Tipping question

[detlef]

To the customer, you are. I have a $50 dinner check, I intend to give a $10 (or whatever) tip to the waiter. I write $10 on the line. And the waiter only gets $9.80.

 

Now my Visa gets charged $60. You (the restaurant) only gets $58.80. In my mind, the restaurant paid $1.20 for the credit card fee. I'm not thinking that the waiter paid 20 cents of it.

So, basically you're saying the problem with what I do is the irrational reaction it gets from the consumer? After all, that $10 is getting divided up among other people as well, often at the waiter's whim. Let's just say that there have been more than one instance when a waiter has failed to be much of a team player when it came to letting the love trickle down on a good night.

[keggerz]

Are Debit cards the same fee? I pay almost always with my debit cards. If I have the cash, I try to tip with cash though. I guess that is the best solution.

Merchants Service accounts have different fees for Debit vs Credit and also a different charge if the card is swiped vs entered manually

Edited December 3, 2007 by keggerz

[Caveman_Nick]

I managed a liquor store for 9 years and have been a managing bartender for 12 years. (well, managing for about 7)

 

This does not surprise me. People's opinions tend to jive with where they come from and where they are.

 

I have seen members of my family as well as friends open and close restaurants. I have worked in them, and had friends manage, serve, bartend, bar manage, etc. It's an industry I have been very close to for a long time.

 

In my observation, the best scenario for everyone involved is that the restaurant is well run, properly staffed, and makes money. If the venue makes money, everyone that works there makes money. You don't keep good kitchen staff if you don't pay well, and you don't keep good wait staff if the place doesn't fill up. The ownership bears tons of responsibility and risk.

 

When it comes to matter like this of finding extra costs and trying to stick them to the ownership, in my observation it is those that don't understand how close to the edge of going out of business restaurants get on a regular basis that take this perspective.

 

The owner paid their cut to the CC company. They shouldn't have to pay someone else's as well. JMO on the subject...

[chester]

This does not surprise me. People's opinions tend to jive with where they come from and where they are.

 

Not sure how to take that.

 

When it comes to matter like this of finding extra costs and trying to stick them to the ownership

 

I guess that I see this as ownership taking extra costs and trying to stick it to the employee.

 

And, yes, I understand that it is not the owner's money. I simply see it as a business expense

[Caveman_Nick]

When my customers are ready to pay i ask, Cash or Credit...if they say Credit I tell them there will be an additional 2% convenience charge and a 25 cent transaction fee....that sounds pretty F'n stupid right? Well it should because its about as stupid as charging it to your employees.

 

And if I walked into your store and offered you $23 for a $25 product, would you take it? You are trying to equate a business that has relatively fixed costs with one that has volatile costs, and talking directly about a new cost they should absorb that is completely subjective based on the whim of the customer.

 

 

it is a CODB(COST OF DOING BUSINESS)...do you charge your staff for their training time?

 

Most restaurants require servers to work training shifts in which they get paid but get no tips, as those tips are given to the training server. I can;t say that Detlef handels things this way, but that is pretty standard.

 

 

 

just because you dont think they feel nickel and dimed doesnt mean that dont feel that way....and just because they want to pickup shifts if they moved and came back would have to do with their earning potential and not that you possibly nickel and dime them

 

Again, I know many servers, and they would all prefer to be at the place where they make the best money. If that means that they have a 2% fee for their CC bill, so be it.

Edited December 3, 2007 by Caveman_Nick

[Caveman_Nick]

Not sure how to take that.

 

There's no slight intended with my remark. You have a perspective on the situation based on your personal history and current situation. It's not a "bad" thing, it's just a thing. There's no reason that my POV is better than yours, I just don't happen to agree with yours, and that comes mainly from my vantage point versus yours

 

 

 

And, yes, I understand that it is not the owner's money. I simply see it as a business expense

 

You see it how you want to see it because it benefits you when seen in that light. I am just trying to provide impartial perspective from someone that has seen both sides. However it's broken down, it's money taken directly out of someone's pocket. You just don't want it to be taken from yours. I understand that, and can't condemn you for it. I just don't happen to agree. You work for the tips. Would you work in a restaurant that had a no tipping policy and made it known to their clients, and just paid you a flat rate? Because in that case the business owner could control the expense to profit ratio.

