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Business Math: How to Split Tips Between Employees

In most restaurants across the country, servers receive the majority of tips. However, all of the restaurant’s employees are jointly responsible for the customer’s satisfaction and so most restaurants require that servers share tips with supporting staff.

How the tips are split varies 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 among 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, 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.

39 Comments

  1. Gman
    Gman May 17, 2014

    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????

    • Timesheets
      Timesheets May 19, 2014

      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.

      • Tammy
        Tammy October 6, 2016

        Tim hortons does not share tips evenly I work 8 hrs help out on front counter when needed and never get a full tip out.if they make 17 dollars a day I only get 7.is this fair .not to me it isn’t

      • Chad
        Chad March 5, 2017

        Do you know of an app that lets you in enter in all the info and it calculates everything for you?

        • Wilfred Gateri
          Wilfred Gateri June 12, 2017

          Hi Chad.

          Just read your comment. I’m one of the cofounder’s for Tipmetric.com which is a web app that “lets you in enter in all the Tips collected and it calculates everything for you?”

          The web app is currently in private beta but if you are still looking for a solution I would be happy to give you an account to give the app a test run and see if it can help out.

          Let me know…
          WIlfred.

          P.S. Still working on the landing page 🙂

          • Waitress
            Waitress August 1, 2017

            I would love this.

        • Eva
          Eva April 12, 2018

          you can create Exel sheet it really helps in daily tip out

    • Rachael
      Rachael October 14, 2016

      I wonder the same thing! What I offer is as being a food runner/anything the customer needs/ busser I average about 25 hrs a week while being paid 5.03 an hour plus tips usually make about 20 a day in tips…..it is said in my position I make almost 10$ an hour my luck I’m always stuck as closer which mens a higher tip percentage to me. The more hours and the ability to chalk up the work and know everything that is done is being done for the better that is what makes the customers happy and happy witholidays ourselves as servers because there is always room for improvement and in this line of work means more appreciation = more tips!!!!!!!

  2. Michael Diamond
    Michael Diamond July 24, 2014

    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?

    • Timesheets
      Timesheets July 24, 2014

      Hi Michael. I added a new section to the post in response to your question. Hopefully this helps!

    • Stepanovich
      Stepanovich December 16, 2014

      Gratutiysolutions.com has an option to share by points and hours in combination.

      • Peggy
        Peggy December 16, 2014

        That looks like a really convenient way to handle tips! I love it!

  3. Dman
    Dman August 28, 2015

    I am trying to create an excel spread sheet with a pool system. I want to be able to input the nightly tip total and have the total divided among the servers and server ast’s automatically. What would the needed formula be? Example Total nightly pooled tips is $1,500.00 each servers point is 10 each server ast is 5. What formula do I put in excel to have the money divided for total nightly points then multiplied by the workers value? Thank you

  4. Jack
    Jack November 23, 2015

    Can managers decide how the waiters will split their tips with the bartender?

    • Peggy
      Peggy November 30, 2015

      That’s a great question. Hopefully this page from Nolo Law for All helps answer your question:

      “Many states allow employers to require tip pooling. All employees subject to the pool have to chip in a portion of their tips, which are then divided among a group of employees. An employee can’t be required to pay more into the pool than is customary and reasonable, and the employee must be able to keep at least the full minimum wage (that is, the employee can’t be required to pay any part of the tips the employer is counting towards the minimum wage into a tip pool).

      Only employees who regularly receive tips can be part of the pool. Employees can’t be required to share their tips with employees who don’t usually receive their own tips, like dishwashers or cooks. And no employers are allowed in the pool: Tips from a tip pool can’t go to employers or, in some states, managers or supervisors.”

  5. Barbara
    Barbara April 7, 2016

    Should kitchen staff get tips as well?

    • Timesheets.com
      Timesheets.com April 18, 2016

      Hi Barbara. Here is a link to some information on the topic.
      “The 2-1 decision from the 9th Circuit Court of Appeals bars businesses from sharing tips given to waiters, bartenders and other staff with back-of-house employees such as dishwashers and cooks. It applies mostly to states such as California where workers are paid the minimum wage on top of any tips.”
      http://www.latimes.com/business/la-fi-tip-sharing-ruling-20160224-story.html

  6. james k
    james k August 23, 2016

    I am a assistant manager at a restaurant and i am trying to come up with a better system than we currently have. we have a system for catering orders that tip on there card,and is distributed among all employees, morning or night, and also based on how many hours you worked in a pay period, it is then taxed and added to your pay check. i believe it is unfair because all the catering orders are done in the morning but the night crew also gets part of those tips. even tho they are not involved in anyway. is there a system that can calculate total tips and distribute it based off those who worked that day and received the tips for there work.

    • Wilfred Gateri
      Wilfred Gateri July 10, 2017

      Hi James.

      Just read your comment. I’m one of the cofounder’s for Tipmetric.com which is a web app “system that can calculate total tips and distribute it based off those who worked that day and received the tips for their work.”

      The web app is currently in private beta till end of September and if you are still looking for a solution I would be happy to give you a trial account to give the app a test run and see if it can help out.

      Let me know…
      WIlfred.

