How to Fairly Distribute Tips to Employees

Tips can make things complicated. But they make a significant difference to the pay of many employees in America, so finding a way to fairly distribute tips to employees is important.

Beyond a pay upgrade, splitting tips can encourage teamwork, shows appreciation for the back of house or workers who might not take in direct tips and where serving is involved it softens the blow when a section or time of day isn’t as busy as another.

So, for the restaurant owner that’s looking to fairly distribute tips to employees, I’ve come up with four great ways to consider. It’s important to note that these are not the only ways, so make sure to do what’s best for you and your business!

Ways to Fairly Distribute Tips to Employees

By Percentage

In many cases, a server will share a percentage of her tips with the back of house employees who assisted during the day. 

A percentage of these tips will go to the different areas, for example, 20% might go to the kitchen, 10% to the bar, 5% to the busser and 2% to the hostess. So, if she brings in $200, $40 would be split amongst the kitchen staff, $20 in the bar, $10 to the busser and $8 to the hostess.

By Hours Worked

Sometimes a restaurant opts to have all of the tips pooled together and splits them up by hours worked since some shifts will feature more servers on than others. This isn’t necessarily popular with full-time servers who don’t want to take the same split as someone who only worked part of the shift.

However, the formula most often used to get the tip for each server is (hours worked by server / hours worked by all servers) x Tip total (for all staff). 

On a Voluntary Basis

In some restaurants, owners leave it to the individual servers to decide how much to contribute to each pool. Using the honourary system, the server makes the decision on how much each support they had.

It’s true that many will provide a suggested formula that the servers can use to break up the tips, but ultimately it’s completely up to them to make the final decision. A system like this can encourage teamwork amongst the staff, ensuring that everyone works better together. 

Let the Customer Decide

It’s a tad more innovative than some of the other methods, but some restaurants are putting the decision in the hands of the customers themselves. By adding an additional tip line, the customers can decide to tip just their server or split a tip between the server and the back of house.

This can make a big difference in upping the customer service game in your restaurant. Other staff members might be encouraged to interact with customers if they knew it directly impacted their pay. 

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