Service Charges That Aren't Tips

[annecros]

Wouldn't I expect them to back it up - no.  Why would I?  Again, I can't imagine going through life living with the assumption that everyone is out to screw me over - that would be a very tiring life.  Maybe I've lived in a small town too long.  When I lived in New Orleans, I was screwed over on the shell game once, but you know what - I'm still alive and happy, and not missing my $5. 

They've made the public statement of what the money is for.  Good enough for me.  If it turns out that the bean wasn't under any of the shells, I wouldn't support them anymore...but that's life isn't it?

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So when they tell you that 5 points on your bill is going somewhere, you would not expect them to be able to back that up? Seriously. The 5 points are a selling point, make you feel warm and fuzzy when you pay the bill, but there is absolutely no way of knowing where the 5 points land.

Sheesh, I get screwed over all the time because I trust people. That is not the issue. I don't mind being screwed over, I mind that other people might be screwed over.

[gfron1]

But if they/I get screwed over that's their/my business, not yours. As I've said, 50% of people will appreciate these efforts. 50% won't or will distrust. So what I am saying is there is nothing that you or I could say that could get us to agree on this - we have very different paradigms.

As a consumer then you make your choice to go somewhere else. I would be more inclined to support them for making this commitment - even if it is a commitment to my expense.

[annecros]

But if they/I get screwed over that's their/my business, not yours.  As I've said, 50% of people will appreciate these efforts.  50% won't or will distrust.  So what I am saying is there is nothing that you or I could say that could get us to agree on this - we have very different paradigms.

As a consumer then you make your choice to go somewhere else.  I would be more inclined to support them for making this commitment - even if it is a commitment to my expense.

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A paradigm is simply a perception of reality. I do have a tendency to want to at least be able to touch it before I am convinced. My paradigm is a real touchy, feely kind of place.

You can fool all of the people some of the time, some of the people all of the time, yadda yadda

Do what makes you feel good. If you think, sincerely, that adding an additional 5 points on your bill will save the life of a dishwasher, then by gracious just do it.

I think that expending your funds wisely, with forethought, would be a supercool thing to do.

[Fat Guy]

I'm in favor of businesses telling their stories. I'm one of the few people who reads the "history of our restaurant" thing on every menu that has one. And I'd be entirely pleased to read a statement of socially conscious policies on a menu. But I think I'd rather not have it expressed as a surcharge. I'd prefer something like "You may have noticed we charge a dollar or two more than our competitors, and we wanted to explain why: first, we provide our employees with health-care benefits, which are unfortunately not standard in the restaurant industry; second, we pay our back-of-the-house staff a higher-than-average wage . . . ." That's also a good place to talk about sustainability and such.

[prasantrin]

As a consumer then you make your choice to go somewhere else.  I would be more inclined to support them for making this commitment - even if it is a commitment to my expense.

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As a business owner, would you consider adding a surcharge to your prices? For example, "You will find a 5% surcharge on your receipt to help us provide our employees with health insurance."

If not, why not?

[Tri2Cook]

I'm in favor of businesses telling their stories. I'm one of the few people who reads the "history of our restaurant" thing on every menu that has one. And I'd be entirely pleased to read a statement of socially conscious policies on a menu. But I think I'd rather not have it expressed as a surcharge. I'd prefer something like "You may have noticed we charge a dollar or two more than our competitors, and we wanted to explain why: first, we provide our employees with health-care benefits, which are unfortunately not standard in the restaurant industry; second, we pay our back-of-the-house staff a higher-than-average wage . . . ." That's also a good place to talk about sustainability and such.

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I'm casting my vote for that approach, takes care of both sides of the fence.

I can definitely see where Rob is coming from and in a perfect world I would probably agree completely but I also share a bit of Anne's skepticism of people asking for my money so they can be nice to someone else with it. Not to the point of being paranoid, I agree with Rob that that would be a miserable way to live, but it still lurks in a corner of my mind and makes itself known from time to time.

