Business Math Series: How to Split Tips Between Employees

restaurant waiterIn most restaurants across the country, servers are the ones who receive the majority of tips from customers. While you might think otherwise, bar tenders, in a typical restaurant, do not usually receive a whole lot of tips. However, all of the restaurant employees are jointly responsible for the customer’s satisfaction and so most restaurants require that servers share tips with supporting staff, including the bar tenders. In general, the service of all the employees is better if they receive tips so this is a great practice.

How the tips are split varies from restaurant to restaurant and there is a formula for every type of scenario. Tips can be pooled between the wait staff, kitchen staff, bussers, and bartenders. They might be distributed by a percentage, using the honor system, or by points. Whichever method the restaurant uses is usually up to the manager and all the servers use that method.

Percentages

Some restaurants require that the wait staff tip the supporting staff based on percentages. These guidelines will be set by the manager. But usually the wait staff will give 10% to the bartender and then split another 25-30% between the remaining staff. The percentages may be general so that after figuring 25-35% the funds are then passed out to all the supporting staff equally or they may be very precise as in the example below.

The Seattle Times quoted this scenario for a single server:

• Total sales food/beverage = $1,000

• $150 gross tips (assuming a 15 percent tip)

• $10 (6.7%) to the expediter (who controls the flow of food)

• $20 (13.3%) to the busperson (who clears and sets tables, and, hopefully, keeps your water glass full)

• $15 (10%) to the bartender (my note: This is regardless of whether or not the bartender had a large number of people actually buying drinks from the bar. Sometimes bartenders can make pretty good tips all by themselves, other nights the bar is practically empty and the patrons stay at their tables. This percentage is independent of that.)

• $8 (5.3%) to the hostess (who may or may not have seated you near the bathroom door)

• $1.80 “tip charge” (1.8 percent of her total charged tips, paid back to the restaurant to cover the fee they’re charged for $100 of charged tips. Note: This practice is common though not widespread)

Pools and Points

When tips are pooled, 20-100% of each server’s tips are put into a pool to be divided up by the manager and distributed amongst the supporting staff. The distribution will be based on percentages. Many restaurants pool 100% of tips, which helps ensure that everyone makes decent tips – i.e. no one has a great night and, likewise, no one goes home with a terrible night either. This egalitarian philosophy helps ensure that everyone comfortable.

The point system is an easy way to calculate the percentages owed to everyone. It might look like this:

Servers -10 points

bussers – 5 points

bartenders – 5 points (bartenders share their own tips behind the counter too, usually equally)

Example:

If three servers brought in $750 and there was one busser and two bartenders, the split would be:

Three servers x 10 points (30), one busser x 5 points (5), two bartenders x 5 points (10). Total points is 45. So divide 750 by 45 to get 16.6. Each point, then, is worth $16.6. Now you will multiply $16.6 by the number of points relevant for each person. So in this example, the servers get $166, and the busser and bartenders each get $83.

Splitting Tips Based On Hours Worked

Sometimes tips need to be split according to how many hours servers work. In many restaurants, a couple of the servers go home after the rush. So it wouldn’t be fair to the full-shift servers to split the tips they make after the part-time servers leave. There is a formula for splitting tips among part-time servers when tips are pooled.

SHARE= (TIPS / TOTAL HOURS OF ALL SERVERS) X HOURS OF SERVER

Pooled tips between all servers = $500
Server A works 8 hours
Server B works 6 hours
Server C works 4 hours

Total Hours of all servers = 18

A’s tip = (500/18) X8 = 222
B’s tip = (500/18) X6 = 166
C’s tip = (500/18) X4 = 111

Once this is distributed amongst the servers, any further percentages may be calculated for the supporting staff.

Split Based on Hours Worked After Pools, Points, and Percentages Are Applied

Not all waitstaff factor in hours worked by the teammate with whom they are splitting tips but some do because some consider it unfair to give an employee the full amount if they only worked a 4 hour shift and the wait person worked 8. If you do want to factor in hours worked, there is an easy way to do this. First, figure out how much you would give the employees based on the formulas above. Then, figure out the percentage of hours that the employee worked in comparison to yours. So if you worked 8 and he worked 4, then he worked 50% of the hours you did. If you are taking hours worked into consideration when splitting tips, then you would give the employee half of your original figure.

If the number is not so easy as 50%, figure out the percentage this way:

Divide the employee’s hours (the lesser of the two) by the number of hours you worked. If you worked 9 and the teammate worked 4 then you’ll give the teammate 44% of the previously derived figure. To find 44% of this figure, simply multiply .44 by the figure. So if you figured that you were going to give the employee $12 then take 12x.44=5.33 and give the teammate $5.33.

Tread With Care!

Any one or combination of these calculations may be standard in one restaurant but not in another. It was my experience working as a server in college that certain tip splitting practices can be looked down upon by some. I worked in a couple of sports bars where we didn’t use any of these formulas and we were just expected to be “cool” in the amount we tipped supporting staff. Personally, being kind of a numbers geek, I would have preferred to use a formula but all of the employees there thought that formulas were too impersonal.

In general, I would always be careful not to use formulas that aren’t followed by all the staff in the restaurant. Restaurant employees can get pretty upset when they feel they are not getting their fair share of their hard earned money. This goes for the waitstaff who are paying out and also for the bartenders, busboys, and kitchen staff.

6 Comments

  1. How do you share tips in a small pizza shop when we only have counter service, no table service. We have 9 employees total, 5 on at any one time, and daily tips are only about $30? What about the owner who works 12 hours a day, 7 days a week, why doesn’t he get any tips????

    1. This sounds a lot like a coffee shop situation where customers give tips to the employees working behind the counter. Tips are split between employees in a coffee shop equally between all hourly employees. Managers and owners typically don’t share in the tips because they make higher wages.

  2. this is great if all the employees work the same hours and shift. how do you combine the values of hours AND points. I share a shift with a bartender and tip out my busboy. Our point value is 6 for the bartender and 4 for the busboy. However, we don’t all work equal hours. So what’s the formula for figuring out money due to each person based on their hours worked and their point value?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s