Let’s talk about tipping. A tip-top subject or does it tip your patience scales? It may seem like a relatively minor subject in terms of restaurant operations. After all, you’ve bigger picture staffing, payroll, inventory, reservations and quality issues to worry about. But how you distribute gratuities is the tip of the employee satisfaction iceberg. Getting it wrong could even be the tipping point in relationships between you and your front-of-house employees.
First thing’s first: much about tipping depends on where you are. In the Netherlands, for example, tipping is uncommon and wages for serving staff are pretty decent, which makes the distribution of tips a moot point. In the US, on the other hand, 15-20% of your total bill is standard as many service industry employees depend on tips for as much as 60% of their overall salary. American employers are not allowed to touch these tips—whether they’re left in cash or by card—and face significant fines if they do. However, if the establishment already pays minimum wage in terms of salary, then it can oblige employees to pool all tips to be shared amongst other employees, like hosts, bussers, bar staff and chefs as well.
Tips are extremely important to servers in some countries, like the US, where the pay can be extremely low. Shared Tips Make a Happy Restaurant
Even in restaurants where tip sharing isn’t obliged, waiters will often give a percentage of their tips for the night to bussers, hosts, bar servers and chefs to keep them on-side and make sure they get their help in delivering great customer experience in future. This is especially the case in larger restaurants with significant turnover of diners.
It’s worth remembering that tips count as taxable income in the US and should be declared by employees.
UK service employees have enjoyed a more ambiguous relationship with tipping until recently. Some particularly miserly establishments kept gratuities all for themselves. Others—hotels for example—distributed waiters’ tips amongst the entire establishment. It was fairly common practice to collect tips and use them for staff parties and nights out, which sounds ok in theory but is essentially making employees pay for their own team building outings.
Fortunately, on the back of some high profile strikes and damming news stories, more regulations and standardisation have been brought to the practice of tipping in the UK.
What are the rules for tipping in the UK?
When a customer leaves a cash tip, it is legally the property of the staff; the business is not allowed to touch this tip in any way. However, there are two options:
- The tip goes straight to the person serving that table.
- All tips are pooled and shared out – either at the end of the night or on a regular (weekly, monthly) basis.
Tips left on credit card are a controversial issue in hospitality circles.
These rules are complicated when tips are left on credit card, or digital wallets (like Apple Pay) which is an increasingly common practice as customers carry less and less cash. Some less charitable restaurants keep credit card tips for themselves: not ok. Tips left on cards still need to go back to employees.
There was outcry recently when it was discovered that some big high-street restaurant chains were skimming as much as 20-40% of credit card tips to either swell their corporate accounts or to share amongst all employees, including office-based workers.
This led to government involvement and best practice guidelines being created for the hospitality industry in particular.
What is the best practice around tipping?
- Develop guidelines for your company or restaurant around tipping. Make sure they’re clear and share with all employees, especially new starters.
- Clearly state whether your tipping policy is: tips go to the waiter who received them; tips are pooled and shared between front-of-house employees (and maybe chefs) at the end of the night; tips are pooled and shared between front-of-house employees (and maybe chefs) on a regular basis, such as weekly or monthly.
- Credit card tips go back to employees and should be shared as quickly as possible – ideally as part of the next paycheck.
- Smaller restaurants can charge a small percentage (2.5% is standard) to cover the cost of processing card payments. Larger restaurant chains should try to avoid this.
- For more advice, check out these codes of best practice.
Remember: your employees may rely on tips, so try to be fair above all. And more tips mean customers are leaving happy; creating a high-tip environment is a win-win.
Matt is an experienced journalist-turned-marketer, with content in his blood and a particular affinity for tech, SAAS, B2B and hospitality. Originally from the north west of England but now a proud Amsterdammer, his first job was working as a kitchen porter, eventually progressing to the dizzy heights of silver service waiter and occasional barman!
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