My biggest question about what I've read in this thread is: just what exactly is this "tips for the back of house" thing that was mentioned? We must have very efficient filters at work, nothing makes it that far back.

[Fresser]

As a consumer then you make your choice to go somewhere else.  I would be more inclined to support them for making this commitment - even if it is a commitment to my expense.

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As a business owner, would you consider adding a surcharge to your prices? For example, "You will find a 5% surcharge on your receipt to help us provide our employees with health insurance."

If not, why not?

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Starbucks provides health insurance for employees who work over 20 hours a week. Clearly the premium prices Starbucks charges for its coffees help subsidize these benefits. But Starbucks CEO Howard Schultz has noted that the Company spends more on health insurance than on "raw materials" to make coffee and that its current benefits policy is untenable.

[gfron1]

For sake of argument I could go on forever based on principles. And I am more than happy to continue a pollyanna approach to life - I happily choose that over skepticism and cynicism - I just can't imagine waking up like that each day. However, I do think FG's approach is logical, but then let me answer this

As a business owner, would you consider adding a surcharge to your prices?  For example, "You will find a 5% surcharge on your receipt to help us provide our employees with health insurance." 

If not, why not?

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I would not because its not part of my industry's model. Cosentino is operating within the model within which he has been set. He is using the tools that are easily available to him. Have you ever walked out of a grocery with a surcharge placed on your purchase? The closest comparison would be the bottle deposits of the 70s and 80s. But in the restaurant/hospitality industry I've paid gratuity (mandatory and choice). I've paid corkage fees. I've paid those stupid tourist fees that some cities tack on to every charge in the hospitality field. From the outside it may not seem novel, but from the inside the novelty comes from how the existing system is used.

[Miami Danny]

For sake of argument I could go on forever based on principles.  And I am more than happy to continue a pollyanna approach to life - I happily choose that over skepticism and cynicism - I just can't imagine waking up like that each day.  However, I do think FG's approach is logical, but then let me answer this

As a business owner, would you consider adding a surcharge to your prices?  For example, "You will find a 5% surcharge on your receipt to help us provide our employees with health insurance." 

If not, why not?

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I would not because its not part of my industry's model. Constantin is operating within the model within which he has been set. He is using the tools that are easily available to him. Have you ever walked out of a grocery with a surcharge placed on your purchase? The closest comparison would be the bottle deposits of the 70s and 80s. But in the restaurant/hospitality industry I've paid gratuity (mandatory and choice). I've paid corkage fees. I've paid those stupid tourist fees that some cities tack on to every charge in the hospitality field. From the outside it may not seem novel, but from the inside the novelty comes from how the existing system is used.

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I love to give money to other people to show my support for their beliefs. I prefer to do so voluntarily. You are equating the restaurant owners having lofty principles with the fact that I ought to pay for it. That's called sticking it to your customers. I will be the judge of my beliefs, and you of your beliefs. That shouldn't be added on to my restaurant tab. It was bad enough when chefs started acting like priests, telling us how to live, eat, etc.,and I believe are now supposed to be correctly addressed as 'Saint Chef'. Now the restaurant is the new church? Am I supposed to tithe to the restauarant and thank them, dear lovely people, for having principles? And then charging me for them? Like a great man once said, "There's a sucker born every minute." Edited February 17, 2008 by Miami Danny (log)

[wesza]

There are variations in many state laws. As a example Hawaii may still require that Health Insurance be provided for all employees working in excess of 20 hours per week.

Other states may not require heath insurance, many employers often offer it, but the amount employees pay varies. I understand there are states that permit the costs being paid by a individual to be deducted from state tax, it possible that fees generated by a service charge being applied to employee benefits may not be a regular taxable item.

