A real difference between tips and a service charge.

[Peter Lawrence]

Came across this interesting tidbit in regards to tips versus a mandatory
service charge that some restaurants charge, especially for larger groups.

Tips go to the employee. The service charge goes to the business, and the
business has zero obligation to share the service charge with the employees,
including the waitstaff.

From the following FAQ provided by California's Dept. of Industrial Relations:

https://www.dir.ca.gov/dlse/FAQ_TipsAndGratutities.htm


Question: Is a mandatory service charge considered to be the same as a tip
or gratuity?

Answer: No, a tip is a voluntary amount left by a patron for an employee. A
mandatory service charge is an amount that a patron is required to pay based
on a contractual agreement or a specified required service amount listed on
the menu of an establishment. An example of a mandatory service charge that
is a contractual agreement would be a 10 or 15 percent charge added to the
cost of a banquet. Such charges are considered as amounts owed by the patron
to the establishment and are not gratuities voluntarily left for the
employees. Therefore, when an employer distributes all or part of a service
charge to its employees, the distribution may be at the discretion of the
employer and the service charge, which would be in the nature of a bonus,
would be included in the regular rate of pay when calculating overtime payments.


(Another reason to avoid restaurants with mandatory service charges.)


- Peter

[Todd Michel McComb]

In article <jfv8ii$ig6$1...@dont-email.me>,

Peter Lawrence <humm...@aol.com> wrote:
>(Another reason to avoid restaurants with mandatory service charges.)

Well. It's unfortunate that sort of abuse is legal. I still think
built in service charge is better, but that law needs changing.

It would be a good idea for restaurants where the entire service
charge goes to servers/bussers/etc to explicitly say so. Maybe
it would even shame some of the others.

That said, I have not known friends who are servers to complain
that this has happened.

[Kent]

"Peter Lawrence" <humm...@aol.com> wrote in message
news:jfv8ii$ig6$1...@dont-email.me...

Every restaurant in California adds a 15%-18% service charge for any party
with six or more people. Is that not a tip?

Kent

[Tim May]

No, not every restaurant adds such a service charge.

I can think of several, off hand, which have ntot added such a charge.

What is your comeback? You obviously cannot cite universality. Do you
have a cite for a law requiring such a gratuity or "service charge"?





--
Tim May

[sf]

On Fri, 27 Jan 2012 14:30:40 -0800, Peter Lawrence <humm...@aol.com>
wrote:

> (Another reason to avoid restaurants with mandatory service charges.)

I would say so!

--

Tell congress not to censor the web. Add your voice here.
https://www.google.com/landing/takeaction/

[sf]

On Fri, 27 Jan 2012 14:30:40 -0800, Peter Lawrence <humm...@aol.com>
wrote:

>

> https://www.dir.ca.gov/dlse/FAQ_TipsAndGratutities.htm
>
>
> Question: Is a mandatory service charge considered to be the same as a tip
> or gratuity?
>
> Answer: No, a tip is a voluntary amount left by a patron for an employee. A
> mandatory service charge is an amount that a patron is required to pay based
> on a contractual agreement or a specified required service amount listed on
> the menu of an establishment. An example of a mandatory service charge that
> is a contractual agreement would be a 10 or 15 percent charge added to the
> cost of a banquet. Such charges are considered as amounts owed by the patron
> to the establishment and are not gratuities voluntarily left for the
> employees. Therefore, when an employer distributes all or part of a service
> charge to its employees, the distribution may be at the discretion of the
> employer and the service charge, which would be in the nature of a bonus,
> would be included in the regular rate of pay when calculating overtime payments.

I forgot to ask about the mandatory "gratuity" for large parties. Is
that considered a tip or a service charge? I consider a gratuity a
tip, but now it sounds like it's considered a service charge.

[Peter Lawrence]

Good question. Gratuities and tips are supposed to be voluntary. If it's
not voluntary, then is it really a gratuity? The term "mandatory gratuity"
is a bit of an oxymoron, isn't it.


- Peter

[Eddie Grove]

I forget the source, as well as what state I was in, but I remember
reading that because it is mandatory, it is technically a service
charge, and therefore should be hit with a sales tax.


