Restaurant Tipping Methods: Pooled Tips vs. Tipping Out

By: Julia Beebe

4 Minute Read

Feb 20, 2018

Restaurant Tipping 1

Tipping is a highly contentious issue in most restaurants. Everyone wants their piece of the pie and it’s often the most attractive incentive to working in a restaurant - cash money in your pocket! So, how do you decide which form of tipping is the best fit for your restaurant and staff?

Yup, that’s right, there is more than one way to structure tipping within your restaurant! When setting up your restaurant's payroll process, consider the pros and cons of both tipping structures. 

Option 1: Tipping Out - Waitstaff and bartenders collect the tips throughout their shifts and then distribute it out to hosts, bussers, expeditors, and anyone else who may have assisted them throughout the day. 

Option 2: Pooled Tipping - Pooled tipping takes the amount of tips earned during a shift and divides it evenly among everyone who worked that shift and is tip eligible.

So, which is better?

I spent three summers working at a high-end country club that pooled servers’ tips during each shift. 

In year one, when I was a brand-new server, I liked the pooled tipping policy. I was able to learn the ropes and hand off the big, scary tables to more seasoned servers without losing anything in my paycheck. I could also opt to be the expeditor while still getting an equal cut. Life was good.

When I started my second summer, I began to see the other side of the pooled tipping method. Now, as a more senior member of the team, I was doing more work and taking the big, scary tables without any extra incentive. I would take the large parties of 20+ people while other servers maybe had one or two very small parties (it was a country club so we never had high volume, just big spenders). Every once in a while I would be rewarded when a club member’s guest would sneak a big tip my way, but overall it was not ideal.

At the start of my third summer, I was still annoyed with the pooled tipping method (I know what you’re thinking, not enough to stop working at this place) but it started to grow on me. After going away to college and experiencing the tipping out model, I began to understand why a restaurant might prefer pooling tips. In my experience, pooled tipping definitely encouraged a more supportive and collaborative atmosphere; I didn’t mind helping someone else with their tables because we were all sharing the tips so it benefited me as well.

As a server, I definitely preferred the tipping out model over pooled tips. Restaurants are very dog-eat-dog, for better or for worse, but it empowers workers to do their very best because their tips depend on it! However, neither type of tipping is definitively better than the other. Restaurant owners need to consider the culture they want within their establishment to determine which tipping model is the better fit for their staff and clientele.

A Couple of Tips About Tipping

Pooled Tipping

Pooled tipping is typically a good fit for quick service restaurants, including fast food spots, bakeries, cafes, and pizzerias - basically any environment where there is a counter between your server and your guests. These establishments are more conducive to teamwork, so pooled tipping makes the most sense. Pooled tipping is also somewhat simpler when it comes to running payroll and figuring out how much each employee will be taking home. 

Tipping Out

In full service restaurants, bars, and nightclubs, tipping out via the waitstaff and bartenders is the common practice. They are the staff members responsible for managing the customer experience from beginning to end, making them the primary determinant of the final tip amount. It is a best practice for restaurants who use the tipping out method to create a standard in which bartenders and waitstaff tip out the rest of the team to ensure everyone receives their fair share. 

As you can tell from my story above, your servers will likely always have a strong opinion about how you structure tipping within your restaurant. Having an open dialogue with your staff and making it a point to ask them which method they prefer is a great way to get team buy-in and to keep all of your employees happy.  

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