In most Union contracts with Hotels, Restaurants and Caterers there is a agreed division of service charges. Often 20% of total service charges are divided with Captains, Headwaiters and Matri Di's with the balance divided to servers according to number of covers served. This income is all reported to the IRS and added to the paychecks. Cash Gratuities are divided by the staff involved with hosting, organizing and running the affairs such as hosts, Captains and Matri Di in charge of each affair.

In Europe you are regularly charged a service charge, VAT (value added tax) and others that are permissible with service staff generally anticipating a additional gratuity from pleased patrons.

This 20% share of pooled tips is something agreed upon by all employees in many operations especially those family operated that goes to non-service employees such as cooks, dishwashers, bakers etc.

All over the world customs vary. For example in most of Asia suppliers are expected to tip the employees who put their merchandise away. The employees in return are expected to rotate the goods, keep them in excellent shape, being sure to exchange them with the supplier if they are not up to standards. When they obtain the position this is what makes it work economically for buyers and sellers. It's been going on forever, but it takes quite a while for foreign operators to learn to do business this way. Especially since the workers are expected to tip the chef for allowing them the privilege of working.

Irwin

Edited February 17, 2008 by wesza (log)

[annecros]

For sake of argument I could go on forever based on principles.  And I am more than happy to continue a pollyanna approach to life - I happily choose that over skepticism and cynicism - I just can't imagine waking up like that each day.  However, I do think FG's approach is logical, but then let me answer this

As a business owner, would you consider adding a surcharge to your prices?  For example, "You will find a 5% surcharge on your receipt to help us provide our employees with health insurance." 

If not, why not?

←

I would not because its not part of my industry's model. Constantin is operating within the model within which he has been set. He is using the tools that are easily available to him. Have you ever walked out of a grocery with a surcharge placed on your purchase? The closest comparison would be the bottle deposits of the 70s and 80s. But in the restaurant/hospitality industry I've paid gratuity (mandatory and choice). I've paid corkage fees. I've paid those stupid tourist fees that some cities tack on to every charge in the hospitality field. From the outside it may not seem novel, but from the inside the novelty comes from how the existing system is used.

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Well, 6.2% of my husband's earnings go to the welfare of seniors and the disabled (they call it "Social Security") and his employer even matches it!

Wouldn't 5% costing come close to SSI and Workman's Comp?

Peanuts.

The only grocery store that I know of that charges a surcharge is the Commissary System on military bases. Those grocery stores sell at cost, then add a surcharge of 5% to the bottom line to cover overhead. They are a non appropriated fund organization, so money is tight for this benefit. They still are having trouble competing with the big boxes outside of the gate. Also unique to this system, bag persons work for tips only and shelf stockers are Independent Contractors that are paid by the manufacturer or broker, by the case. Used to be about a quarter a case.

The Commissary System is unique in that it is not profit driven in the slightest. But it does depend upon the patrons, much like restaurants, to pay employees out of pocket.

[san]

Why is overhead a surcharge on the bill? Last I heard, overhead was overhead.

I think mostly everyone is in agreement that there is an issue with servers making sometimes up to 10 times as much as dishwashers and line cooks. I personally like the way french laundry takes responsibility for paying all of its staff and overhead by working the costs into the price of the menu (they state that service is included and the only extra charge is for tax). My main issue with a 5% insurance charge is that I doubt that the restaurant's food prices were reduced 5% when they started the charge, or that their menu prices are 5% lower than their comparable competitors. My guess is that the prices on their menu more or less resemble the rest of the similar S.F. restaurants, who don't have an extra charge for overhead. Unless there is a notable price difference, any overhead fee to me just seems like an underhanded way to trick people into feeling good about giving more of their money to the restaurant.

[gfron1]

I love to give money to other people to show my support for their beliefs.  I prefer to do so voluntarily.  You are equating the restaurant owners having lofty principles with the fact that I ought to pay for it.  That's called sticking it to your customers.  I will be the judge of my beliefs, and you of your beliefs.  That shouldn't be added on to my restaurant tab.  It was bad enough when chefs started acting like priests, telling us how to live, eat, etc.,and I believe are now supposed to be correctly addressed as 'Saint Chef'.  Now the restaurant is the new  church?  Am I supposed to tithe to the restauarant and thank them, dear lovely people, for having principles?  And then charging me for them?  Like a great man once said, "There's a sucker born every minute."

