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September 26, 2021

When servers are lucky enough to get a tip, it's not all theirs

Do you ever wonder what really happens to a server’s tip?

Tip Often, tips are placed in a pool and allocated proportionately to each staff member at end of the shift.

In larger restaurants, servers' total sales are tracked electronically. The shop owes the server credit card tips, while the server owes the house the total of what customers paid in cash, plus a percentage ranging from 3 to 5% to split with backroom staff.

At other places, servers kick in a generally agreed upon portion of their tips to share among the kitchen, bar, bus and shosts staff – and, often, salaried floor managers.

Because tips are off the books, even if a table stiffs the server, the server still has to split the tips between bar and kitchen staff.

For the most part, all this is done on the honour system, backed by the fact that servers who treat their coworkers poorly will quickly find themselves ostracized – which, of course, costs them money.

Orlando-based Darden Restaurants, however, is now standardizing how waiters and waitresses at Olive Garden and Red Lobster share their tips under a new policy that's really seems part of a larger plan to trim labour costs. And more chains are likely to follow.

Could the same thing happen here? Quite likely, as recession-weary eateries look for ways to trim expenses, particularly in light of continued upward pressure on the minimum wage. Some, for instance, are now passing credit card fees on to servers.

How are tips shared where you work? Are you kicking back to the house? Do you have pay the processing fees on credit card tips?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...