How tip-outs work

A tip-out is the portion of your tips you hand off to other staff who helped serve your tables, like the bar, bussers, food runners, and sometimes the host stand. It is usually figured as a percentage of your sales or your tips, or a flat amount, and it comes out of what you made before you count your night as done.

How is a tip-out calculated?

There are three common ways a tip-out is set:

• Percent of sales. A share of everything you rang up. Common for the bar, often 2% to 4% of your total sales.
• Percent of tips. A share of the tips you collected, often 1% to 3% to bussers or runners.
• Flat amount. A fixed dollar figure per shift, for example $10 to a barback.

Your restaurant may use one of these or stack several. To see your own number, put your figures into the tip-out calculator.

How much should I tip out?

If your restaurant has a written policy, that is the answer — tip-out is usually not discretionary. Where it is left to you, or where you are trying to judge whether a policy is normal, these are the ranges most full-service restaurants land in:

• Bar: 2% to 4% of your sales, or roughly 5% to 10% of your tips.
• Bussers: 1% to 3% of tips, sometimes a point in a points system.
• Food runners / expo: 1% to 2% of tips, or a flat $5 to $20 a shift.
• Host: where included at all, usually a small flat amount or under 1%.

Stacked together, total tip-out commonly runs 15% to 25% of gross tips at a full-service restaurant. Above about a third, it is worth asking exactly what the policy is and how it is calculated — not because it is necessarily improper, but because that much of your income deserves a written answer.

Percent of sales versus percent of tips

This distinction matters more than the percentage. A 3% tip-out on $1,600 in sales is $48. A 3% tip-out on $300 in tips is $9. Same number, very different result. Percent of sales is tied to what was ordered, so it stays steady even on a night you were tipped poorly — which is precisely when it stings. Percent of tips rises and falls with how you did.

What do you actually keep?

Your take-home tips are your cash and card tips minus the total tip-out. If you made $300 in tips and tipped out $48 to the bar and $9 to a busser, you keep $243. That is the number that matters, and it is the number a lot of workers never actually calculate. Divide it by hours worked, add your wage, and you have your true hourly — the only figure that compares one shift honestly to another.

Tip-out and your taxes

You owe tax on the tips you keep, not the tips you passed along; the staff who received them report their own. That makes the tip-out figure worth recording rather than estimating, since it directly reduces the income you report. See are tips taxable and reporting tips to your employer.

Is a tip-out fair, and is it legal?

Tip-outs to other tipped employees who are part of the service are common and generally allowed. Rules get stricter about including managers, owners, or back-of-house staff, and they vary by state and by whether the employer takes a tip credit. For how shared pools work, read tip pooling, and for the state picture, tip pooling laws by state.

Track it without the mental math

Set your tip-out rules once in Tipfolio and every shift subtracts them automatically, so your take-home and your true hourly are always right.