Tip Pooling 101 – Bar Math for Dummies

In the bar business, few things cause me more angst than the topic of money; I mean my money. It’s my main reason for emerging from my man-cave isn’t it? Come the end of the night or shift, I want to get paid and I want it on the spot. Contrary to appearances and actions during my shift, I didn’t come to work to chase blue-ribbon ass, suck down endless Jamo shots, or juggle empty bottles of Malibu. I came to work primarily to enhance my collection of Benjamins (and maybe a few Jacksons).

Depending on where you work, there may be a myriad of tipping scenarios that may severely affect your cash – what you “walk” with come the end of the night. The universe has conspired to amass a shitload of things that can quickly torpedo your earnings. Among them, you have a tip division scheme or two that the bosses (in their infinite wisdom) have dreamed up and implemented. Let’s take a look at a few of them in no particular order and how they can affect your take. When you’re done reading, play around with my Tip Pooling Spreadsheet to get an idea how it works.

1. Flying Solo. Despite what you may think, bartending by yourself is not always the most profitable situation. It can be or it can’t. Every bar will differ. If you’re a really talented bartender who happens to be a young, hot female, you’re all set. You’ll rake in beaucoup duckets with no problem – I’m sure. They’ll probably be no one to pay outside of the barback (15% – 25%). Likewise, if you’re a classic, friendly and speedy dude working alone in an old-school, established pub with good traffic, a similar story applies.

2. Straight Pooling. In reality, most of us wind up working in bars, not alone, but with a couple of other bartenders simultaneously. The lot of you could be working the large main bar or smaller – one man bars – scattered throughout a lounge or club. Shifts may run concurrently (easy pooling and split) or they may overlap (more common and more challenging to split.

A. Concurrent Shifts: Cash tips are counted and smaller bills sold back to the business. Each bartender’s report is run and credit card tips noted. The cash and tips from all bartenders is totaled, then divided by the number of bartenders. Cash-outs usually take a long while and you typically split the tips before the managers have completed their procedures. But wait – there’s a problem: each bartender has different credit card tip totals. So what to do? Easy:  write down the respective credit card tips on separate pieces of paper. Add cash tips to the lowest numbers to bring the totals (including charge tips) up to the highest charge tip. Then, split the remaining cash evenly.

Let’s imagine we have 3 bartenders all working the same hours. At the end of the evening, they’ve amassed the following nut:

Total Cash: $683
Melissa Charge Tips: $352
Paul Charge Tips : $265
Kim Charge Tips: $144

This is a pretty realistic scenario to be honest. Melissa could be making boob money with corporate geeks, Kim could be an ignoramus with terrible service skills – disappearing constantly, and Paul could simply be running circles around them both – doing mad volume. On the flip side, Kim could simply have a terribly slow section.

So, out of the cash tips, you’d add the following to each respective pile, to make them equal the person with the highest charge tip total:

Melissa: $0 
Paul: $87
Kim: $208

You’d then split the remainder ($388) three ways – evenly. Now, when everyone gets their charge tips from the managers at the end of the night, assuming their drawers aren’t short, they will each have made $481 before tipping out the barbacks. Make sense?

B. Overlapping Shifts: In large bars, this situation happens quite a bit yet the tips still need to be split fairly. Let’s say Meg works 11am – 5pm, Peter works 1pm – 7pm, Charlie does the 5pm – 12am shift, and Chuck closes 7pm – 2am. How on God’s green Earth do you split the money equitably?  Easy… In a Straight Pool setup, every time someone comes and goes, you split all the money including yet-to-be-received credit card tips. Sounds hard right? Well, it’s not. Let’s break down the example:

    • When Peter arrives, Meg pockets all her cash (or starts a new tip bucket) from 2 hours tending bar, and notes how much in tips she’s received per closed credit card vouchers. Those vouchers are then set aside and a new collection is begun.
    • When Charlie arrives at 5pm, Meg’s shift is over.Both Meg and Peter perform the above procedure, splitting the differential in additional credit cart tips similar to the method noted in Section A.
    • Finally, Chuck’s turn. Peter’s shift is now over. Both Peter and Charlie also perform the split in the same way.

