Tip Sharing with Lavu POS

We all know it takes a team to create the best possible customer experience wherever you work. This is especially true in the Restaurant Industry where every team member must be on point in order to produce the perfect meal. Many restaurants like to reward and encourage positive contribution on all sides by pooling, or sharing, tips. Tip sharing is gathering all of the tips from the day or shift into a single pot and distributing a fair percentage to all tipped employees (servers, bartenders, etc.) who contributed to the success of the meal. 

The Lavu POS now offers restaurant owners and managers a simple tool to effectively calculate shared tips for distribution.

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What do you get from this feature?

You are now able to create tip sharing rules that allow you to either split shared tips evenly between the servers who worked the shift or to split shared tips based on hours worked during the time when the tips were accumulated.

The first rule looks something like this: $100 in tips was collected and 5 servers were working during that shift. Each server will take home $20 in tips ($100/5 employees = $20).

The second rule works out a little differently.

  • Imagine the same $100 in tips.
  • The tips were collected over a 4 hour period (11:00 - 3:00) by 2 servers, Bethany and Julio.
  • Bethany worked 3 hours (11:00 - 2:00)  and Julio worked 2 hours (1:00 - 3: 00). We have a total of 5 ‘tip’ hours worked.

First, the system calculates the ‘hourly rate’ for the tips by dividing the total tips ($100) by the total hours worked by all employees (3 + 2 = 5). The hourly rate in this example is $20 ($100 / 5 tip hours worked).

Next, the system calculates the amount of tip that each employee should take home by multiplying the hourly rate by the number of hours worked. Bethany worked 3 hours, so her take home is $60 ($20 hourly rate x 3 hours worked). Julio worked 2 hours, so his take home is $40 (($20 hourly rate x 2 hours worked).

This is beginning to sound like a word problem on a math test. Don’t worry, though. Setting this up is a breeze and we provide you with a brand new report called Tip Sharing so that you don’t have to do any of the math. It will display your tip sharing and tip out rules that you have established for other classes.

Note: Tip pooling is separate from ‘tip outs’ in that tip pooling is sharing tips among a single Employee Class (e.g. Server) and tip outs are percentages of tips paid out to support Employee Classes (e.g. Server pays tip out to Host).

Setting it up.

The first thing you need to do is decide which tip pooling option, Evenly or Hourly, that you will use.

Next, you need to build out an Employee Class that your servers and/or bartenders will use. The employee class determines tip out rules for support staff such as bar backs, tip refunds if you are withholding tips to pay for processing the credit card tips, and tip pooling.

Check the box next to Enable Tip Sharing in order to get started setting up your tip pool rule.

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Tip Sharing Controls

Here are all of the controls that become visible once you have enabled Tip Sharing.

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The first selection, Tip Sharing Rule, determines the tip sharing rule the class will follow. The gray button is the selection.

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The next check box indicates that you want the tips that the server has collected on their orders, their tip in, to be added to the Server Owes House calculation on their server summary. This tells you how much money the server owes you at the end of the shift. See the Special Notes section below for a detailed description of the Server Owes House / House Owes Server calculation.

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The final decision you will need to make is the period of time that you will use for tip sharing.

The selection in the below image is Weekly. This means that all tips will be pooled over the course of the week and distributed weekly. Makes sure that you set the selection below it, What day does your work week start on, so that it is the same as your weeks start day set in your Overtime settings.

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This image shows a Daily time period. This means that tips will be collected over the course of the day and then divided amongst all of the employees who clocked in using this employee class during that day.

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This final image shows a Shift tip sharing period. This feature is optimized for two shifts. In the example above, my restaurant opens at 11:00. My lunch shift runs from 11:00 to 4:00 and my dinner shift is from 4:00 to 10:00. This will calculate two tip sharing periods, open to 4:00 and 4:00 to close. Tips are pooled and then distributed at the end of each shift.

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Remember to click the SAVE button once you have made all of your settings selections.

Assign the Employee Class

You will need to assign this employee class to all of the employees who will be part of your tip pool.

  1. Navigate to Settings >Users / Customers > Edit Users
  2. Click on the first user you would like to assign to the Employee Class
  3. Scroll down to the Administration section
  4. Enter a pay rate in the blank box to the right of the Classes
  5. Select the tip share optimized employee class from the drop down
    1. You can enter more than one Employee Class if the employee works in other positions. The example below is an employee who sometimes works as a server (tip sharing) and other times works as a bartender.
  6. Click SAVE when you are done

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Note: It’s a good idea to set up employee classes for all of your employees, even if they are not tipped, because it will help you to keep better tabs on your Labor Rate.

