Insights / How (and Why) to Start Tip Pooling in Your Restaurant
How (and Why) to Start Tip Pooling in Your Restaurant

Tipping practices are in constant conversation in the restaurant industry. Restaurant owners have tried a number of ways to create a more equitable system that will provide their employees the sort of consistent, fair wages that improve worker retention.

Some restaurants have gone so far as to eliminate tipping altogether, but many end up reverting to a traditional tipping system. Yet another system restaurants have tried in hopes of making tipping fairer for everyone involved is tip pooling. For restaurant operators who use this method, it may offer the benefits of a traditional tipping system while also addressing some of the disparities in workers' pay the traditional system brings.

What is tip pooling?

Tip pooling is when a portion or all of the tip money from the night is collected and redistributed evenly or by designated percentages — instead of each server keeping the tips they earned individually.

To pool tips, gather some or all of the tips collected during a shift and re-distribute the money among the staff. The money can be split evenly or assign different amounts to certain positions. For example, you might distribute 70% of the tip pool evenly among servers and 30% among kitchen staff.

That allocation contrasts with traditional tipping models, wherein servers keep the tips for the tables they personally handled. Understandably it makes for some major changes at your restaurant.

What are the benefits of implementing tip pooling?

Pooling tips will have a profound effect on the relationships workers have with one another during a given shift. Establishments that pool tips find the practice has two main positive effects.

Equitable wages

Tip pooling can help make wages more equal across the board for your entire staff, especially if your tip pool extends to the back of the house. Regardless of the type of work a staffer does, they directly share in the night’s success. Especially for back of house workers, equitable wages are also a great way to stand out in a tough hiring market. Across the board, employees who aren’t satisfied with their wages are quitting their jobs. Tip pooling can be one way to ensure everyone on your team, with the possible exception of servers, earns higher and more consistent pay.

Improved teamwork

A traditional tipping model incentivizes the individual server. But when everyone's tips rise and fall together, the entire staff has immediate motivation to work hard, to pick up any slack, to knock out any side work, and to hold one another accountable. The shared sense of mission boosts team morale and has a positive impact on the health of your restaurant.

Easily automate tip pooling calculations and payouts

One common drawback to implementing a tip pool is the work involved. It brings new rules, more complex tracking, and calculations that have to be made at the end of each shift. Restaurant managers can spend up to 8 hours a week calculating tips with traditional methods. Those who use 7shifts can turn those hours into minutes. Here's how:

Automating calculations

Much of the work of running a tip pool comes from manual data entry. With 7shifts Tip Pooling software, tip data is automatically pulled from supported POS integrations (or through 7shifts integrated time-clocking app, 7punches). Once tips are collected, tip calculations are made according to your custom rules and sent to supported payroll providers.

Avoiding labor compliance issues

With your calculations done automatically, you eliminate costly human errors that cause headaches when running payroll. Once the pool is calculated, you can export and send it directly to your payroll provider for payout. Using a reliable software will instill confidence in your team that they're being paid accurately.

[Photo by Karolina Grabowska via Pexels]

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