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It would be "sticking it to the customer" if the customer had no choice or didn't know - neither is the case here. I'm assuming Mr. Cosentino's restaurant is not the only one in town, nor have I heard about them putting a gun to our heads to show up and eat.

And yes a sucker is born every minute, that's why the diet industry makes so much money; the herbal viagra peddlers are rich; people pay hundreds of dollars for clothes; people buy monsterous SUVs when they live in the plains; along with countless other consumer choices that each of us makes on a daily basis. Or how about those who shell out all of that money for cable or satellite - to me they're suckers - its about our personal values, morals...paradigms. With full disclosure, I am able to take my responsibility as an educated consumer.

[turkeybone]

I read through the thread and for all the people who said "Im sick of surcharges and whats next, fuel cost, warm water cost?", I dont think those really apply in this case. You can't make an emotional case for fuel. You don't feel bad if Exxon doesn't get its extra couple cents. Have you historically felt that CPAs were underpaid, and really need an extra 8%?

I think that this is akin to people donating to NPR or public television. When you read that little note on the menu, either you say "yes, I feel good about helping this underprivelidged class!" and come back, or you say "well, I'm just taking 5% off my usual tip". You're making it mandatory for the customer to pay this 5%, but that doesnt make the customer responsible for paying a full tip -- they still have a choice in paying 5% more on top of their bill.

Any arguments about surcharges and "what's next, fork cleaning charge??" don't apply. The restaurant is specifically giving you an "opportunity" to feel good about helping a typically beat-down workforce. Whether you believe that the kitchen/dishwashers are worthy of your aid depends on your background. But I think (now this is the opinion of a random east coaster) the San Fransisco "foodies" know all about the culinary world and what shit pay they get and don't get -- Im sure plenty of people go to restaurants that are sustainable, that dont use bottled water, that dont serve foie gras -- isnt looking out for the well being of their dishwashers go into this category?

Again -- either you agree and feel good about helping out, or if you're skeptical, you just decrease your tip. Yeah I think it's gimmicky, and I don't know how well something like this would fly on the east coast.

At the CIA, they throw on 15% service charge and kick it back to 'scholarships', and anything on top of that goes to the students' pockets. Now, you don't have to pay this, but you have to call over the manager and sign something and I mean, do you really want to be the person to say "No, I dont support education".

Whether it's right or wrong, even if it is the restaurants responsibility anyway, do you want to be the one who says "no, I dont support healthcare for the dishwashers" ?

Lots of money can be made off guilt.

edit: and if youre skeptical about where the money goes, just make a mention to the server -- Im sure if it was BS, they would be very quick and vocal about it.

Edited February 17, 2008 by turkeybone (log)

[kjente2]

http://www.sfgate.com/cgi-bin/article.cgi?...e&sn=002&sc=696

This article is about the San Francisco mandate and how business owners have responded. Many have responded by moving or planning to move to the East Bay.

[Chris Hennes]

http://www.sfgate.com/cgi-bin/article.cgi?...e&sn=002&sc=696

  This article is about the San Francisco mandate and how business owners have responded.  Many have responded by moving or planning to move to the East Bay.

←

A relevant quote from the article:

The owners of Zuni Cafe on Feb. 1 added a 4 percent health surcharge to its menu to cover the additional costs of the mandate. While a few customers were not pleased, the majority appreciated why the restaurant needed to take action, they said.

Co-owners Gilbert Pilgram and Judy Rodgers said they didn't want to simply raise prices to absorb the cost; they wanted a separate surcharge so customers understand exactly why they are paying more.

The fact that this is a new city ordinance makes the previous argument about whether the money is actually being spent on health care a moot point: they do, in fact, have to "open their books" at least to the city. No trust necessary.