 

If anything, and this is honestly my real opinion, if wait staff has such a problem with this 2%, they should start calling the CC companies and complaining. I honestly think that this part of the transaction should be protected from these fees. But that is another subject.

 

Also, is this 2% fee tax deductible for the servers? I bet it is, but would not be for the restaurant owner.

[detlef]

When my customers are ready to pay i ask, Cash or Credit...if they say Credit I tell them there will be an additional 2% convenience charge and a 25 cent transaction fee....that sounds pretty F'n stupid right? Well it should because its about as stupid as charging it to your employees.

 

it is a CODB(COST OF DOING BUSINESS)...do you charge your staff for their training time? and this is another way to look at it...who has the Merchant Services Account? The restaurant or the servers? Thats what I thought....Nick is right its just a cost that gets passed to the consumer but hey that is fine....imo employees are the most important asset for all business. Invest in your employees and you will win every single time. 2% sure isnt much of an investment either.

ok so help me out with this....is this because the bill is run at its total prior to knowing the tip and the customer then takes the slip that had the tip on it so you have no clue what the tip was? or is it just that the customer took the wrong slip? if its a wrong slip thing and the customer tipped $20 who gets that money, the restaurant?

to me it all comes down to COST OF DOING BUSINESS

just because you dont think they feel nickel and dimed doesnt mean that dont feel that way....and just because they want to pickup shifts if they moved and came back would have to do with their earning potential and not that you possibly nickel and dime them

First off, regarding the missing cc copy. The waiter has no idea what the tip is because the customer did not specify, so when the waiter goes to close out the cc transaction, they have no amount to enter. So no, the restaurant does not get the tip. Give me a freaking break!

 

As for not letting them snack on mistakes. Now that would be petty. What the hell else am I going to do with it? I run my restaurant like a team. I endure all the risk to provide a healthy, friendly, and lucrative environment for everyone. There are tons of ways that restaurants pass some of that risk onto employees and plenty of them do, in fact, make the waiters pay for mis-fires and breakage (so don't take that as a given). I pass none of it along and openly ask them to participate in shouldering one cost that benefits them and nobody else. If it was an unreasonable request, I doubt I'd have the staff loyalty that I do.

 

Lastly, save me the freaking lecture on "investing in my staff". Believe me, I do. I've worked in this industry for 25 years. I've seen the turnover places have with employees. Hell, every time I go to the place next door, there's somebody else that I don't recognize. The simple fact is, that doesn't happen at my place which speaks louder than a bunch of dudes who have no idea what the working experience at my place is like. I simply do not lose employees...ever.

Edited December 3, 2007 by detlef

[tonorator]

 

fine place you got here. can i get a refill on my drink?

Edited December 3, 2007 by tonorator

[dmarc117]

 

fine place you got here. can i get a refill on my drink?

 

 

lite on the ice too!!!

[detlef]

Also, is this 2% fee tax deductible for the servers? I bet it is, but would not be for the restaurant owner.

It's deductible to the extent that, like all other expenses, it limits the bottom line. I pay for rent, meat, booze, etc. and pay the CC company every month as well.

[BeeR]

So, we took our employees out for a very nice dinner last night. The bill came, and we had about $500 in food, and $500 in booze, and it was listed separately on the bill. The service was very nice, so I was planning on tipping 20%, a nice $200 tip. My business partner said that you weren't supposed to tip on the alchohol. I've never heard of this. I've also never seen food and booze split on the check. What's the proper tipping amount here?

If you can afforrd to take out your employees, you can afford a "full" tip.

 

Although IMO 20% is a bit high, unless the service was more than simple adequate.

 

Course tipping in general is completely f-ing stoopid, but that's for another thread.

[detlef]

If you can afforrd to take out your employees, you can afford a "full" tip.

 

Although IMO 20% is a bit high, unless the service was more than simple adequate.

 

Course tipping in general is completely f-ing stoopid, but that's for another thread.

