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The Problem
Up until this point, everyone at Carytown Cupcakes has earned a set base pay, plus an equal split from the tip pool. The problem with this system is that when it’s less busy, not only are there fewer to be worked, but everyone’s hourly rate drops.
Proposed Solution
A few things will change.
New Pay Rates
Name of Role
Guaranteed Minimum Hourly
Portion of Guarantee from Base Pay (85%)
Portion of Guarantee from Tip Pool (15%)
1
Shift Leader/Manager
$17.00
$14.45
$2.55
2
Baker
$15.75
$13.39
$2.36
3
Shop Clerk/Baker’s Assistant
$13.50
$11.48
$2.03
There are no rows in this table
Example #1: A slow week
Old Pay Structure:
A baker earns $13.50/hour plus $2.30/hr tip split, resulting in a net hourly rate of $15.80/hour
New Pay Structure
A baker earns $13.39/hour plus $2.36/hr tip split. However, there aren’t enough tips in the pool to cover the minimum, so the company bonuses the baker, resulting in $13.39/hr base plus $2.24/hr tips plus $0.31/hr bonus money to meet the guarantee
Example #2: A very busy week
Old Pay Structure:
A baker earns $13.50/hour plus $3.50/hr tip split, resulting in a net hourly rate of $17/hour
New Pay Structure
A baker earns $13.39/hour plus $2.36/hr tip split. After the tip pool is distributed to everyone in the pool, there is still some money left, so every employee earns an additional $0.42 per hr tip. The baker’s final pay rate is $13.39 + $2.36 + $0.42 =$16.17/hour
Interactive Example
Busy Week
Busy Week
(Change the setting above to model what would happen based on our normal sales volume)
Role
Hours Worked
Base Pay/Hr
Tips/Hr Toward Guarantee
Additional Base toward Guarantee
Additional Tips/Hour
Final Rate/Hr
1
Shift Lead
120
$14.45
$2.55
$0.00
$1.00
$18.00
2
Baker
100
$13.39
$2.36
$0.00
$1.00
$16.75
3
Baker's Assistant/Shop Clerk
70
$11.48
$2.03
$0.00
$1.00
$14.50
There are no rows in this table
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