[Miami Danny]

"The fact that this is a new city ordinance makes the previous argument about whether the money is actually being spent on health care a moot point: they do, in fact, have to "open their books" at least to the city. No trust necessary. "

Yeah, because restaurants never break the law. I was an investigator for the US Labor Dept., and the biggest lawbreakers when it came to screwing over employees was the restaurant industry (especially considering the huge numbers of illegals working in the trade). I know people working at restaurants in NYC right now who are not getting their proper tips from their employers. Want to complain? Just lost your job, and your pay.

And if I'm not wrong, aren't restaurants, like other business, required to pay workmans comp? Social Security? Medicare? Should these all be broken out on the menu? I don't have a problem with that. Do you? Here in Florida I used to pay, as the retailer of alcohol, a special surtax on every bottle I purchased from my wholesaler. Should I have added that to the tab, too? How about providing soap at the employee hand sink, and paper towels. Employers are required to do that. as well. The point is that, yes, no one puts a gun to one's head to dine at a restaurant. But that doesn't make it right. Those 'surcharges' should go into the food prices.

(And, not to be crass, but the argument could also be made that no one is putting a gun to anyone's head to work in a restaurant, either.)

Edited February 17, 2008 by Miami Danny (log)

[annecros]

http://www.sfgate.com/cgi-bin/article.cgi?...e&sn=002&sc=696

  This article is about the San Francisco mandate and how business owners have responded.  Many have responded by moving or planning to move to the East Bay.

←

A relevant quote from the article:

The owners of Zuni Cafe on Feb. 1 added a 4 percent health surcharge to its menu to cover the additional costs of the mandate. While a few customers were not pleased, the majority appreciated why the restaurant needed to take action, they said.

Co-owners Gilbert Pilgram and Judy Rodgers said they didn't want to simply raise prices to absorb the cost; they wanted a separate surcharge so customers understand exactly why they are paying more.

The fact that this is a new city ordinance makes the previous argument about whether the money is actually being spent on health care a moot point: they do, in fact, have to "open their books" at least to the city. No trust necessary.

←

I'm not sure it moots any point that I have so far made - because it just shifts the restaurant owner into the position of lobbyist. Why is complying with the law of the land a matter that should be printed on the menu? It is still overhead, and still what they have to do if they want to do business in this geographical region.

They are angry because they had to do the right thing, and are making sure that the customers know that they are doing the right thing (although they were forced to do it by law), and are actually advertising that they are doing the right thing and want you to feel good that they are complying with the law. But you have to pay. No duh, but seriously, I wouldn't expect an announcement on the menu that the owners are complying with work comp laws.

I'll say it again. Silly, and I will at this point add manipulative.

Ultimately, the consumer pays, and this is just a way of turning the tables to make yourself look like the good guy.

[gfron1]

And I will repeat one more time to Miami Danny's litany of things that you pose as other surcharges are not relavent because they are part of current daily operating procedures. The restaurants that have added this surcharge are doing so against the grain of the industry. Ten years from now this may no longer be the case, but today it is.

I think we will mostly agree that the back of house staff should be paid a living wage, and we can therefore assume that it will show up on our tab in one form or another. But we are talking about a shift in CW at this point, and so it might be deemed savvy for an owner/chef to embrace the change and use it to draw more goodwill. And others will baulk and go somewhere else.

[Miami Danny]

And I will repeat one more time to Miami Danny's litany of things that you pose as other surcharges are not relavent because they are part of current daily operating procedures.  The restaurants that have added this surcharge are doing so against the grain of the industry.  Ten years from now this may no longer be the case, but today it is.

I think we will mostly agree that the back of house staff should be paid a living wage, and we can therefore assume that it will show up on our tab in one form or another.  But we are talking about a shift in CW at this point, and so it might be deemed savvy for an owner/chef to embrace the change and use it to draw more goodwill.  And others will baulk and go somewhere else.

