Tip Pool vs Tip-Out: What’s the Difference?

If you have worked in more than one restaurant, you have probably run into two different ways of sharing tips: the tip-out and the tip pool. People often use the words as if they mean the same thing, but they work very differently, and the difference affects how much you take home, how predictable your income is, and what you need to keep track of at the end of a shift. This guide explains both systems in plain language, walks through an example of each, and covers the questions worth asking before you start a new job.

The short version

With a tip-out, each server or bartender keeps the tips from their own tables and then pays a set share to support staff such as the bar, bussers, hosts or food runners. With a tip pool, tips from a group of people are combined into one pot first, and the pot is then divided among the group using a formula, such as hours worked or points assigned to each role.

In other words, a tip-out starts from your tips and subtracts what you owe. A tip pool starts from everyone's tips and hands out shares.

How a tip-out works

In a tip-out system, your tips are yours until the end of the shift. When you cash out, you pay each support role according to house policy. That policy might be a percentage of your tips, a percentage of your sales, a fixed dollar amount per role, or a mix. Whatever is left after you pay those shares is your take-home for the shift.

For example, imagine a server who made $300 in tips. House policy is 5% of tips to the bar, 3% to the busser and 2% to the host:

• Bar: 5% of $300 = $15.00
• Busser: 3% of $300 = $9.00
• Host: 2% of $300 = $6.00

The total tip-out is $30.00, and the server keeps $270.00. If the same server had a slow night and made $150, the tip-out would drop to $15.00 and they would keep $135.00. Because the shares move with your own results, a tip-out rewards strong individual performance: the more you earn from your tables, the more you keep.

How a tip pool works

In a tip pool, the tips from everyone in the pool go into one total at the end of the shift. That total is then split by a formula the restaurant sets. Two formulas are especially common:

• By hours. Each person's share is based on how many hours they worked. Someone who worked eight hours gets twice the share of someone who worked four.
• By points. Each role is given a number of points (for example, servers might get more points than bussers), and the pool is divided by total points. Points can also be combined with hours.

Here is a simple hours-based example. Three servers pool their tips: together they made $900. Server A worked 6 hours, Server B worked 6 hours and Server C worked 3 hours, for 15 hours in total. That works out to $60 per hour ($900 ÷ 15). Servers A and B each receive $360 and Server C receives $180. Notice that this has nothing to do with which server had the best tables. It only depends on time worked.

Key differences side by side

Pros and cons of each system

Tip-out

The main advantage of a tip-out is that it rewards the effort you put into your own section. If you build regulars, upsell well and turn tables quickly, you see the result directly. It is also easy to check: you know your own tips, you know the percentages, and you can do the math yourself in a minute. The downside is that your income can swing a lot from night to night, and a sales-based tip-out can sting on nights when a big table leaves a small tip.

Tip pool

A pool smooths out the swings. If you get stuck with a quiet section, the group total still carries you. Pools can also encourage teamwork, because everyone benefits when the whole room does well. On the other hand, strong performers may feel they are subsidizing others, and the math is less transparent, since you usually need everyone's numbers, hours and the formula to check your share.

Hybrid systems are common

Many restaurants mix the two. A common setup is that servers pool tips among themselves and the pool then tips out the bar and kitchen as a group. Another is that each server keeps their own tips but contributes a percentage to a support-staff pool that is split among bussers, runners and hosts by hours. If your workplace uses a hybrid, it helps to write down each step in order, so you know which number each percentage is applied to.

Questions to ask before you start

1. Is it a tip-out, a pool, or both? Get a clear answer, ideally in writing.
2. What is the base? For a tip-out, is it a percent of tips or of sales? For a pool, are all tips included, or only card tips?
3. Who is included? Which roles receive a share, and does that change on busy nights or special events?
4. How are shares paid? In cash at the end of the shift, or through payroll?
5. Where can you see the numbers? Ask whether you can view the pool total and the formula, so you can check your share.

Rules vary by location

Tip-outs and tip pools are shaped by both house policy and local rules. Laws about who can share in tips, whether managers can take part, and how tips must be paid out differ between countries, provinces and states. This guide does not cover any specific law. If you are unsure whether a policy is allowed where you work, check your local labour or employment standards office, or ask a qualified advisor.

Keep reading

• How Much Should Servers Tip Out? explains the common ways tip-outs are set.
• Tip-Out on Sales vs Tips shows why the base matters so much.
• How to Calculate Tip-Out walks through the math step by step.

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