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September 12, 2017 6 Ways to Split Tips Between Employees

split tips between employees

Lately, more restaurants are choosing to split tips between employees. Since so many factors play into how a customer may tip, restaurants want to guarantee fair payment for all employees at the end of their shift. We share 4 reasons why it’s a good idea to split tips between employees – and 6 ways to do it.

The Great Divide Between Hourly Wages and Tips

According to the US Department of Labor, hourly rates for tipped servers can be as low as $2.13 per hour. This means that tips make up the bulk of a server’s salary, which can be troublesome when some servers face an empty section during one of their shifts. Or, a server may do a great job for a large party that neglects to adequately tip.

By deciding to split tips between employees, you mitigate these factors that are beyond the server’s control. Some may view this practice as unfair, but industry insiders know that pooling tips can actually encourage teamwork and ensure fair payment for the entire restaurant staff.

The Benefits of Split Tips Between Employees

A team that feels adequately compensated for their work is more likely to do a better job. Here are 4 ways that choosing to split tips between employees will benefit the team as a whole…

Supports Servers

  • When deciding how to split tips between employees, it’s important to focus on support staff as well as servers. Taking care of the busser and hostess will give them more incentive to take on more responsibility, like running food or filling water glasses.
  • Taking extra work off the server’s plate means that your serving team can handle larger sections. Eventually, you may be able to schedule less servers per shift, which will increase your bottom line.
  • Another way to support servers aside from deciding to split tips between employees? Consider customer-facing dining technology. This allows customers to place orders on a touchscreen tablet instead of flagging down a server and even pay their bill when the meal is over. Orders go straight to the kitchen so meals and drinks arrive faster, often leading to higher tips – everybody wins!

Shows Appreciation to the Back of House

  • It’s also important to remember the back of house. You can’t run a restaurant without those who make food and expedite the orders. Yet, at the end of the evening, tipped employees may be pulling more money than back-of-the-house employees.
  • The kitchen team usually makes just an hourly rate, although they are cooking for the entire restaurant rather than just one section. Deciding to split tips between employees in the back of house shows your appreciation for the work they do and improves overall employee morale.

Protects Staff

  • Split tips between employees also protects the team from factors that they can’t control. There are going to be nights where certain sections are busier than others.
  • The patio will be busier when there’s good weather. The bar area will be slammed on the weekend. Or, you may have a large party taking up one section of the restaurant all night.
  • Deciding to split tips between employees can guarantee that all employees, including the back of house, can go home with decent tips at the end of the shift.

Encourages Teamwork

  • Teamwork improves when you split tips between employees. It incentives everyone to work together and help out other sections that may be in the weeds. It’s in everyone’s best interest to take care of each section, because if one server does well, everyone succeeds.
  • Some diners may say it isn’t fair to split tips between employees. They may expect their entire tip to go to the one person they’ve interacted with during their visit. That is why servers get the majority of split tips between employees. However, servers would not be able to do their job effectively without the supporting staff working as a team.

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Ways to Split Tips Between Employees

There are many ways to split tips between employees, and most restaurants will create a standard for their business. Consider the size of your team and the amount of hours each employee works. Then, decide what you think is fair. Some common ways to split tips between employees include:

Percentage

Individual servers split a percentage of their total tips for the shift with their supporting staff. Percentage amount for split tips between employees is usually set by the manager. However, as a general rule, the larger tip portions goes to staff that plays a larger role in assisting the server.

For example, say a server makes $150 in tips. To fairly split tips between employees, you could follow this breakdown:
15% goes to kitchen – $22.50
10% goes to the bar – $15
5% goes to busser – $7.50
2% goes to hostess – $3

Pooling Points

This may seem like a complicated way to split tips between employees but we break down the formula to make it easier.

Servers contribute 20 – 100% of their tips into a pool at the end of the evening, which is then distributed among support staff based on a point system (ie. Servers – 10 points; Bussers – 5 points; Bartenders – 5 points). In most cases, restaurants require servers to pool 100% of their tips so everyone goes home with a good amount.

Say for example you had 3 servers, each worth 10 points, and they earned $750 total at the end of their shift. The busser on duty gets 5 points and the two bartenders equal 10 points. That’s a total of 45 points, which you would use to divide the total amount of tips (in this example, that’s $750/45 points = $16.6).

Each point is worth that amount, then multiplied by the number of points assigned to each employee (a server would be 10 points x $16.6 = $166).

Hours Worked

Some restaurants schedule more servers during busy hours, leaving only the full shift servers to continue after the rush ends. This can make the idea to split tips between employees difficult, as the full-time servers may not want to pool their entire earnings with those who only worked part of the shift.

To figure out how to split tips among employees that worked different hours, follow this easy formula:

(Hours of Individual Server/Total Hours of all Servers) x Tip Total (All staff) = The Share of Each Server

Weekly Pooling

Rather than split tips between employees at the end of the shift, some restaurants will pool all the earnings each week and calculate the total to distribute among the staff. This way, instead of nightly tips, each team member will receive a lump sum when they pick up their paycheck. This may help managers from having to split tips between employees during busier shifts when they may be too distracted each time they cut a server.