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That is typical St. Chef talk. "Embrace the change"? You mean forced to comply with a humane law, and then making it seem like they've been so concerned about it for so long, they just didn't want to tell anyone about it, but now the word's out. Please nominate us for a James Beard Compassion Award.

Oh, by the way, we'd also like you, the customer, to know how compassionate we are, and to make it seem like you're helping us do a good deed. Now give us $10.

I completely agree with Annecros. Manipulative and obvious.

[gfron1]

I won't waste any of our time (or take us off topic) by listing the countless societal changes that have occurred throughout the millennia. When the "big change" happens its not news to most people, its simply the machine catching up with the times. With this issue the machine has not caught up yet.

[scubadoo97]

I don't think it necessary to announce it in that manner. I mean if they need a 2% increase in prices due to rising transport costs then raise your prices and leave the rest to the accountants. I mean even in the waitstaff jobs my daughter held she had to tip out the dishwashers and sometimes the cooks. There's another way to do this without publishing it on the menu. It's a worthy thing to do for sure but it doesn't belong on the menu as a surcharge in my opinion. The menu is not the place to list the costs of doing business.

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I totally agree.

I don't want to see a service charge for what is considered the normal price of doing business. If you want to pay for your employee's health care in full or in part, I commend you but factor it into the price of the food as you would other business expenses. I should not be made to feel in anyway responsible for paying the restaurant's employee benefits. If the employer needs to raise prices for any reason that is their prerogative. Some of us don't have that option.

How would you feel if other business started doing this. 5% employee benefit surcharge at Macys or at your doctors office. And your doctors office has a very real problem with fees set by the government and insurance companies that are in many cases going down while malpractice insurance goings up to astronomical prices. I don't think I would hear comments like "that was socially conscious or responsible". Sure I'll help pay for the employee's health care or what ever. People would be bitching up a storm

[Miami Danny]

I won't waste any of our time (or take us off topic) by listing the countless societal changes that have occurred throughout the millennia.

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Because of restaurants? You mean because they've historically treated their employees so shabbily that laws had to be passed and unions formed just to protect the workers? Then I totally agree with you.

[prasantrin]

Oh, by the way, we'd also like you, the customer, to know how compassionate we are, and to make it seem like you're helping us do a good deed.  Now give us $10.

I completely agree with Annecros.  Manipulative and obvious.

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That was my problem with it from the outset. It's very manipulative, and I don't like being manipulated. Yes, the health care situation is a sad sad affair in the US, as is the inequity of wages. But I certainly don't need a restaurant to help me feel guilty about it. I was raised Catholic--I can feel guilty all by myself.

[K8memphis]

I think that living wage jobs need to be tied to a skill set. Hypothetically in San Francisco Worker X is employed by a restaurant as a dishwasher with a living wage and has to move to Omaha for some reason. In Omaha poor dude-buddy Worker X cannot find comparable work to support his family. He would then be painfully under qualified and uniquely over paid resulting in a deadly combination in the real world.

Worker X needs to be skilled in order to draw a living wage. Which leads me to the point that there are certain jobs that should not be paid living wage. Should be held by those who are not the bread winners, like teens, single people, students, retirees, and anyone else working their way up like newcomers to America. How will these folks be able to enter the workforce without entry level jobs?

Those San Fransisco folks are going to have to change things up quite a bit to make it work in reality. For example train the dishwashers to do something with bankable skills like prep the food. Check out Detroit if you think just granting higher and higher wages and benies just because of a union or a law or because it feels good works on the bottom line.

Chicago was going to enact living wage regulations in particular on big box stores. Target said, agh well on second thought, we'll cancel building those new stores there and cancel on creating mucho jobs and cancel bringing in muy mucho revenue. Catch you later, Chi-town. Perhaps it chenged since I last heard but that's where they were at one point.

You work you ride.

Edited February 18, 2008 by K8memphis (log)