Tip / Gratuity Distribution
As I'll be opening a coffeehouse soon, I want to determine a fair procedure for the distribution of tips (both cash and credit card) for the staff. What is the best way to assure that the staff share the daily gratuities fairly amongst themselves? Do you have a formal process, or does the staff just "fight it out" each shift? Then, are they expected to report their tips to the employer for tax purposes? My goal is to make sure that everyone is treated fairly regardless of the hours that they work.
Replies to This Discussion
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Permalink Reply by Brady on
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Adrian Badger said:Thanks to everyone for their feedback, it is extremely valuable. Am I correct in assuming that the employee is then fully responsible for reporting "tip income" to the IRS (cash or credit card) and not the business owner?
Here's a short answer... NO. Go ask your accountant.
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Permalink Reply by James Doyle on
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"There is a pretty standard system that Baristas use. Lets say one Barista opens at 6am and works solo for the firs hour and earns $3 in the tip jar. The next Barista comes in at 7 and Barista #1 pockets the tips. They work till 11am and the tip jar fills with $10. At 11 a third Barista clocks in. #1 and #2 split the money. Barista #1 leaves at 12 noon and sees that another $6 is in the tip jar and they all take a third.
So basically the tip jar is split every time a new Barista clocks in or out. They earn a fair split of the hours put in, not a portion of the total day's accumulation of tips (which would cause a fight)."
This is the system I agree with the most. Also, credit card tips are manageable if you have one person adjusting them while there is a lull.
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Permalink Reply by Adrian Badger on
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Thanks for the info, everyone. It seems there is much yet to be learned on this topic with respect to the tax implications. I'll update this discussion as I find out more accurate and applicable information about the tip/tax reporting issue.
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Permalink Reply by stephanie crocker on
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We are so stupid! Our register has been off like up to $40 every day and we JUST figured out that duh! it's because our employees are pulling the credit card tips out of the register. What's weird though is when our register is NOT off...I guess that means we're ripping off the customers?
Anyway, we need to crack down and get in control of this whole tip/register thing. Reading this post has helped me start to figure out a procedure. My baristas have never really given me a straight answer about what they are making in tips. I sort of need that info to attract new baristas.
I will probably contact my credit card vendor and see if there's a way to generate a report of the tips for the day and have the employees record what they are taking from the register so we can see if THEN the register will balance.
I know I know, it's our first year though and so late to be figuring out these details. I wish we would have done this sooner!
Also, I wanted to get everybody's take on the whole credit card tips thing...we are paying fees for credit cards, AND taxes(because they are reported as OUR income). I think it was mentioned that we would take a percentage out of their credit card tips to cover those costs, right?
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Permalink Reply by Benza Lance on
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Just out of plain curiousity, what would you say the average amount of tips your cafe pulls in during a regular shift?
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it's hard to say, I think the afternoon averages about $15 and the morning closer to $30, definitely no where close to 8%
Benza Lance said:Just out of plain curiousity, what would you say the average amount of tips your cafe pulls in during a regular shift?
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Stephanie, do you save your credit card receipts? This would let you know exactly what they should be taking out.
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Permalink Reply by Arno Kamphuis on
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I really do not understand the US way of tipping. Why, Why, Why do you tip?? As a customer, stop with the tips, and just pay for the drinks. That is what you want, right? The service is there so that you will actually buy the drinks in that shop, and not somewhere else. So just by actually going to the shop/bar is enough to say that you like the service.
In addition, the employer/owner should pay the employees a fair amount of money for the work they do. As an employer, just raise the prices of the drinks by 10% and give this money directly to the employees. This would be much easier, and much more fair to everybody (including customers).
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It would be, but with that 10% price increase, how much business will you lose (because you will, at the very least, a little bit), and will you still make your same profit as before? Not just because I'm a young, starving barista... because I am, but higher wage for the barista would be fantastic. I know people mention how this position is a career in other countries, but you have to take into account various other factors, like if the people still live at home much later in life (not uncommon overseas), cost of living, etc.
I, myself, don't ever see the barista being a career position, as far as pay goes. What I do see is more baristas diversifying their skills, and stepping into other avenues while still working the bar (like training, etc). And maybe THEN could you consider the "barista" a career choice.
Arno Kamphuis said:I really do not understand the US way of tipping. Why, Why, Why do you tip?? As a customer, stop with the tips, and just pay for the drinks. That is what you want, right? The service is there so that you will actually buy the drinks in that shop, and not somewhere else. So just by actually going to the shop/bar is enough to say that you like the service.
In addition, the employer/owner should pay the employees a fair amount of money for the work they do. As an employer, just raise the prices of the drinks by 10% and give this money directly to the employees. This would be much easier, and much more fair to everybody (including customers).
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Oh, and I'm now figuring that maybe the Sac Valley "over tips" by most people's standards, because I would say that tips account for about 1/3rd of my monthly pay.
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I don't know... when I was in a higher-volume shop I'd pull down tips roughly equal to my hourly wage.
Agreed to the point about losing business if you pursue Arno's suggestion. This is just not how it is done in the US. Think about the grumbling that the becoming-more-common automatically-added 15% gratuity is creating in restaurants.
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two good points. I didn't throw that out there to make myself sound big and bad, and it should be noted that Temple is a high volume cafe, specially those weekday mornings.
Luckily, nor cal hasn't been hit with this "automatic gratuity" thing thats goin around yet... i'm still waitin for it.
Brady said:I don't know... when I was in a higher-volume shop I'd pull down tips roughly equal to my hourly wage.
Agreed to the point about losing business if you pursue Arno's suggestion. This is just not how it is done in the US. Think about the grumbling that the becoming-more-common automatically-added 15% gratuity is creating in restaurants.
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