Voluntary

Some restaurants use the honor system to determine how to split tips between employees. This gives more control to your team since servers can decide themselves how much they think each staff member has earned.

You can still encourage a certain formula to be used, but servers may tip more or less, depending on the support they’ve received. You may worry an honor code could be counterproductive, yet it is more likely to encourage teamwork and ensure that supporting staff are doing their best to assist servers.

Separate Tip Options for Diners

This is a more innovative approach to split tips between employees that you may start seeing more often in restaurants. Although it’s not widely used now, some restaurant owners understand that diners may want to tip their server alone, or give a few extra dollars to the kitchen for an excellent meal. To assist with this demand, restaurants started adding another tip line for the kitchen on their checks.

This puts control in the customer’s’ hands, allowing them to know exactly where their tip money is going. It also incentivizes the support staff to provide excellent customer service. Bussers may be more inclined to chat with guests while cleaning tables, if it means they could receive a direct tip.

Every owner wants to reward a job well done – deciding to split tips between employees is a great way to incentivize staff while ensuring quality pay for your team.

9 Comments

  1. Timothy Brown on January 5, 2018 at 6:30 am

    Are you sure the Hours Worked formula is correct?

    • William Foody on January 8, 2018 at 10:30 am

      Thanks for catching that! It did seem confusing and we have updated it.

    • Scott W Golas on February 11, 2019 at 2:12 pm

      It’s not. Should be for an individual: Individual total hours worked/total hours of tip pool eligible staff = percentage of total hours this individual worked. That percentage * tips collected = their percentage of tips

      • wfoody on February 11, 2019 at 2:34 pm

        Thanks Scott, your way works with out the extra step of averaging the tips.

      • Agnes Hermann on July 1, 2019 at 12:08 pm

        CAn you show an example with numbers?

  2. Alan S Daniel on February 3, 2018 at 9:33 am

    Kitchen Staff are not part of a valid tip pool. See Fact Sheet 15 on the Dept of Labor Wage and Hour Website

  3. Jorge on April 11, 2019 at 12:56 am

    Hi. How to manage gratuity when is charge by the restaurant like a fix rate to the guest. How you (restaurant) pay the taxes on that and how the staff pays taxes on that ?
    Can you split that gratuity with all staff members including managers and bOH ? Orlando Florida 2019

    Many Thanks.

  4. Lisa on July 24, 2019 at 12:04 am

    Sorry don’t agree. If everyone is getting part of the servers tips, it does not make them work harder and be a team member, they work less and don’t care how hard they work because they are getting tips no matter what. I think it should be up to the server. If I have a great busser I tip them very good if I have a bad one then I don’t tip them good. If you want servers to give up so much of their tips then they should receive more wages. I’ll be damn if I bust my ass and make $250 in tips and you would want me to give up almost $100. This is why servers make less wages because our tips are part of our pay! With the tip pooling, how do you know everyone is being honest and turning in all their tips? This is what happened to me bartending tonight. First time bartending at the Denver Athletic Club, I work for a temp agency, no one informed in the beginning that we split tips. I was put on the slowest bar, of course, but I know how to take care of my customers, and I had over $80 and the lead bartender runs up and grabs my tip jars, I grab them back and asked him what he was doing. That’s when I was informed that they split up the tips. Fine I’m a grown ass woman and know how to turn in my tips, nobody should be allowed to touch someone else’s money. 6 bartenders and the grand total was $243!! I know everyone made more than $50 because I did and I was on the slowest bar. One large bar had 4 bartenders, smaller bar had 2 but both bars in the same room. The smaller bar turned a very small roll of money too small. After he took my tips he had one person gather all the tips at our bar and put it in his pocket. Now how is that right? I don’t know these people and I’ve learn to trust no one. Everyone should be responsible for turning in their own tips not just one person unless agreed upon in the beginning. Why didn’t they let me hold the money? Who in the hell are they? Then the bartending manager took 10% of the tips! Why? If he wants tips then he should quit he’s managing position and be a bartender. He got more than half of what I got. I only landed up with $36 and he got $23 no way!! We were to busy to have only made that much tips and I was the only one that had a problem with the amount. That’s because everyone knew about the tips being split except me and some or all pocket some of their tips. This is why I don’t believe in tip pools because people can’t be trusted to be honest and the ones that are like me get screwed everytime and plus places like this allow their employees to treat temps like shit and if you speak up they don’t want you back.

  5. John on November 14, 2019 at 4:25 am

    I work for resteraunt bar and we get the 8% or sales we get pd $4.35 an HR and they make pool on the C.Card tips and they split them up by percentage whoever gets the most revenue 40% 2nd 30% 3rd.20% and so on so basically if I get $100 in tips and the 3rd best seller I get $20 of the $100 that was tipped to me and the top seller gets $40 I think should be illegal for an employer to make you give up that much of your tips but I guess in Iowa it’s legal

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