Tipping Out vs. Tip Pooling: Which is Best?

Tipping Out vs. Tip Pooling: Which is Best?

Serving restaurant guests should be a team effort. Many restaurant owners push the idea that, while each server may have an assigned table/section, every customer can be helped by any employee available to give assistance. This notion ensures higher customer satisfaction by promoting teamwork and cooperation. But when it comes to sharing tips, conflicts can arise.

What’s the big difference?

Tipping Out

When servers calculate their tips at the end of the day, they may have the option of sharing those tips with their supporting coworkers, like bussers, hosts, and bartenders. Waiters and waitresses can distribute these incidental tips according to company policy or as they see fit. This is known as “tipping out.”

Tip Pooling

On the contrary, some restaurant operators mandate that all tips given to the wait staff be combined in a “pool.” At the end of each shift, this pool is divvied up amongst the wait staff and other supporting employees. This tipping method is known as “tip pooling”.

In the latter of these two options, tips would be shared with other employees who wouldn’t normally be awarded tips but who play a vital role in the success of the server. These employees include:

  • Bussers
  • Hosts
  • Bartenders
  • Other employees who indirectly assist the server throughout their shift.

Tip pooling can be a good choice when the wait staff fails to properly share tips with supporting coworkers.

The Legalities that Lie Therein…

Tip pooling doesn’t require that other staff get an equal portion of the tip as the server gets (and this is likely illegal, as it’s unfair to the server), but it’s typical in the restaurant biz to see that 15-20% of a waitstaff’s tips be sheared off of the total and given to the staff support team. But there are different mandates for every state, and restaurant owners can find themselves in a sticky situation if they don’t pay close attention to the legalities of tip pooling.

[pullquote-left]”There is no reason to suppose that the last person in a service line is the only one entitled to share in the customer’s bounty.”[/pullquote-left]

One of the largest issues with tipping out is the administration and legalities that lie therein. For instance, there are no POS solutions that presently allow and track tip-outs between staff.  For that reason, most restaurant establishments have rolled tipping out and tip pooling into one – creating a pool that has predefined percentages in it for supporting staff. This way, there are no questions when determining compensation amounts for employees across the board.

Nevada courts say, “There is no reason to suppose that the last person in a service line is the only one entitled to share in the customer’s bounty. For example, a busboy as well as a waitress contributes to the good service and well-being of a customer in a restaurant. Similarly, in a casino, the floormen, boxmen and cashiers all contribute to the service rendered to the player.”

At the end of the day, the choice between tipping out vs. tip pooling is yours. Just be sure that whichever method you choose abides by your state’s regulations.

Which tipping method do you feel is best?




tipping etiquette in America




Bralynn B.

Bralynn B.

Director of Marketing & Sales at QSROnline.com
Director of Marketing & Sales at QSROnline.com, a software company that provides a complete back office system for restaurants that integrates with your POS, accounting, and payroll systems to save time and money. He has over a decade of Digital Marketing & SEO experience. Hobbies include being a dad and wishing he had time for other hobbies.
Bralynn B.