Tipping practices are in constant conversation in the restaurant industry. There have been a number of ways in which restaurant owners have tried to create a more equitable system for employees to earn consistent, fair wages to improve retention. Attempts have been made to eliminate tipping altogether, but many restaurants ended up reverting back to a traditional tipping system.
Tip pooling is another way that restaurants have changed up the system to make it fairer for everyone involved. It also eliminates some of the downsides of tipping like inconsistent wages, an emphasis on “good tables,” and an individual mentality among serving staff.
What is tip pooling?
Tip pooling is a tip distribution method where the tip amount from each customer's bill is gathered and distributed to supporting roles. This includes servers, hosts, bartenders, bussers, or anyone who provides any service that can be tipped by customers like coat check attendants. It can even extend to the back of the house, so cooks, dishwashers, and porters can get tipped out. With tipping numbers up across the board, now is a good time to think about how you can distribute them to your team more fairly.
A traditional tip pooling worksheet from restaurantowner.com
“Tips are a huge part of restaurant compensation and tip pooling is often so complex it becomes a part-time job worth of work for managers. By transforming the tip pooling process from hours of manual report generation and calculations each day to the click of a button, we've freed up our customer's time to focus on other parts of their business,” says Riz Jiwan, 7shifts' VP of Product.
What are the benefits of tip pooling for restaurant teams?
More equitable wages
Tip pooling can help create more equal wages across the board for your entire staff, especially if your tip pool extends to the back of the house. This makes sure that your team is being tipped out equally, regardless of shift or the type of work they're doing. Equitable wages are also a great way to stand out in a tough hiring market. Team members feel more valued and stick around longer.
A rising tide lifts all ships, so when everyone's tips are not paid out just for their work, teamwork will be encouraged. This can also help team morale, and have a positive impact on the health of your restaurant.
No “bad tables”
When tips are split fairly, infighting among your team over tables and sections will fall by the wayside. They'll also be less inclined to neglect side work in favor of taking on tables, making your restaurant run more efficiently.
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Tip pooling and distribution simplified with 7shifts
Tip pooling can help your team get paid more fairly and increase teamwork and morale. But without tip pooling software, trying to work out tip pool payouts on your own can be a hefty task, with so many rules, reports and data sources.
Disadvantages of doing tip pools on paper or spreadsheets
You may choose to calculate your tip pool by hand, using paper or spreadsheets. These options can be overwhelming, as well as:
- Time-consuming. Restaurant managers spend up to 8 hours a week calculating tips the traditional way.
- Prone to human error. You’re running around trying to put out fires, and in the chaos, you accidentally short a bartender on her tip payout. When she eventually brings it to your attention, you have to go back and redo your work. One too many errors on a paycheck can lower employee satisfaction.
- Too complicated. You have the staff’s logged hours stored in the POS, but their tip amounts are divided between cash and credit card. Not only is your browser full of open tabs, but your desk is piled high with sheets.
What a tip pooling tool provides
7shifts’ software can manage tip pools for you. Create the tip pools you need and make tip payouts more accurate. So you can tip out with confidence, whether you have ten employees or hundreds. Our software also integrates with select payroll providers to save you time.
Create custom tip pools that fit your teams' needs
Create as many tip pools as your restaurant needs with a simple rule creator that helps you create pools in under a minute. You can customize your tip-sharing and pooling to fit your restaurant's needs and make adjustments at any time. 7shifts' Tip Pooling software makes sure you're in control of where the tips are coming from, which roles contribute to or receive from the pool, and how that distribution is calculated.
Save time with automated tip calculations
Put down your calculator. 7shifts’ Tip Pooling software does tip calculations for you - no math needed. And if your POS has a supported integration, or if you use 7punches to declare tips, the tool automatically syncs your tip data.
Reduce errors with detailed reports
With all your calculations done for you, you can eliminate costly human error that causes headaches when running payroll. Once it's calculated, you can export and send directly to your payroll provider for payout. Better yet, it will instill confidence in your team that they're being paid accurately.
Ready to save up to 8 hours a week on tip pooling with 7shifts team management platform? Book a demo today.
If you’re an existing 7shifts customer, you can try tip pooling for free. Enable a Tip Pooling trial within your account. Questions? Reach out to your Customer Success Manager or connect with Support.
How Canadian Bakin' is streamlining tip payouts with 7shifts new tools
At Canadian Bakin' in Huntsville, AL, owner Daniela Perallon instituted a tip pool to create pay equity amongst her team. While pleased with the results, she was unhappy with the amount of time it took her each week-and the chance for error with manual and spreadsheet calculations.
“Before it was a time-consuming, stressful, and unnecessary task, so the tip pool [feature] has saved time and mental energy. As a business owner, it's mostly the mental energy you're using.”
Now, Perallon uses 7shifts Tip Pooling tools to help manage her team's tips, saving time that she can invest back into growing her business.
“For me, it's freed up more time to focus on specials for the menu, marketing, customer outreach, All these different things to have more time and energy to focus on because tip pool is [taken care of].”
Perallon was able to separate some team members who work at Canadian Bakin's local farmers' market stall, as they collect their own cash tips. This unique aspect of their business gets managed seamlessly, taking away the chance for human error.
“[The team] is getting assurance that calculation, there's one less step where user error can occur. I could type in hours incorrectly or forget to take hours out, which happened a couple of times. It takes away my user error because 7shifts is doing all the work for us.”
7shifts is a team management software designed for restaurants. We help managers and operators spend less time and effort scheduling their staff, reduce their monthly labor costs and improve team communication. The result is simplified team management, one shift at a time.
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D. J. Costantino
Hi! I'm D.J., 7shifts' resident Content Writer. I come from a family of chefs and have a background in food journalism. I'm always looking for ways to help make the restaurant industry better!