What Actually Happens To Your Tips At Restaurants

Oleg Chumakov/Getty Images

Navigating tipping culture can be confusing. While many patrons might mean well and think they know where their tips are going, there are a few possible ways tips could be paid out and distributed among the restaurant's staff. Traditionally, tips are meant as a gesture directly from patron to server as motivation for prompt, excellent service. While this makes reasonable sense and may still exist, this isn't the case in many restaurants. There are a few major tipping systems at play now, namely tip pooling and tipping out.

Even the best servers can admit their jobs couldn't be done without their teammates, especially during busier times. In that spirit, establishments may pool tips to ensure everyone gets their fair share, regardless of having direct contact with the customer. Here, tips are collected and redistributed among the staff. There's a focus on the server, with a certain percentage divided among the rest of the eligible staff, such as runners and bartenders. 

Unfortunately, this system can be problematic since employees who don't work as hard may receive an equal tip to those who contribute more. Further, there have been major lawsuits surrounding tip pool distributions. In 2012, Mario Batali was one of the celebrity chefs sued by their employees after he and his business partner skimmed off his staff's tip pools. In another instance, a Dallas steakhouse's owner pooled tips and unfairly paid a percentage to inelligible morning staff workers in 2022.

DC Studio/Shutterstock

Aside from tip pools, restaurants also employ a tipping out, or sharing, system. Though this resembles the pool method, the key difference is tips are directly paid out at a set percentage between staff members. For example, while a host may need to stagger their table seating, servers may tip out a percentage for their help in doing so; if alcohol is ordered, another percentage goes to the bartender, and a similar payout goes to the bussers and runners who maintain the servers' tables. Once the tips have been distributed, the server keeps the leftover amount.

This system aligns more with traditional tip standards since it may better recognize and motivate the server, as well as support staff. That said, it still has its flaws: if a table tips low, servers still need to adhere to established percentages, meaning they walk away with less than they deserve. Since it's more based on individual performance, it also could create competition rather than collaboration among staff.

Ultimately, what tipping system is used depends on the establishment. When dining at a smaller restaurant, tip pooling might be in play due to the establishment's staff not having specified sections. In the case of a restaurant with a larger staff, host stand, and a bar, the tip out method may be preferred to better recognize collaborative efforts. Regardless, patrons can always ask their server. There's also something to be said for abolishing tipping systems all together, which would eliminate the mystery — but that's a different discussion.