Thursday, August 08, 2013

How Tipping Works

"Tipping is still optional, after all. Unless a preset tip is worked into a bill (usually for large parties or banquets), the amount of extra cash a patron leaves at the end of a meal is up to him and based, supposedly, on the quality of service rendered. Sounds reasonable. However, there are many variables that interrupt a seamless implementation of this fairly simple notion.

One such variable is the tip-out policy. Almost every restaurant I've worked in has required that servers tip out a certain percentage of their tips to other workers. The tip-out where I work now is as follows: 15 percent to the busboy, 8 percent to the bartender, 5 percent to the hostess, 5 percent to the food expediter, and 2 percent to the extremely underpaid wretch who makes the coffee drinks. [Rachel's note: At my restaurant, where I make all of my own coffee drinks, half of my non-alcoholic beverages, and all alcoholic beverages if the bussers are underage, hostess my own tables much of the time, clear plates, clean and reset my own tables unless a busser can stop making juices and help me, I still tip out 10-15% to the bussers, and 20% of my food sales to the kitchen)] The math is easy to do. In order to walk out the door with $100 in tips, I have to earn $155. On some nights my busboy, who services three waiters at a time, will actually make more than me. The bartender makes more than me every night.

The tip out doesn't really end there. Because servers are required by law to report all their tips. Regardless of whether or not a server declares [them], the government knows how much she has sold during the course of the year because her restaurant is required to report it. 10-15% of your sales is considered taxable income. To illustrate how this all plays out, I'll offer an example. Say on a given night I sell $1,000 in food and beverages. Say it's been an average night, and I've netted in $150 in tips. After I tip out, I'll have $97 left in my pocket. But shortly I will owe more of that $97 to the IRS, and that will be deducted from my hourly wage. In fact, the more I sell, the more I will owe, regardless of whether I've made any set percentage or now. If I am not tipped, or tipped badly, I will still owe a percentage of my sales. Guests who don't tip, therefore, are effectively costing their server money."

From "Waiting" by Debra Ginsberg.