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Cash only for gratuity!!

I recently had an expensive business dinner at a local restaurant.
When the bill came there was a note: "all gratuiies in cash!" Most times this is just a suggestion/preference and when I get the credit card receipt there is a spot for a tip. I'll apologize/explain and include the tip on my card if it is a business meal or I am low on cash.
I gave the server my business credit card to pay. The credit card slip has no place for the tip.
I explained that it was a businees expense and was told the dreaded: "It's our policy!" Somehow I thought I should have been forewarned!
Getting reimbursed for cash is a nightmare with our company.
I had enough cash for a generous tip. I could not see punishing the server for the "Policy!"
Otherwise the meal and service was fabulous.
I know all about "cash flow" and the economy of the food industry.
I.M.H.O accepting gratuities on credit cards is one more cost of doing business.

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  1. Yes, of course you should have been forewarned. This is bad business, and I'm sad to observe that I bet it's the servers who lose.

    3 Replies
    1. re: pinehurst

      I've seen signs on the entrance of restaurants: "Cash only!" but never a sign stating Cash for Tips only.

      1. re: Motosport

        I've run into "Tips: cash only" at several local places, but only on the menu after you sit down; or even sometimes not until the bill is actually presented. Never before you enter though, so I'm sure some people are caught short. So far I've managed to scrounge up some kind of tip despite the surprise. I always assumed it was for the waitress' sake, if it's a credit card charge they might have to wait til the end of the week to get paid out, as was done at the restaurant I managed. But tax issues and bookkeeping headaches are other possibilities, not that they would ever admit the tax angle.

        1. re: Motosport

          "Cash for Tips"

          I've been a couple of places where I've seen little signs on the table, about the size of a "Reserved" placard. of course, they said "Please" too.

      2. Similar problems exist when the credit card machine is programmed not to ask if you want to leave a tip. I reckon that's about half the time we eat out. You never know if it's going to or not.

        Problem is then if you havnt got the cash for a tip (although now we usually make sure we are carrying enough cash for that, but not always). Nothing you can do except not tip.

        1 Reply
        1. re: Harters

          Or scramble around for an ATM!! Yikes!!

        2. That restaurant must have a hard time keeping good servers cause it is going to reduce the tips for sure.

          1 Reply
          1. re: redfish62

            I could also see that it was torture for the server to have to deal with this issue. Better to have them focus on serving.

          2. I haven't seen that in restaurants around here yet but I have seen signs for cash-only tips in hair salons and day spas.

            1. If the restaurant is going to enforce their policy then they should also have an ATM/cash machine close by.

              10 Replies
              1. re: latindancer

                Oh please do not suggest that!! Those kinds of ATM machines have huge service charges to use them and are a profit maker for the location that has one.

                1. re: Quine

                  Yes, true.
                  I don't always carry alot of cash on me. It's either that or the server doesn't get a tip and I would feel horrible about that.

                  1. re: latindancer

                    True, faced with this, I would come back (I'd ask the server what times/days they worked) with cash for the tip. I know a few places that use this sorta (well it actually is) scam. This way, they make a profit on the ATM and don't have to do the proper record keeping.

                    1. re: latindancer

                      Sometimes all I leave the house with is a credit card and house keys. What an unfortunate policy.

                      1. re: babette feasts

                        I know, I lead a pretty much cash-less life. So I get tweeked when I am forced to use cash in a simple non-cash situation.

                        1. re: babette feasts

                          I agree that not carrying cash is an unfortunate policy to hold.

                          You never see that kid with the lemonade stand that you just have to give some business? Never want to stop and have a quick beer or soda on a hot day?

                          1. re: FrankJBN

                            I can't imagine NOT having a fair bit of cash on me, even in this day and age. *Especially* when I go on a trip, I would try to have at least $200-300 or so in cash in my wallet.

                            1. re: FrankJBN

                              Actually, no kids with lemon aid stands, don't drink soda, nor beer if I am driving. I do keep some change in the car (quarter for the shopping cart), I very seldom use a purse, and since I now use a smartphone, not even a date planner. Yep, keys and wallet. Travel light. Any "cash only" I run into unexpectedly, has been few and far between. And I have been doing this for quite a good number of years now. Heck I know people out in the Midwest that as far back as 20 years ago paid in check at McDonalds!

                              1. re: FrankJBN

                                I normally carry some cash, but if I know I will be charging dinner and am only going out for that, not necessarily.

