The Tip Pool: Team Building, Stability, Retention

Gratuity models at restaurants and bars have evolved over the years, driven by shifting cultural norms, labor market pressures, and consumer expectations. If it was once standard for a server to earn a tip and keep it for themself, it’s now much more varied based on the operator and how they choose to run their business. And while many restaurants still opt for a more traditional model, tipping out team members based on sales, others have experimented with alternatives, like service charges, tip pooling, and eliminating tips altogether in favor of higher menu prices and higher wages for staff.

In another installment of our tipping series, Full Book spoke with Tommy Lombardo, owner of Ristorante Lombardo in Buffalo, N.Y., about why changing from a traditional tipping system to a tip pool worked for his family’s 50-year-old establishment, and why a weekly tip pool at their younger concept, The Little Club, helps provide better consistency and wage stability for his team.

Can you describe the tipping system at Ristorante Lombardo?

Lombardo's is a fine dining, white tablecloth restaurant. We've been in business for 50 years and for about the last 15 years, we've been doing a tip pool for the front of house. (The way we have it set up, it wouldn’t be legal in New York State to include the back-of-house staff in our tip pool.) It’s based on a point system. Servers and bartenders get one full point; hosts, expediters, server assistants, and bussers get a half point; at times we have a polisher polishing wine glasses and things like that and that person gets a quarter point. We total all tips made in a night and divide that by the total number of points. Each person gets their share based on their assigned point value.

We use a Google spreadsheet to track everything. By the next afternoon, our bookkeeper populates it with the previous night’s data. You’ll see how much you made — both cash and credit card tips. Cash tips are handed out directly, and credit card tips show up in paychecks.

Why does tip pooling work for your restaurant?

For a restaurant of our size — we have 80 to 95 seats — that’s owner operated, tip pooling encourages teamwork and reduces drama. There’s no fighting over tables. With pooling, we promote a more collaborative culture. It’s a multigenerational restaurant, and we’re looking for long-term, career-minded professionals. We have really low turnover and a lot of that, I think, we can credit to wage stability. This model helps with retention. 

I understand why a more traditional tip-out model might work for a bigger restaurant, incentivize employees to work hard, and encourage healthy competition. But you're always going to have someone who gets the short end of the stick, one way or another, and that person’s always going to kind of feel defeated. I think the danger is if that’s too frequently the same person, it can create a negative culture, and a disparity between that person who’s making the least amount of tips and the top dog.

Tip-pooling also supports the type of service we provide. For example, we do synchronized service and everyone runs food for each other. In a non-pooling house, that’s harder. You might have one server saying, “Why am I always running Kevin’s food while he gets the tip?” Pooling removes that tension.

Do you ever get pushback about the tip pooling system?

Sometimes, especially when server assistants aren’t seen as pulling their weight. Servers might say, “Why should this person get a half point if they’re not performing?” But we work on coaching those employees and figuring out ways to get them to perform better. But if that doesn’t work, we let them go. It does happen, but I think more positively, we have servers who stay for two, three, four years and they get really, really good. And that outweighs the negative that, cyclically, people will leave.

There’s always a chance someone will leave for a non-pooling restaurant where they can make more money — but that’s okay. Some people thrive in more competitive environments, and some prefer the teamwork and more stability.

At The Little Club, you pool tips weekly instead of nightly. Why is that?

When we opened, we were more of a wine bar with a static menu that was very charcuterie heavy. And the tipped staff, the bartenders, would be preparing the food. Pooling weekly made sense because we wanted to smooth out the earnings across the week and offer consistency. My thought was if we tipped across the week, there would be some average that we could count on.

We estimated that employees would make around $30–$35/hour including tips and minimum wage — whether they worked a busy night or a slower one.

Six years later and Little Club is very much a full-service restaurant with a chef and a non-tipped kitchen — the kitchen is completely out of the tip pool. But we still do the pool across the week. About two years ago, I gave the staff the option to change it — and they voted to keep it. Little Club is eight years old, whereas Lombardo’s is 50 years old, and the business isn’t as consistent. You’re more prone to work a night where it’s going to be really slow, and that stings a lot less when you tip across the whole week. You’re not going to come in on a slow Tuesday and walk out with just $40. You can always count on making about $75 a night in tips, and that’s because we tip across the week. 

I guess you could try to game the system and say you only want to work on Tuesdays or Wednesdays, the slower nights, and then benefit from the busier Friday and Saturday nights. But we require people to be available Fridays and Saturdays. And I suppose if you only work Friday and Saturday and you never work during the week and you’re busting your ass, you should probably be making more money. But for the most part, we don’t have people who do that. And people seem to appreciate the wage stability.