Using Tip Sharing

Now that you have everything set up, you just need to have your employees clock in using the tip share optimized employee class. Employees with only one class assigned will automatically be clocked in as that class. Employees with more than one class option will need to select the tip share optimized class when clocking in to be added to the tip pool.

The employee in this example can choose between Bartender and Server. Server has been optimized for tip sharing. Selecting Server will add the employee and their tips to the Tip Sharing report.

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Tip Sharing Report

The Tip Sharing report is a V2 report in the Lavu Control Panel, which is available to Level 3 Lavu users. This report shows the breakdown of the Tip Pool by Employee and by Class in real time. The numbers in this report are finalized when the last server has clocked out for the end of day/shift. This report is visible once you have enabled tip sharing.

Using the Report

Managers should use this report to:

  • Ensure that tipped employees contribute the appropriate amount of money to the pool at the end of their shift.
  • Accurately disburse monies to each server based on the TIPS DUE TO EMPLOYEE column of the Tip Sharing report at the end of the shift, day, or week depending on the tip sharing time period you have selected.

Understanding the Report Sorted By Employee

The image below is an example report. The rules established are that the servers split tips evenly at the end of their shift. The shift ends at 4:00 PM.

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Here is a breakdown of what this report is report means. We are going to skip the Name column.

 

EMPLOYEE CLASS

This is the class assigned to the employee that has the assigned tip sharing rule.

CLASS ID

This is the identifying number assigned to the employee class. You can ignore it.

DATE

The date the server worked.

HOURS

The number of hours the employee worked during this time.

SALES

The total sales made by this employee during this time.

CARD TIPS

The total Card Tips paid on orders opened by this employee during this time.

CASH TIPS

The total Cash Tips paid on orders opened by this employee during this time.

TOTAL TIPS

The sum of Card and Cash Tips (e.g. $50 card tips + $6 cash tips = $56 total tips).

TIP OUT

This column contains tip out amounts for support staff. Tip outs are only generated if the following conditions are met:

  • You have set a tip out rule using the employee class (e.g. Server tips out Host 5% of total tips)
  • A support staff member who is assigned to an employee class that receives a tip out (e.g. Host) is clocked in during the same time period as the tipped employee (e.g. Server) for the appropriate duration.

In this case, the tip out amount is $0.00 because there were no support staff clocked in during the report time period.

TIP IN

This column is equal to the TOTAL TIPS  minus the TIP OUT as the tip out amount is distributed prior to adding the remaining tips to the Tip Pool. This is the amount that the server will contribute to the pool.

TIPS DUE TO EMPLOYEE

This is the column that determines how much in tips each employee will earn. This example illustrates the Split Evenly rule.

TIP POOL RESULTS

This column shows the difference between the individual server’s TIP IN amount and the tips they are due according to the tip sharing rule you have established for your location. Positive values indicate that the server earned less than the TIPS DUE TO EMPLOYEE amount and negative values indicate that the server earned more.

 

By Employee Class

You can also see this same information by class rather than by individual employee. This information is especially nice if you have multiple tip sharing classes (e.g. You have two bartenders who will share tips and six servers who will share tips. Each class (Bartender and Server) will share tips only with other employees clocked in as the same class.) The below image looks different from the first report because there is only one class to report on as opposed to multiple employees.

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Special Notes - Server Owes House / House Owes Server

The Server Owes House / House Owes Server calculation is a calculation that prints on the Server Summary and shows how much is cash owed at the end of the night. Traditionally, it is set such that if the server took in less in cash payments than they received in credit card tips, the house will owe the server the difference (Credit Card Tips Owed to the Server- Cash Payments = House Owes Server). Alternatively, if the server took in more cash than the amount of credit card tips, the calculation is the difference between cash payments and credit card tips and the server owes the house (Cash Payments - Credit Card Tips = Server Owes House).

The Tip Sharing feature has a setting checked by default (you can turn it off if you like) that changes this calculation slightly.

Scenario

Calculation

Example

Cash Sales >= Card Tips

(Cash Sales are greater than or equal to Card Tips)

Cash Sales + Cash Tips - Tip Out = Server Owes House

Cash Sales: $100

Card Tips: $90

Cash Tips: $10

Tip Out: $7

100 + 10 - 7 = 103

Server Owes House $103

Card Tips > Cash Sales

(Card Tips are greater than cash Sales)

Card Tips + Cash Tips - Tip Out = Server Owes House

Cash Sales: $90

Card Tips: $100

Cash Tips: $10

Tip Out: $7

90 + 10 - 7 = $93

Server Owes House $93

 

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