Eddie

[Ciccio]

On Jan 27, 2:30 pm, Peter Lawrence <hummb...@aol.com> wrote:

>  From the following FAQ provided by California's Dept. of Industrial Relations:
>
> https://www.dir.ca.gov/dlse/FAQ_TipsAndGratutities.htm

I find #4 to be interesting. Cooks and chefs are considered not to
provide "direct table service," for the purposes of tip pooling, which
makes sense. So, how is it a bartender is considered to provide
"direct table service," presuming the bartender doesn't deliver the
drinks?

Ciccio

[Peter Lawrence]

Here's the sentence in question: "Such employees could conceivably include
waiters and waitresses, busboys, bartenders, host/hostesses and maitre d’s."

I think two key words are "could conceivably". In other words, it's not a
given that bartenders can share in the tip pool. I've been at restaurants
where the drinks have been delivered by the bartender or by the restaurant's
bar waitstaff (and not our regular server), so it makes sense in those
restaurants that the bartender (or the bar's waitstaff) share in a tip pool.

But it also could be that bartenders are traditional tipped for the drinks
they prepare, so they get part of the tip regardless if they serve the drink
or not.


- Peter

[Kent]

"Tim May" <tc...@att.net> wrote in message
news:2012012721355178265-tcmay@attnet...

> Tim May
>

We used to haunt the storefront Asian restaurants in the E. Bay, which
don't. I hereby retract my statement. I'd say 80% of restaurants add service
for a party of 6. What's really a piss off is that they have the balls to
do it at a buffet place, like Hs Lordships in Berkeley.

Kent

[Kent]

"sf" <s...@geemail.com> wrote in message
news:k157i7dr5r1sq8440...@4ax.com...

> Tell congress not to censor the web. Add your voice here.
> https://www.google.com/landing/takeaction/
>
>

I'm in a group that does this a lot. The service staff pretty much
recognizes that the service charge is the tip. It's a forced gratuity of
sorts. However, I'll bet the restaurants take a fraction of that charge.
That may be why service at a large party table is frequently marginal.

Kent

[Kent]

"Eddie Grove" <eddie...@hotmail.com> wrote in message
news:871uqkf...@hotmail.com...

At the famous "Chez Panisse" in Berkeley, where they charge 18% service,
they charge sales tax on that service.

Kent

[Peter Lawrence]

On 1/28/12 1:05 PM, Kent wrote:
>
> However, I'll bet the restaurants take a fraction of that charge.
> That may be why service at a large party table is frequently marginal.

I was thinking the same thing.


- Peter

[Steve Pope]

Kent <keh...@ana.yahoo.com> wrote:

>At the famous "Chez Panisse" in Berkeley, where they charge 18% service,
>they charge sales tax on that service.

Yes, the law is that if service is mandatory, it accrues sales tax.


Steve

[jcdill]

Any restaurant that took a fraction of the service charge would have a
very hard time hiring for positions to serve to large parties, unless
they upped the wages they paid for those positions.

The reason large parties get such bad service is simply because it's
very difficult to prepare and serve good food to a large party. It's a
workflow problem. If one woman can make a baby in 9 months, you can't
speed the process up by putting 9 women on the job and expect a baby in
1 month. Similarly, it takes a certain amount of time for a kitchen to
put out 12 meals, and it takes a certain amount of time to transport
those 12 meals to the table, and it takes a certain amount of time to
make and serve drink orders, etc. Putting several servers or cooks on
the same job doesn't speed it up as much as you would think because of
workflow issues (the kitchen is only so big, the bar is only so big,
there are other customers, etc.). So service for a large table is never
as good as service for a small table, even when your best staff is put
on the job, even when you put extra staff on the job, etc.

jc

[jcdill]

It is SO obvious you have never worked in the industry.

Most bartenders serve drinks at the bar where they are tipped directly
by their bar customers for that service. When they also have to prepare
drinks for a server to deliver, it takes them away from the customers at
the bar (who tip the bartender directly). In order to ensure that the
bartender give the server's orders as much time and attention as is
given to the customers at the bar, the servers tip-out to the bartender,
so that all orders are equally "rewarding" to the bartender, and the
bartender works all orders as received.