Actually, there's very little about tipping that hasn't been addressed in this thread.

[Caveman_Nick]

It's deductible to the extent that, like all other expenses, it limits the bottom line. I pay for rent, meat, booze, etc. and pay the CC company every month as well.

 

 

Right...not tax deductable, it just becomes money that isn't income.

[detlef]

Right...not tax deductable, it just becomes money that isn't income.

What's the difference? Isn't that pretty much what tax deductible means?

[keggerz]

It's deductible to the extent that, like all other expenses, it limits the bottom line. I pay for rent, meat, booze, etc. and pay the CC company every month as well.

CC fees are able to written off against profits for the business....do you back out how much of the fee is paid for by your wait staff? or does that # come from your merchant services records?

 

and i wasnt slamming you about investing in your employees it was just a general statement....and fwiw charging them the 2% is about as petty as it would be to not let them snack on mis-fires, ISMHO

[Caveman_Nick]

What's the difference? Isn't that pretty much what tax deductible means?

 

Essentailly, but not being a tax attorney I can't really speak to the differences in how it affects your filing.

[keggerz]

We see about 80-90% cc sales.

not going to presume i know what your biz does but lets look at a restaurant that does $1,000,000 in sales

 

that would mean between $800k - $900k in CC sales

2% would be between $16k-$18k....now come tax time would a business claim the full CC expense or would they back out the

2% they charged to their employees?

 

also i am not 100% sure but I assume that a restaurants sales do not include tips so if we used an average of 15% for tips on the $1,000,000 in sales we would end up with tips of $150,000 and 2% of that would be $3k

 

so does the biz claim $16k-$18k in CC expenses or $13k-$15k in CC expenses?

 

and this is where one of the bean counters would have to step in to show how it would change the bottom line

[detlef]

not going to presume i know what your biz does but lets look at a restaurant that does $1,000,000 in sales

 

that would mean between $800k - $900k in CC sales

2% would be between $16k-$18k....now come tax time would a business claim the full CC expense or would they back out the

2% they charged to their employees?

 

also i am not 100% sure but I assume that a restaurants sales do not include tips so if we used an average of 15% for tips on the $1,000,000 in sales we would end up with tips of $150,000 and 2% of that would be $3k

 

so does the biz claim $16k-$18k in CC expenses or $13k-$15k in CC expenses?

 

and this is where one of the bean counters would have to step in to show how it would change the bottom line

The deduction is handled by my payroll company and summarized in my annual reports. Thus, the accountant backs that out from what I declare my CC costs are. Otherwise, in addition to raping my staff, I'd be stealing from my fellow taxpayers as well.

[detlef]

CC fees are able to written off against profits for the business....do you back out how much of the fee is paid for by your wait staff? or does that # come from your merchant services records?

 

and i wasnt slamming you about investing in your employees it was just a general statement....and fwiw charging them the 2% is about as petty as it would be to not let them snack on mis-fires, ISMHO

I guess I would define petty as throwing away a perfectly good plate of food just because you didn't want to "reward" mistakes. There is no winner here.

 

On the other hand, as your example illustrates, the 2% thing means $3K to the bottom line at the end of the year. Every choice I make effects this.

 

For what ever reason, this one appears to be a red herring. I could make other choices that cost my waiters even more. I could start using inferior products. I could pay my chef less and end up with less exciting specials. Both of these might impact me poorly, but might not. After all, the reciprocal cost savings I experienced could offset any loss in revenue I had. However, the waiters most certainly would lose out because their check averages and, possibly the total number of customers would decrease. They also might not get the benefit of getting tipped by an enormously satisfied customer. People may not penalize a waiter for bad food, but they certainly reward them for great food.

 

Again, it's just like a hairstylist choosing to work at a salon that charges a higher rent for a chair. If it's a cool place and they make better money, they don't (or at least shouldn't) resent the higher cost associated with doing business there. Fortunately, it appears my waitstaff sees it that way.

