Would you know if your employer is stealing your tips?
Tipping is a part of restaurant dining in North America, for better or worse. As a diner you tip your Server and they are expected to share some of those tips with the other staff. Servers and Bartenders are the front line staff that interact with the customer, but they are only part of the team that delivers your dining experience. The team members in the kitchen and the assistants up front are integral cogs in the service machine and a significant part of their earnings come from tips that are shared amongst the staff.
The distribution of tips is known as a “tip-out”. At the end of their shift a Server or Bartender contributes a percentage of their sales to a group tip pool which is collected and distributed by management. There are no industry standards or government regulations regarding what percentage this tip-out is or how it is distributed.
Canada’s restaurant industry generates 70 Billion in revenue, subtracting the 46% that is fast food dining where tipping is not standard practice, you are left with $38 Billion in Sales that customers tip on. Canada’s average restaurant tip is 17.2 per cent, generating $6.5 Billion in tips. A typical Canadian Server or Bartender will be required to contribute at least 5% of sales to a community tip pool, that’s $1.9 Billion in tips being managed by Canadian restaurant owners and operators with no oversight. The US figure is 10 times that.
How would someone working in a kitchen know if their employer was distributing tips equitably or even skimming money off the top? The short answer is that they wouldn’t. There is not even consensus on what constitutes “fair and equitable” distribution of a tip pool.
My company manages staff tips for restaurants and for years we’ve been collecting the spreadsheets operators use to distribute tips to their staff and I can attest that there is no standard for how that calculation is done. The simplest method is to disperse tips proportional to hours worked, but some operators first carve off a piece for the “managers”, some operators reward some roles over others; the cooks get a larger portion than the dishwashers, some operators favour seniority; seasoned cooks get more than the newbies, some restaurants divide staff into groups and then assign arbitrary portions to each group; Support staff share 20%, the Kitchen shares 60%, and Managers take 20%. The distribution method is the prerogative of the restaurant operator, it can vary wildly even between restaurants within the same franchise, and it is all hidden in spreadsheets in the back office which few employees ever see. There is little to no transparency in the process, and given human nature, that means millions of dollars is being mismanaged, diluted or siphoned from low wage employees.
We are in the process of developing a distribution system for tip pools. Transparency, I believe, is a vital element to that process. The food and beverage industry is experiencing a labour shortage. Kitchen staff are particularly in demand, so they have more employment choices than ever before. Employers and staff both benefit from making the distribution of tips a fair and transparent process. It’s another recruitment tool for employers desperate to attract talent and being treated fairly inevitably feeds employee job satisfaction; it is, after all, their money.
I would love to hear about staff experiences with this issue. We’re also still collecting tip distribution spreadsheets in search of common threads, and I’d appreciate it if you had one to share.