These systems were worked out directly between the servers and the
bartenders early on. Servers would "tip out" to the bartender to ensure
that their orders were prepared promptly, the servers who tipped better
got better service from their bartender, just like the regular patrons
at the bar who tipped better got better service from the bartender. Now
it's just an established practice.

The practice of tipping out to hosts and maitre d's is basically
bribery, pure and simple. There is no logical reason those positions
should share in a portion of the server's tips, and when I worked as a
hostess/waitress in the late 70s/early 80s this was not a common
practice (at Bennigan's - no one ever tipped-out to the host/hostess, or
to the busboy), the host position was a minimum wage entry position and
you worked there only until you could move into a server position. To
the best of my knowledge, the practice arose (as a common practice
across the industry) in the mid-to-late 80s as servers would sometimes
slip a bit of a tip-out to the host when they were given a party that
was exceptionally generous, to bribe the host to give the "best
customers" to that server over the course of the evening. Then, over
time they all tipped-out to the hosts because if you didn't you were
selectively given the worst customers, or somehow "skipped" in the
seating order and ended up with fewer tables each night. Ditto for
tipping to the busboy to get your tables cleaned up
sooner/faster/better, and especially as busboy positions also took on
other table service duties (water service, coffee service). Now it is
just expected that servers tip-out to the hosts and busboys at the
better restaurants. (Not at Denny's, but at places like Ruth's Chris.)

Anyone who has worked in the industry recently knows how much the
servers have to tip-out to co-workers today, and thus is often very
generous in the tip they pay (e.g. 25% or more). [1] They tell their
friends and family why they tip so generously. This is why, in part,
tips have risen over the past 50 years from a standard 10% (when servers
kept all that they received) to a standard 10-15% (went up in the 70s
with inflation when minimum wages were not going up, but restaurant meal
prices were going up, so that servers could afford to live on what they
received) to a standard 15% (80s and 90s) to today's standard 15-20% and
moving towards 25% - the tip you leave is being tipped-out and shared by
a lot more workers today than in the 1960s.

jc

[1] Here's an example where a server has to tip-out 35% of what they
receive to other employees:

http://www.tumblr.com/tagged/tipping?before=1314726301

> But each restaurant sets its own “tip out” procedure. The place I
> work now requires that the servers tip out 20% to the busboy (unless
> there is a host working — then 7% goes to the host and 13% to the
> busboy — the busboy is never happy when there is a host and doesn’t
> work as hard since he isn’t making as much even though a host is on
> because it is busier and everyone needs to work harder), 10% to the
> bartender, and 5% to the “kitchen.” (Which in California is against
> the law.) We have no food runners or sommelier so we get to keep that
> “savings.”

[Peter Lawrence]

On 1/29/12 9:33 AM, jcdill wrote:
>
> It is SO obvious you have never worked in the industry.

Well of course, since I had already stated that I didn't.

Thanks for restating the obvious (since I had already mentioned this fact
myself).


- Peter

[Al Eisner]

Of course, by quoting jc you stated the obvious a third time. And by
quoting you, I've just stated it a fourth time. Etc. :)
--

Al Eisner
San Mateo Co., CA

[Travis James]

At least the tone wasn't obnoxious. Otherwise it would have read SOOOOOOOO.

[Travis James]

On 1/29/12 8:52 AM, jcdill wrote:

> On 28/01/12 1:10 PM, Peter Lawrence wrote:
>> On 1/28/12 1:05 PM, Kent wrote:
>>>
>>> However, I'll bet the restaurants take a fraction of that charge.
>>> That may be why service at a large party table is frequently marginal.
>>
>> I was thinking the same thing.
>
> Any restaurant that took a fraction of the service charge would have a
> very hard time hiring for positions to serve to large parties, unless
> they upped the wages they paid for those positions.
>
> The reason large parties get such bad service is simply because it's
> very difficult to prepare and serve good food to a large party.

It's definitely an added skill of a restaurant. I'm part of a group that
has a monthly dinner whose size is around 30. Some of the best
restaurants cannot handle it on their open menu. A small few, know how
to do it and have staff that cater to the large group helping with wine,
sending out appetizers, and timing the food just right. And there are a
few high end restaurants who know they cannot choreograph the whole menu
so they set aside their most popular entrees for preorder choices. I
consider that reasonable. Know your restaurant's strengths and
weaknesses and work it with the customer - especially when it's going to
be a large bill at the end.

