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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.

7 Comments

  • Jorge Apr 11, 2019 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 2019Many Thanks.

  • Alan S Daniel Feb 3, 2018 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

    • Scott W Golas Feb 11, 2019 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 Feb 11, 2019 2:34 pm

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

    • William Foody Jan 8, 2018 10:30 am

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

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