Managing Tip Distribution in a Restaurant

[LukeNieuw]

Hi Guys,

How is everyone handling Tip Distribution at their Restaurant? By that I mean servers tipping out Bartenders, Kitchen, Dishwashers, Managers etc.. I've read that most restaurants have their servers tip 3% of sales to Kitchen and 3% to the Bartender. 

Tips are such a hot topic....

Currently our servers were tipping out 5% of Food Sales to the Kitchen. Our servers make their own drinks so there is no Bartender to share with. They run their shift report at the end of the day and collect any Credit Card Tips they're owed in Cash from the Cash Register (another team member verifies with them and signs). They submit their shift report plus any Cash owing to the Restaurant at the end of their shift. Make Sense?

I have their shift report broken down by sales category so it's easy to make the calculation but I noticed it's based on Gross Sales and doesn't account for any discount or loyalty reward that was applied. So in that respect they could end up tipping out on $ they never collected.

Should we make the % smaller and go by total NET sales? 

Does anyone have any suggestions or a better way to handle this??

Thanks in advance! 

[mksavage]

Completely agree with your thinking here. While many of these decisions might not affect the actual amount of money/tips a team member receives, they definitely set the tone for how much they feel that we appreciate/value them. If they don't know they are valued, they will move somewhere else -- regardless of how much money they are making. I always try to think of how these kinds of decisions will be perceived and err towards benefitting the team.

[elponce]

We have also been calculating tip out based on category sales, tracking on an excel spreadsheet.  Would love to see a way to add tip out to the server check out reports- this was something both of our previous POS were able to do. 

Servers tip out 5% on food & 5% on bar sales.  We calculate their tip out nightly, but then we have to do more math to pay everyone that receives the tip out weekly.  Lots of extra time spent by management, and also allows for human error.

Very good point about the discounts- we don't have a ton of comps & discounts but I'm going to look into it- definitely don't want to shortchange my waitstaff!

[GourmetOnWheels]

We will split the tips 50/50 FOH and BOH

René

[Chantel]

Luke,

I have 4 locations, all full service restaurants. The raising minimum wage in our state (Washington) has created a larger discrepancy between FOH and BOH earnings. None of our staff want to move to a complete tip pooling, so we do a tip-out on percent of food sales. We have one high-end restaurant that does 5% tip out, two do 3%, and one with tons of togo's the servers handle does 2%. We have it that all online orders that come in the sale is "unassigned" and those "unassigned" tips go to kitchen tip pool as well. All of our location average right around $4 an hour to each BOH staff member from the tip pool. In our state, you are required to have a clear, written out tip pool policy. But this is a good idea to have anywhere, so it's very clear how it's calculated and distributed. We do not let servers take cc tips in cash, all cc tips go onto their paychecks. We have an excel sheet and load in their cc tips, and what their BOH tip out is, then subtract that tip out from their paycheck tips. We pool the tips and distribute based on hours to kitchen staff. This way all staff is paying their own taxes on the tips the receive. A side note, we do not include dishwashers in the tip out. Servers tip them $1-$5 based on performance in cash that day. We only have one location with bartenders, we do the same. Servers tip them out cash that day. If you'd like to see the excel sheet we use, shoot me an email owner@mammothburgerco.com  I highly recommend moving to tips being paid on their paychecks. Much easier for you. Also, I'm against dinging your servers the merchant processing fee. If you're paying 4%, you need to shop around. Square processing starts at 2.75%(I think?) and you can get that lowered by simply calling your square rep and asking them. Especially if you have multiple locations and higher volume. Build that fee into your business budget. One more thing, not sure if applies to Canada, but for US restaurant owners: Very important to file your IRS 8846 form and get a credit back for all the employer taxes you paid on the tip portion of payments to employee's. You may not even know you're paying this, but you are! 7.65%, and you get that credited back on your taxes if you file that form.

Chantel