[keggerz]

The deduction is handled by my payroll company and summarized in my annual reports. Thus, the accountant backs that out from what I declare my CC costs are. Otherwise, in addition to raping my staff, I'd be stealing from my fellow taxpayers as well.

but the question for the bean counters is what the hit would end up being for you if you wrote it off vs charging them the 2%

 

Do you have a sexual harassment policy? I am sure that raping your staff would be a no no with regards to it

[detlef]

but the question for the bean counters is what the hit would end up being for you if you wrote it off vs charging them the 2%

 

Do you have a sexual harassment policy? I am sure that raping your staff would be a no no with regards to it

I'd imagine the simple answer is that I would save the marginal taxes I pay as a result of "making" as opposed to not "making" that money. So, that knocks off about 30% of the $3K I save.

 

However, once the easy things are taken care of, every manner in which you can find another point or two in your expenses comes with a reciprocal downside. The one thing you can't factor in is the fact that your savings are marginalized by the fact that you'll be taxed on that much more income. I mean, the idea is ultimately to make the income as big as it can be despite the rather obvious negative impact that has on the amount of taxes you have to pay.

[KevinL]

So, basically you're saying the problem with what I do is the irrational reaction it gets from the consumer? After all, that $10 is getting divided up among other people as well, often at the waiter's whim. Let's just say that there have been more than one instance when a waiter has failed to be much of a team player when it came to letting the love trickle down on a good night.

 

It's my reaction from me giving the waiter $10 and you shortstopping his check to pay (what I feel are) your transaction fees.

 

To me, it's no different from charging the waiter for the lemons that he chops up and puts in my water glass. It's a cost of doing business. But to you, you can measure it and assign it to a specific employee, and you choose to do so.

[detlef]

It's my reaction from me giving the waiter $10 and you shortstopping his check to pay (what I feel are) your transaction fees.

 

To me, it's no different from charging the waiter for the lemons that he chops up and puts in my water glass. It's a cost of doing business. But to you, you can measure it and assign it to a specific employee, and you choose to do so.

Let's say another pizza place than the one you worked at figured out a way to provide you with a pleasant work environment where you'd make more money. Perhaps they did this by paying a concession to have exclusive rights to a certain group of people who loved pizza. So, you can get a job there but when they hire you they say, "we realize that our concession fee has a very positive impact on both yours and our income and thus we feel it is fair that we pass on a very small percentage of that fee to you." Of course, you're not going to have to drive all over hell and back and you're going to make much more money than you make now.

 

If you did the math and realized that you would be making more and having a nice experience doing it, would you not agree to this? Would you resent your employer for requiring you to, in a very transparent and upfront manner, shoulder this fee? Despite the fact that they were offering you this fine opportunity?

 

I would think you'd be foolish to turn down the opportunity and a total ingrate to resent them for the deal that you willingly entered.

[Atlanta Cracker]

but the question for the bean counters is what the hit would end up being for you if you wrote it off vs charging them the 2%

 

I'm no bean counter but for the sake of jumping into the arguement let's assume a top end tax bracket and gestimate that the $3,000 as a deduction would end up saving about $1,200 in taxes or in effect be a hit to the pocketbook of $1,800.00.

 

Now let's assume there are 5 waiters earning a minimum salary of $2.50 for 12 hours a day, 7 days a week or about $1,000 / week in direct labor costs (excluding FICA and SS, etc.) That would be about $52,000/year so saving $1,800 saves you 3.5% of your total labor costs.

 

I don't know that this really makes any point.

 

I guess from my perspective I'd eat that amount to avoid the thought running through the back of my staff's head of "Oh, what's a little _________ gonna hurt. I get charged 2% on CC tips so I'm not going to worry about taking a liberty or two here or there." Even if they are otherwise happy I promise you that is going through some of their minds.

 

But, if it's working so be it...

 

 

By the way, there are several liquor stores here that charge 2% less for their products if you pay cash so that can work in some instances.

[keggerz]

lets just agree to disagree on who should shoulder the 2% CC cost(and that isnt a hard cost for you is it? what do you charge a waiter if the customer uses AMEX? )

 

imo, it is a Cost of Doing Business...but you as well as others are entitled to your very own opinion