employees not to have to have cash. But also, what does it change for you guys in regards to cash and the need for cash, and how you’re managing that going forward? 

Stephanie Callihan: Yeah, so it definitely helps make it so we can reduce the amount of cash that we’re having to keep, you know, on hand in the restaurant, which, again, like I said, it’s just risk from a potential perspective. You know, we’re not having to then send people to the banks to grow and try to pull money out to try to fund the checkouts.

Tal Clark: You know, as you say, and I don’t mean to interrupt you, but as you say that, it’s crazy to me that we were ever doing that, right?

Stephanie Callihan: Somebody from the restaurant goes to the bank, gets cash, brings it back to the store, and there is, what’s crazy is there’s some people still doing that, and hopefully we can change all that, but wait in line. Have to stand there wait for the bank teller to prove you know who you are. You know, there’s so many other activities that the managers need to do to be present in the cafe, and all the things that they need to be, you know, taking care of in their restaurants, and running to the bank and having to handle the paper money. It’s crazy. It’s not the number one thing you know in 2026 now that they should be focused on. So like you said, we’re able to maintain the tips on a daily basis. They can fund it on the card instantly. You guys give us options where the manager has access to the portal, where they can go in and manually key that. So again, same thing. If the manager is busy, instead of saying, Hey, I have this employee who’s trying to leave right now, somebody needs to open the safe, get them the cash out so that they can leave. The manager can do it at that exact time. If they’re busy, they can come in an hour later, and instantly, load it to the card. Or there’s ways that we can do file transfers. And as we’re pulling that tip data from the point of sale electronically, you know, from the Support Center, we can manage that tip out process as well and take it completely out of the manager’s hands at one left half to finish, we’re also then sure that it’s accurate every time, right. So again, with cash, it can be miscounted. What happened? Why do we have a cash over short at the end of the day? Did the employee get everything that they were supposed to? Did we overpay? We have an audit trail now within the instant app, you can run reporting and see either this manager or in the system at this time, paid this employee this many dollars for that it got to them on their card and in their account. And I think the nice thing you guys have as well is even if you lose that card, you can go in and cancel it. We have a stack of cards available at the store so that within your account, you can just assign a new card to that so no delay being able to use your money like you said, virtual card. No again, no risk like you have with that paper cap in terms of not being able to access your money or it getting lost or not knowing what happened. 

Tal Clark: Absolutely, absolutely. Well, look, I think that is we’ll wrap up this session of the podcast, and we’ll come back and talk again Stephanie. This has been a great discussion for our listeners. You can learn more about Stephanie’s work at cottonpatch.com. Please tune back in for part two of our podcast, where we’ll discuss more of the opportunities around going cashless for tips, as well as other restaurant industry trends for finance and operations as always, thanks for joining us on The instant payments podcast.