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updated: 2026-06-08
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t_keyword: Gratuity 
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date_published: 2026-03-11
date_modified: 2026-06-08
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  t_meta_title: What Is Gratuity in the Restaurant Industry-
  t_meta_description: Learn what gratuity means in restaurants, how tips work, common gratuity types, and how restaurants manage and distribute gratuities through POS systems-
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    v_date_published: 2026-03-11
    v_date_modified: 2026-06-08
  author:
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    t_author: Priyanka Bhadani
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    t_author_description: Jin is a content coordinator and SEO strategist for the Hubworks marketing team. When she's not busy writing and conducting research, she enjoys reading, binging Netflix, and exploring the outdoors with her rescue dog.
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  content:
    heading:
      t_title: What is Gratuity known as?
      t_description: Gratuity is money given by a customer to staff in a restaurant as appreciation for the service they offered.
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      t_text: <p><strong>Gratuity:</strong> Gratuity is money given by a customer to staff in a restaurant as appreciation for the service they offered. Commonly called a tip, gratuity is usually added to restaurant bills and is earned by servers, bartenders, or other service staff.</p><p>Restaurants commonly offer gratuity, which can be either-</p><ul><li>Freely given by a customer;</li><li>Added automatically to a bill; or</li><li>Shared among the staff in <a href="https://plumpos.com/marketplace/tip-pooling-software/">tip pools</a>.</li></ul><p>Amounts given as tips are highly varied; they depend in large part upon quality of service, and also upon local customs for tipping.</p><h2>How Does Gratuity Work in Restaurants?</h2><p>Gratuity is typically a percentage added onto the bill.</p><p>Here is the typical way that it is done-</p><ul><li>A customer is presented with a check after their order.</li><li>The customer selects an amount or percentage to add for a tip.</li><li>The tip is added to the payment total.</li><li>The restaurant processes the tip on the <a href="https://plumpos.com/">POS system</a>.</li><li>The tip is divided according to the restaurant's policy.</li></ul><p>Sometimes, the gratuity is automatically added by the restaurant for large group reservations or private events.</p>
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