Question:
What are standard tip out percentages? I feel like it’s all over the place, even within the same restaurant.
– Host, Philadelphia, PA
Answer:
Like a lot of restaurant industry benchmarks, standards for “tip outs,” giving a percentage of tips to hosts, bussers, runners, and bartenders, vary widely. At some establishments, there is a clear house policy, uniformly applied; at others, there are house guidelines; and still at others the discretion falls on the individual server. The inconsistency is further complicated by variations in state law.
There are good reasons for this variance—restaurants are staffed differently and job descriptions differ, so finding an equitable structure that will keep employees satisfied and reduce turnover becomes a unique challenge for each restaurant. For example, a restaurant where servers take orders, serve drinks, run food, handle payment and ensure overall guest satisfaction, assisted only by a busser, will have lower tip outs than one using a team approach where a back waiter, runner, busser, bartender and/or sommelier all have a hand in the experience.
One good strategy is to look to similar successful restaurants for a breakdown. At Philadelphia-based Pod, a restaurant similar to yours, a server reports, “8% to the bar, 10% to the busser and 12% to the runner.” On weekends, when there is a barista working, she or he is tipped out $5 or $10. Those percentages are fairly generous compared to other restaurants, but can work when tickets are high and when there are relatively few servers aided by each busser or bartender. A general rule of thumb is to expect overall tip outs of about 20-30%.
It can be complicated, for sure, but your POS system can be your best ally. Once you have recommended guidelines or house percentages in place, it is easy to produce reports of each server’s beverage and food sales as well as credit card tips. Worksheets like this one can reduce the vagueness and sense that money is not flowing in a transparent way.
Finally, before setting any tip policy, consult with counsel and your state restaurant association to be sure your policy is compliant in your jurisdiction. For example, while it is being contested in various states: back of house workers and managers cannot usually be included in any tips; the restaurant can typically set a pooling policy but it has to be universally enforced and detailed in the employee manual; and the restaurant cannot assess any sort of administrative fee for handling tip outs.
More on tip pooling here.