                                1. re: FrankJBN

                                  I work at a place where nearly everything you need can be purchased with payroll-deduction. They aloso hav e a bunch of vending machines. Not carrying cash around eliminates that temptation, meanwhile I can swipe my name badge for food or pharmacy purchases (it's a hospital, that's why the pharmacy LOL) . It really keeps me from nickel-and-diming myself to death. A while back I changed departments, and my current coworkers go out for lunch or order in occasionally so I've started keeping enough cash for that, plus i've sort of gotten out of the habit of using vending machines and fast food places for a quick iced tea.

                        2. Accepting credit cards for gratuities is one more cost of doing business, BUT it is one cost the establishment can choose not to bear.
                          Typical merchant agreements do not let merchants refuse credit cards on some sales and accept it on others.
                          In the case of a gratuity the restaurant is not purveying anything to the customer in exchange for the amount being charged, but may suffer a 4% loss on each transaction.
                          In some jurisdictions, the restaurant may not charge the employee the credit card percentage, so the restaurant has to subidize the employee's tip.
                          In other jurisdictions, I have seen legislation worded such that the establishment has to collect sales tax on gratuities included in the total sales amount of each transaction. If a customer spent $50, and the tax rate was 10% the bill presented is $55. If a customer then wrote $10 Tip on the slip, the restaurant would have to remit 10% on $60, thus eating a percentage of the whole sale and the extra dollar in sales tax. This is not common tax language but it can happen, especially when the gratuity or service charge is set by the establishment and not left up tp the customer. I belonged to both a country clun and city club here in CT, where there was a 20% gratuity added to all bills. Members did not pay after each meal, but received a statement each month. The CT Department of Revenue Services ruled that the grauity was subject to sales tax.

                          7 Replies
                          1. re: bagelman01

                            I understand all of that and it's a slippery slope of sorts.
                            I am certain that business lunches and dinner will be taken somewhere else if that policy is in force.
                            We had lunch at that restaurant with friends on Sunday but it's off my list for expense account meals.
                            I can't afford to "eat" (no pun) a $20 tip when the place across the road has no problem with gratuities on my credit card.

                            1. re: bagelman01

                              All good points! While some of them may apply in this case, there could also be the instance where the employer doesn't want to fool around with tax withholding on reported tips. It's extra recordkeeping for them when the waitstaff should be performing their own recordkeeping. By insisting on cash only for tips, it may be their attempt at pushing the recordkeeping responsibility solely to the employee.

                              Back when I was waitressing (which was a long time ago; there may still have been some dinosaurs on the planet), credit card tips were paid out in cash at the end of the night and were recorded for tax withholding purposes. Any cash tips we received were supposed to be reported to the manager so they could log them for payroll. Our measly wage was reduced by all reported tips. It may not be managed this way any more but that's my experience.

                              I knew a lot of servers who would underreport their cash tips. Tsk-tsk, I know but it was widely done. I did not....I've worked with the IRS before (corporate and payroll taxes) and have a fear of being audited. I've never been but I keep exceptionally well documented tax records just in case.

                              1. re: Dee S

                                Tips are included in the payroll not only for tax purposes but for Worker's Comp insurance purposes where premiums are based on payroll. Employee meals must also be included as remuneration.

                                1. re: mucho gordo

                                  The Workers' Comp angle is interesting. A household member was just very seriously injured on a job that is low wage+tips. Workers were actively discouraged from reporting their cash tips at this establishment, and the cash tips were a very significant part of the pay. Without documentation of the cash tips, the Workers Comp payments were significantly lower than if those tips had been reported. Or so I've been told...still a babe-in-the-woods on this. mucho gordo, am I reading this correctly that the circumstances of cash-only tips may be a way of avoiding higher Workers' Comp premiums?

                                  1. re: cayjohan

                                    It is a way to avoid higher premiums but there are other factors involved in determining premiums and, although I'm not qualified to speak with any authority on the subject, I don't believe it has any bearing on the payout amount for claims.
                                    Bagelman01 might be able to shed some light on this if he's listening in.

                              2. re: bagelman01

                                "...where there was a 20% gratuity added to all bills. Members did not pay after each meal, but received a statement each month. The CT Department of Revenue Services ruled that the grauity was subject to sales tax."
                                Isn't that because a compulsory 20% "gratuity" is no longer a "tip" or gratuity but a service charge since it is no longer discretionary? Maybe the tax code is worded that way in CT to cover discretionary tips as sale-taxable (as distinct from income to the recipient (e.g. the server) but in other places I would think sales tax is not applied to a discretionary tip?