It all sounds a bit complicated. But, in practice, it’s really quite easy once you do it once or twice. Sometimes in busy bars with many overlapping shifts, bartenders screw themselves by splitting their charge tips a second time. You’ve got to pay special attention. Then, there is the issue of bartender theft – specifically, bartenders stealing from one another, under-reporting charge tips, pocketing cash tips, etc. We’ll save that discussion for another article sometime soon.

3. Hourly Pooling. The object of the Hourly Pool, is to establish a base rate of pay for all bartenders. In other words, determine an hourly number to pay everyone per hour based on total tips (credit card and cash) divided by the total number of all bartender’s hours worked. I know, I know… your head just said “what what?”

Let’s take a look at a practical breakdown using the same earnings from our example crew above. We’re going to assume we’re working in an environment where the credit card tips are received at the end of each evening’s cashout, as opposed the God-awful check system more and more establishments are using these days.

Total Cash: $683
Melissa Charges: $352
Paul Charges: $265
Kim Charges: $144

Melissa Hours: 7.5
Paul Hours: 10
Kim Hours: 6

Gross Tips: $1,444
Barback Tipout (15% for argument’s sake): $216
Total Hours: 23.5
Net Tips (Gross Tips – All Tipouts): $1,228
Rate (Net Tips/Total Hours): $52.26

So, the net-net is that everyone earns the following:

Melissa Hours 7.5 x $52.26 = $392
Paul Hours: 10 x $52.26 = $523
Kim Hours: 6 x $52.26 = $313

But, if you’re on the “check system,” you’ll only be applying the hourly rate for what you have in cash (for now). Management will likely figure out the rate for credit card tips, and you wind up receiving it during the following pay cycle.

Total Cash: $683
Total Hours: 23.5
Rate: $29.06
Melissa Hours 7.5 x $29.06 $= $218
Paul Hours: 10 x $29.06 = $290
Kim Hours: 6 x $29.06 = $174

The beauty of hourly pooling is that there (1) it works irregardless of shift differentials and (2) it keeps the daytime goons fully paid – even if it’s slow. Therein lies the really, really shiteous part of Hourly Pooling. An “opener” working the day shift, typically slower than night shifts, will earn the same exact rate of pay than that of the night time bartender getting crushed by volume.  Sure, depending on where you work, there can occasionally be special daytime events where it gets real busy. But for the most part, opening bartenders don’t ring in half of what closers take in. That’s simply because drunks mostly come out after sunset – period.

If you ask me, the more appropriate way to set things up is to allow the seasoned, experienced, talented, fast and furious bartenders to work the busy night time shifts and forget the Hourly Pool. In a situation where the daytime folks aren’t raking in a whole lot of cash, they will obviously become disgruntled to an extent. But that’s OK. In my world, you’ve got to work your way up to good/night-time shifts via exceptional service, speed, high rings, great personality, ability to deal with adversity, dependability and sometimes even seniority. Pay the daytime folks enough of an hourly wage where they won’t bolt and allow them to work their way up to the better shifts.

4. Party Pay or Buyout Pay. This is almost always calculated by the house so I won’t devote much digital ink to it.

Here’s a spreadsheet I’ve created to help you out. Just fill in the green fields. Everything else will be automatically calculated.

One final note on working with others… A lot of your situational happiness and fortune will be a combination of luck and local management policies. As I mentioned at the top of this article, you can make a shit-ton of money working alone in the right bar. Conversely, you can also make a shit-ton of loot working with others if you have the right crew. The “right crew” is key to your financial success. For example: If you have a combination of (1) a really hot, but attentive, girl or two (2) a good looking and speedy guy, both of whom are seasoned and can easily “read” customers,you have a Mega Millions winning situation. Hot girls draw business (guys) – end of story. Guys bring girls. Girls attract even more guys. A + B + C = $$$.

On the flip side, an inattentive, douchebag dude behind the bar whose primary interest is picking his nails and flirting endlessly with the hostesses can completely torpedo your earnings for the night. Just sayin…

That’s my 2 cents folks. Carry on.

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