Wednesday, September 17, 2008

Service charge vs. gratuities

Last week, I had to make a quick trip to another country. On my last day there I met a friend for lunch at a "fancy" restaurant. When the bill came, I noticed that an 18% gratuity was automatically added (even though it was only two people having lunch). Well, we had a great server, so I brushed it off, but inquired with the manager on my way out about how the gratuities were distributed among the waitstaff, because I wanted my server to know that we truly appreciated her service, and I wanted her to get a bigger share of the pie. "They don't get that," the manager replied "If you'd like to leave her a tip, leave it on your credit card or on the table in cash." You mean a tip on top of the tip? You bet. I now know how some of my clients have felt when they saw a 20-22% service charge added to their bills, and the line following in bold: "gratuities at your discretion". Just to be clear, a service charge is not a gratuity. Gratuities are voluntary. Service charges are not. Many caterers, hotels, venues, etc. have a tendency to use the two words interchangeably (which is cause for much confusion), and I suspect they're the ones being named in the current rash of lawsuits that are being brought and won in parts of the country by patrons and customers against restaurants and caterers with muddy explanations for either or both words. Expect caterer's contracts to get a lot more specific and iron clad in the near future.

Frankly, as a planner, I always feel a bit of relief when I see a service charge on a caterer's bill (especially if there's a lot of setup to be done), because I know that I can rely on the caterer to do the grunt work, which means my client doesn't have to spend more money to hire more people for me to manage or to rely on family and friends (sometimes a real crapshoot) or worse, ask me to do it (and yes, I will charge you). It once took two of us three hours to tie 300 bows onto 150 Chiavari chairs. It took another three hours to get the cramp out of my fingers. Setup is hard work, so I can understand a service charge when warranted, but an 18% gratuitity to an unknown party for doing nothing? well that just irritates me.

1 comment:

G said...

New York state law recently changed this year regarding service charges. The part of the service charge that is actually going to the servers cannot be taxed, and if any part is going somewhere else (like administration) it has to be stated and has to be taxed.