                                1. re: huiray

                                  It was not considered a service charge, as the entire amount went to the particular server of each ticket. It also was not viewed as compulsary, as the clubs were owned by the members who voted on the amount of the standaqrd gratuity.

                                  The country club is gone, but the city club still exists and tax is billed on the gratuities.

                              3. The owners are obviously trying to avoid taxes. Leads to question, what else are they cheating on?

                                I feel for the servers. I'm guessing most will be taken back & leave a lower tip.

                                15 Replies
                                1. re: Clams047

                                  My thoughts exactly - no paper trail means it's easy to underreport the amount of tips paid.

                                  ETA: if I'm dining at a place that's expensive enough to put on a credit card I'm highly unlikely to have enough cast on hand (in case the owners haven't noticed, a lot of people just don't carry much cash these days). What's the establishment to do: the choices come down to put the tip on the card or stiff the waiters. If I were working there I know which I'd prefer.

                                  1. re: tardigrade

                                    I've not yet encountered this. I'd not return to such a place. And all the stuff Bagelman01 cites, I don't care. This is the cost of doing business. Either accept credit cards or don't. I can respect and accept a place that chooses to be cash-only. But these half-way measures turn me off big-time. And why should I help servers or their employers evade taxes by paying cash so they can better hide it? I pay taxes on all my income and so should they.

                                    1. re: Leonardo

                                      It is a fact that most servers prefer the cash tip, they like to fudge on reporting them to the IRS, and in some cases are required to tip out 15 to 20 % percent to bus persons and 5-10% to the bartender. Thus cash tips make it easier for them to skimp on the tip out.
                                      That said it doesn't happen with all servers but it has happened in some instances.

                                      1. re: keithlb1

                                        "It is a fact that most servers prefer the cash tip, they like to fudge on reporting them to the IRS, "

                                        Will you please cite the source(or sources) for this fact?

                                        1. re: Quine

                                          Ever know any servers?

                                          My sources for agreeing with keithlb at least partially are purely anecdotal but purely unanimous too.

                                          1. re: Quine

                                            British government minister on the subject that paying in cash is "morally wrong".


                                            1. re: Harters

                                              I live for the most part on a cash basis, and I think it would be morally wrong to infer that recipients of my cash are tax scofflaws. How people handle their finances and tax obligations is none of my concern. Period.

                                              1. re: Harters


                                                Wow. Cash IS legal tender, if you use the right notes... It IS suitable for settling debts. This Tory hack seems to be suggesting that ANYONE who uses cash is a probable criminal who will not declare income appropriately - which is what he seems to be saying when he said that "paying in cash" is "morally wrong". Again, just Wow.

                                                ETA: ...and just look at that picture of him...sour...angry...pinched...sour... Did I mention sour?

                                                1. re: huiray

                                                  Yeah, but we all know he's right.

                                                  Ask almost any trader if there's a discount for cash payment and you know you're going to get one. In the UK, that's usually going to get you a discount of 20% which, by an amazing co-incidence, is exactly what Value Added Tax is levied at.

                                              2. re: Quine

                                                I work in the biz, and lets just say that with the advent or payroll companies and computerized reporting the days of fooling the IRS are pretty much over. But they still like to conceal their cash tips to some degree because the minimum reporting requirements are such that the cash tips are usually more than the minimum based on your total sales

                                                1. re: keithlb1

                                                  I grew up in the business and have remained on the fringes since. Both owner, BOH and FOH. I hate when people say things like "It is a fact that most servers prefer the cash tip, they like to fudge on reporting them to the IRS, ". It's not a fact, it is a speculation, and a nasty one. To me, it is on the same order of "if you insult the server or send bad food, it's a fact that they will spit in it" Almost everyone believes that as truth, yet in 50 years, I only knew this to happen once and the person served a 6 month jail sentence.

                                                  Most often, I have seen and had personal experiences where the skipping out on taxes was done for the benefit of the owners. With tips un-reported, they can stiff the server for minimum wage make-up, avoid some payroll taxes and fees.
                                                  The servers are the big losers in this "cash only" practice. One food business in which I was the office manager, the owner concealed the fact that she stopped paying into workman's comp insurance. (She would always take the bill "home to write the check"). I had to testify in court, when she was sued by the state.

                                                2. re: Quine

                                                  You obviously have never worked in food service.