[Peter Lawrence]

Sometimes, I can get really redundant in my moods. ;)


- Peter

[axlq]

In article <jfv8ii$ig6$1...@dont-email.me>,
Peter Lawrence <humm...@aol.com> wrote:

>Came across this interesting tidbit in regards to tips versus a mandatory
>service charge that some restaurants charge, especially for larger groups.

I wonder if that applies to the mandatory extra charges some
restaurants tack onto the bill for special holidays, such as
Valentine's Day. Every time we've gone out for dinner for
Valentine's Day at a place that requires reservations, the 18%
gratuity is not optional or at the discretion of the diner, it's
mandatory. I assumed this went to the waiter.

-A

[Peter Lawrence]

Isn't it odd that restaurants would make a 18% gratuity mandatory during St.
Valentine's Day? Are people notoriously less generous and stingy on tipping
on that day, or any other special holiday? I would think people might be
actually more generous with their tips.

I could understand the logic of a mandatory 18% service charge on a typical
Christmas Day or Thanksgiving Day buffet, since many people do tip less than
18% if their meal is a buffet. But for regular sit-down service, I think it
would be odd to tip less than 15 - 18%, even if it's a holiday.


- Peter

[sf]

On Fri, 03 Feb 2012 18:31:09 -0800, Peter Lawrence <humm...@aol.com>
wrote:

My guess is as good as yours. Maybe they do it because they can and
they're slammed by customers who aren't dissuaded by the mandatory
gratuity. If they really do keep the money, maybe they use it to hire
extra staff for the day.

--

[jcdill]

On 03/02/12 6:31 PM, Peter Lawrence wrote:

> Isn't it odd that restaurants would make a 18% gratuity mandatory during
> St. Valentine's Day? Are people notoriously less generous and stingy on
> tipping on that day, or any other special holiday? I would think people
> might be actually more generous with their tips.

I think the problem is that they get customers who are too picky, who
expect everything to be 100% perfect on a night when the place is
slammed busy and full to capacity, and who will ding the server for any
imperfections, even though those imperfections are outside the control
of the server. Since the place is going to be 100% full anyway, they
can afford to put in a mandatory service charge - it's not like they
will lose customers with this practice. It's the same reason why they
can get away with raising their prices and offering a smaller menu to
order from.

jc

[Steve Fenwick]

In article <jgih95$dq9$1...@dont-email.me>,

And all good reasons why those are great nights to stay in with one's
sweetheart for dinner in.

Memorable VDay restaurants:

Palermo, University Ave., Palo Alto: I recall them doing all the VDay
badness: mandatory gratuity, extra tables, slow service. We did stop
going there after this.

Zucca, Castro Ave., Mtn. View: Extra tables was the worst of it. No
mandatory gratuity that I recall, and service ok.


Zucca did it more-or-less right; they added extra tables, which made the
restaurant crowded, but didn't otherwise slow down service; I suspect
they had on extra servers. Palermo was in the scr*w-em-its-VDay mode, so
they lost us after that.

Steve

--
steve <at> w0x0f <dot> com
"Life should not be a journey to the grave with the intention of
arriving safely in an attractive and well preserved body, but rather to
skid in sideways, chocolate in one hand, sidecar in the other, body thoroughly
used up, totally worn out and screaming "WOO HOO what a ride!"

[axlq]

In article <nospam-85B7D2....@news.eternal-september.org>,

Steve Fenwick <nos...@nospam.invalid> wrote:
>
>Zucca, Castro Ave., Mtn. View: Extra tables was the worst of it. No
>mandatory gratuity that I recall, and service ok.
>
>Zucca did it more-or-less right; they added extra tables, which made the
>restaurant crowded, but didn't otherwise slow down service;

I like Zucca, never been there for Valentine's Day, but we had the most
unforgettably wonderful wedding anniversary dinner there. It's much
better going out for a special dinner on a day like THAT, than to go out
on a day like VDay where everybody else wants to do the same thing.

-A