  7. Jenn
    Jenn August 26, 2016

    At my coffee shop we split tips with everyone working. When someone new comes into work we split, when someone’s shift ends we split. That system is perfectly fine for me. My problem is one of my coworkers is only there to clean, she gets a 6 hour shift and all she does is clean. Reason for it is because she cannot speak English she is Italian. She doesn’t serve costumers nor ring them up. I don’t think it’s fair that when we have lines out the door and are busting our ass for hours to get the line out of the way that the people that were actually serving people have to split with someone that is just cleaning and helped in no way with the line.

  8. Chenda
    Chenda October 18, 2016

    Thank you. It is useful for me.

    Chenda Yan

  9. Wendi neal
    Wendi neal November 30, 2016

    Work in restaurants where we only tip out bartender But it’s 10 Percent if our gross sales even if the bartender doesn’t make drinks for our guests Should it not be 10 percent of our acohol sales?

  10. SK
    SK January 27, 2017

    I am Busser ( captain) in one of the night
    club And we have a very small team
    2 server1-2 bartenders 2-3 Busser
    including bar back and our pool was
    Server and bartender 6 pint
    Bar back and Busser 4 points
    Becouse bar back and Busser
    Start at 8:30 pm
    And barback and server start at 10-30 pm
    Server and bartender don’t do any any side work including setting the whole bar and
    club and closing, Now my new GM seted
    Up 23% of the tips for Busser and barback
    Now if 2 us work we make 11.50 per 100
    if 3 of us work we make 7.66 per 100
    While server make 25.66 per 100
    if 3 of them or 19.25 if 4 of them
    Basically we make way less half of what
    They make, is this fair ??
    Can they do Two separate pool( 77% pool between server and bertendet) (23% pool
    Between Busser and barback) in the
    the same house?

  11. Megan
    Megan April 5, 2017

    So is it actually a tip pool violation to share tips evenly when not same hours are worked? Even of its an hour or two more or less? If so what action shod I take? San Antonio TX

  12. Martini
    Martini May 17, 2017

    Who by law must split the money at the end of every shift a server or manager!

  13. Jennifer A Parson
    Jennifer A Parson July 25, 2017

    I work at a spot where the cashiers get the credit card tips and get paid the full minimum wage this can’t be right and the waitress get paid 2.13 and don’t get any credit card tips and if they do it goes to the cashier

  14. Susan
    Susan August 14, 2017

    If we use a tip pooling system and a couple of servers come in later than everyone else because they cannot come in at the beginning of the shift because of other obligations, is it wrong to dock them a point? Should we be consistent and also include servers that come in late and dock them as well?

    • Wilfred Gateri
      Wilfred Gateri February 22, 2018

      Instead of docking them a point your tip pooling system should include hours worked. For example if Tom works 8hrs and John comes in late and only works 7hrs then Tom will take home more tips than John because the Tip Pooling system is weighted by hours. This keeps it fair for everyone. For a system that does this, please see TipMetric.com

  15. travis
    travis September 20, 2017

    I work in a fast food restauranrt..im having trouble evenly distributing our tips.
    I have some employees who work 40hrs a week and other who only work about 25 hours aweek.plus I have a prep cook who gets tips.how do I evenly distribute them so that not everyone is getting the same amount,i hand out tips at end of the month.thanks

    • Wilfred Gateri
      Wilfred Gateri September 24, 2017

      Hi Travis.

      Just read your comment. I’m one of the cofounder’s for Tipmetric.com which is a web app that “lets you enter in all the Tips collected + Hours and it evenly distributes them so that not everyone is getting the same amount.”

      The web app is currently in private beta but if you are still looking for a solution I would be happy to give you an account to give the app a test run and see if it can help out.

      Let me know…
      WIlfred.

  16. Wilfred Gateri
    Wilfred Gateri September 24, 2017

    * forgot to add my email for you to easily contact me (hello@tipmetric.com). Shoot me an email if you would like an account. Thanks

  17. Joanie
    Joanie November 11, 2017

    Is it legal for an employer to take 12% from employees tips for tax purpose and also 2.5% for credit card tips?

  18. Enrico
    Enrico June 9, 2018

    We are a big famous restaurant.
    Before we were using percentuage system and was kind of fine, so the owner decided to switch to points system.
    Is it normal that a waiter takes 1.0 and a hostess 0.8??
    We are all unhappy, there is anything that can be done?

    • Wilfred Gateri
      Wilfred Gateri July 18, 2018

      Hi Enrico,

      One system is not inherently superior to another. It depends on the percentage or points assigned per position that are being used to calculate the tip-outs

      I would probably suggest you do some sort of simulation of the 2 different systems with different percentage or point values to make sure you get the exact same tip-outs no matter which system you are using(points / percents).

      You can check out TipMetric.com to help out with this simulation or reach me directly @ hello@tipmetric.com.

      Best,
      Wilfred

  19. Angelique
    Angelique June 28, 2018

    My daughter is a bartender she makes 7.50 per hour and tips are on a point system. If she doesn’t need help she gets 1 point and if a manager steps in he gets the full poi t and she gets 1/2 a point. She keeps track of everything, she received her paycheck made a total of $950.00 dollars came home with 500.00 they told her they take of 34% off the top for taxes is this correct? I need to be able to understand this and help her at the same time.

    • Peggy Emch
      Peggy Emch June 29, 2018

      Hi Angelique. For specific tax questions you should consult with a tax professional.

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