                                                3. re: keithlb1

                                                  When I waited tables by law we had to take our revenue for the shift and claim 15%. So it didn't matter how we were tipped. This tax was then deducted from our paychecks which resulted in paychecks of less then $5.

                                                  1. re: dmjordan

                                                    yes that is what I meant by reporting the required amount based on your total sales
                                                    In some states I think it is 8% of total sales.
                                                    It makes it a universal practice and hard for servers to fudge which I still say happened in many places.
                                                    I recall servers in a high end steak house from DC getting audited to the tune of 10,000's of dollars back in the 80's The laws might even be more strict now but I can't say for sure. Remember servers are required to tip out bussers, hosts, wine stewards in some cases and bartenders so the 8 % might be the right amount.

                                                    1. re: dmjordan

                                                      Yep!! In 4 years working at one particular restaurant, I never once got a paycheck made out for anything other than VOID.

                                            2. After having seen a couple of 'Cash Tip' signs, I now make a point of asking my serveres if they prefer cash tips.

                                              Surprisin to me, i don't notice a trend one way or the other, some thankful for a cash tip, others not expressing a preference either way. (I will note, no one insists on a credit card tip.)

                                              1. I usually carry plenty of cash but if I happen to be paying with a charge card and tips are cash only, then the server is hosed. I won't stiff him/her but I won't be tipping more than I have to, because I am having to deal with two transactions, one with the restaurant and one with the server, whereas at most places it is a single tranaction.

                                                You want a generous tip, then here's a tip for you: Make it easy for me to leave you a generous tip.

                                                2 Replies
                                                1. re: redfish62

                                                  "Make it easy for me to leave you a generous tip"

                                                  How is it any harder to leave a generous tip than to leave an ungenerous tip?

                                                  "because I am having to deal with two transactions, one with the restaurant and one with the server" Boy that's tough. I'd make the server pay for this kind of grotesque inconvenience too.

                                                  Worst thing is when I realize I've thrown down an extra dollar, the trouble I have to go through to shove it back in my pocket. Oh the pain.

                                                  1. re: redfish62

                                                    "You want a generous tip, then here's a tip for you: Make it easy for me to leave you a generous tip."

                                                    How do you figure that the server (the one getting the tip) has, in any way, input as to how the owner chooses to manage the card transactions? This makes no sense to me.
                                                    To me, putting cash on the table is no more trouble of an extra "transaction" than leaving my fork on or off the place. Sorry, I just cannot see why this would make a difference in your tipping.

                                                  2. Not allowing tips to be placed on credit cards is cheap & sleazy for the restaurant.

                                                    Unlike some other posters here, I do NOT carry large amounts of cash on me. Haven't for many years now. And I'm certainly not going to start simply to visit a restaurant.

                                                    It's a shame, but if I can't put the tip on my card, then a very shallow tip or no tip at all. That's the way it is. Perhaps eventually the servers at these particular restaurants will either leave for positions with better policies or go on strike.

                                                    1. So what's next, cash only for the Early Bird Special? Cash only at Happy Hour? <G>

                                                      If they accept the credit card for the bill, they should allow you to include the gratuity unless they have notified you IN ADVANCE that tips will be "Cash Only"!

                                                      I hate to say this, but I think the way to handle this it to pay the bill, and then as you are leaving simply tell the waiter that you are sorry but don't have the cash on hand to leave a gratuity.

                                                      Suggest that they ask their employer to change their policy, and if they won't, maybe the waiter should look for another job with an employer who values their staff.

                                                      3 Replies
                                                      1. re: svnirvana

                                                        You're many years late for "cash only for the Early Bird Special"
                                                        Starting about 15 years ago when visiting my folks in Palm Beach County, FL. It was very common to see 'early bird dinners' advertised in the local throway papers as being Cash Only/No Credit Cards. By 12 years ago, it was common to see restaurant advts. with coupns required for specials that were labelled 'Cash Only on Specials'
                                                        I was partners in a restaurant in St Augustine (But was passive) and we did not accept credit cards on 'off season' specials we advertised (2000-2005). Margins were slim, and restaurants in FL have to really do a year's business in 4 months, and barely cover costs the rest of the year. We were not alone in this, in fact the advertising manager of the local paper suggested this when selling ad space.

                                                        1. re: bagelman01

                                                          So, homeboy, did you mention this policy to your diners before or after dinner?

