Settling the Tip Splitting Debate 1

Monday, September 5, 2016 - 15:28
Settling the Tip Splitting Debate 1

For many restaurateurs, deciding on a tipping policy can be a difficult task. How should your restaurant share tips to meet the expectations of all parties? What are the rules governing tips anyway?

1. Tipping - What does everyone want?

  • Restaurant Customers

Your customers want to reward good service but are sometimes confused about how the system works. When dining out, they want great food and a relaxing environment to enjoy it in. Tipping is a way for customers to thank your staff for making their experience a memorable one. They expect their waiter to get this reward; alternative tipping systems can be frustrating.

  • Restaurant Employees

Your staff want to be rewarded for the extra effort they put in to provide an excellent dining experience. This is as true for staff members responsible for table service as it is for staff members responsible for food preparation. If extra effort towards creating a relaxing, high-quality experience is rewarded, then there is an incentive to keep standards high and your customers happy.

  • Restaurant Management

The restaurateur needs to balance the desire for customers to reward the employees that directly serve them, with the need to reward the ‘behind the scenes’ staff that equally contribute to a high-standard dining experience. The tax system can also complicate how this tipping system can operate.


So, your customer wants good service, your staff want to be rewarded for effort, and you want everyone to be happy. Which tipping system is best?

2. Tipping systems

Sadly there’s no ‘best’ tip splitting system because it entirely depends on your specific situation. What’s the best way to share tips fairly? Here are some things to consider:

  • Should you directly charge customers for service rather than encourage tipping? There’s confusion over service charge for customers; is it a ‘normal’ tip or a charge that ends up with management? The customer doesn’t know where the money they choose to leave ultimately ends up.

Customers value transparency, so give it to them. The success of your system comes down to how you collect and distribute the tips that customers leave.

  • Your restaurant could collect tips, pool them, and then share them out based on the number of hours worked. This avoids penalising employees who work in the kitchen or at non-peak times, but might demotivate some employees who feel that their individual efforts aren’t rewarded.
  • Another option is the ‘keep what you get’ system. Your most enthusiastic staff appreciate that they get fully rewarded for providing great service, but not all of your team members can work busy hours and feel unfairly treated.

Some restaurants now split out ‘service and kitchen’ charges. The premise is that customers can tip the kitchen for food and wait-staff for service. But there’s little precedent for this and it can simply confuse customers and annoy your staff. Click here to read about the tax implications of tips.