                                                          1. re: junescook

                                                            as it says, I was a passive partner, I didn't operate the restaurant (in fact I was usually 1200+ miles north. But the restriction was in the advertisement and on the specials menu handed to the patrons. It was so common, that locals (95% of off season business) expected this on Anastasia Island (St Augustine Beach).

                                                      2. I would not dine there a second time. I live my life with my credit cards, though to secret some cash, when on the road.

                                                        I have only encountered this at the United Club (was Red Carpet Club), at Dulles International, and resent it. I find that I tip below MY norm, just because of their individual policy, but such is life.


                                                        1 Reply
                                                        1. In a sandwich or pizza joint? Okay - don't like it, but I can accept it.

                                                          In a place upscale enough that you'd take clients there for a business dinner on expense account? Doesn't matter what their logic is -- they're wrong.

                                                          2 Replies
                                                            1. re: sunshine842


                                                              Good point about the "level" of the restaurant.

                                                              As one, who lives by his credit cards (but hides a bit of cash in the wallet, just in case), I usually am dining at a more "up-scale" place, though not always.

                                                              Now, and not totally OT, what I hate is hotel/resort catering departments, that only will sell wines for "cash only." We host tables at many, many events, and I want my guests to have better wines, than are usually provided. Too many resorts will ONLY do cash for those, so they expect me to have US $ 1,8000 to $ 3,000 on me. Not likely to happen, so they just do not sell better wines, and if I am on the board for that event, next year, it will NOT be there. Again, I live by my credit cards.


                                                            2. I've never run into this, and it could cause a problem as I often have very little cash. There are a number of restaurants near me that are cash only, but this is known going in. I have never encountered a restaurant without the tip line on the CC receipt.

                                                              7 Replies
                                                              1. re: CanadaGirl

                                                                We nearly always leave a tip in cash; my son worked at a winery restaurant in the Finger Lakes, and if the cheap shits didn't want to give him his tips, they wouldn't. So, we just line out the tip line on the credit card bill, and pay the total. Then we leave ca$h for the server.

                                                                1. re: The 1st and only KSyrahSyrah

                                                                  There have been some multi-million$ lawsuit settlements about this very thing. Too bad your son didn't assert his rights!

                                                                  1. re: The 1st and only KSyrahSyrah

                                                                    Right, but you were given the option, which the OP was not. I will sometime leave the tip in cash, but unless the bill is low I rarely have the cash. I've simply never carried much cash. By the time I got my first job, using debit was pretty universal here in Canada. I remember going on vacation to the US in university and being shocked that I couldn't use my bank card to pay for something at the grocery store. Cash is just not my MO. :)

                                                                    1. re: CanadaGirl

                                                                      Yup! No option to leave a tip on my credit card. At two Manhattan neighborhood places last weekend there was a note on the "thingie" (what are those called?) that the bill came in: "cash gratuities preferred" but the charge slip still had a line for "Tip".
                                                                      I am generous with a tip if the service is decent. I could see that the "policy" made the server uncomfortable. Obviously not her decision to make or change.
                                                                      We still go there but not for a business lunch or dinner.

                                                                        1. re: coll

                                                                          What don't you know??? Thanks, coll!!

                                                                          1. re: Motosport

                                                                            Colls the name, restaurant supplies my game!

                                                                2. not forewarned,is bad business
                                                                  any policy slipped in at the last minute or too late for changes is a bit greasy,ERGO BAD BUSINESS

                                                                  However regarding the cash tip there are a few new wrinkles in the market place,and yes I am F&B trade.

                                                                  Some restaurants the servers,floor staff etc are not getting their tips until after the $ is back to the house AND DEDUCTING the entire credit card transaction fee from the tip.So not only are they waiting,many are also victims of accounting errors in favor of the house.What I personally and professionally think of this IS NOT FIT TO PRINT ON CHOW.
                                                                  This is just pervasive enough in the DC area to be included in the local TV network news recently.

                                                                  I only recently started my homework,investigation into this(60days) locally and the results don't please me.Displeasing enough that I won't be renewing or continuing business with more than one client.Scale of the store doesn't seem to matter.My two clients are high end $$$,white tablecloth,with very deep beverage programs WELL ESTABLISHED,SOLID restaurants that have good,stable well trained staff.

                                                                  My husband and I are both in business.We are credit card folks in spades.The fuel bill alone for his business is over $1,000.00 daily.
                                                                  He carries cash,I on the other hand don't carry enough to satisfy a mugger.

                                                                  At the very least your experience would have been frustrating or awkward for me.