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May 6, 2013 10:24 AM

Service fee on group of 50 in private dining room

The bill stated a charge for the food and a separate service fee of 21%. The guy (not sure if he was a manager or not) that presented the bill stated that the service fee went to pay for the staff and that no gratuity was included. I've never heard of food being priced without including the cost of the labor to prepare and serve. What's going on here?

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  1. Caterers often charge a service fee and then tack on a mandatory gratuity, when catering things like weddings, I found this out when I was shopping for caterers and wedding stuff many years ago. I find it appalling, but there isn't much you can do about it.

    1. As a former event planner and fundraiser, the 21% service fee was always added on at hotels and other similar venues. That said, I've never heard of a private restaurant adding this. Usually, I've encountered an automatic tip of 18% or more for large parties. They should have brought this to your attention when reserving and planning your get together.

      3 Replies
      1. re: TXMandy

        A relative did the planning and I'm confident they did disclose the service fee in advance, but I also think there was a presumption that WAS the gratuity.

        1. re: PappyAustin

          That makes sense, I probably would have assumed the same thing.

          1. re: PappyAustin

            that presumption is not the fault of the venue/caterer.
            this is a normal fee for every banquet event.
            it would be entirely reasonable for the venue/caterer to expect that you would know this.

        2. that's how it was done the last time i had a catered event.
          the catering manager alerted me ahead of time (he included the fee in his quote) so that i wouldn't be caught flat-footed.

          i have no problem what they name the various portions of the quote. (they could call it the "flying pig" fee if that pleases them.)
          i just need to be able to calculate my "out-the-door" number including tip. normally i also slip the servers some cash in addition to the charge that goes on the bill.

          1. Are you aware of the standard distinction between a service charge and a gratuity? In most states, a restaurant can do anything it wants with a service charge that is displayed on a catering contract or a menu (New York may be an exception), including distributing it to the employees as a bonus. And if it's a mandatory charge, the state will likely insist that sales tax will be collected on top of it. That still doesn't exempt a restaurant from paying its employees the legal minimum wage (state or federal, whichever is higher). If the restaurant did indeed pass on the service charge to the wait staff, it could very well be considered the equivalent of a normal tip and at 21 percent, not terrible.

            A gratuity, on the other hand, is widely regarded as a gift from the patron to the servers, not subject to sales tax, and the restaurant has no right to interfere other than stipulating how it should be divided among the wait staff.

            So if you pay a 21 percent service charge that all goes to the wait staff on top of their regular pay, any additional gratuity is essentially additional gravy for the wait staff (which may well be well deserved).

            3 Replies
            1. re: nocharge

              the catering managers i've dealt with here in california have told me that the service charge does NOT necessarily go to the servers.
              this is why i like putting green money cash into the hands of servers, especially servers at a banquet function.

              1. re: westsidegal

                Yes, I believe that there is no requirement in California that any money of the service charge whatsoever goes to the employees. The restaurant could conceivably keep it all. That, I believe, is consistent with standard labor law practices. (On the other hand, a restaurant that keeps the service charge could have a serious problem with employee retention unless it gives out very generous base salaries.) The famous New York case is, from my understanding, based on consumer fraud law, not labor law. Would consumers be led to believe that the "service charge" would go to the servers?


                But going back to the original issue, if the manager told the truth about all of the service charge going to the servers on top of their regular base salary (and California doesn't have a tip credit), any additional gratuity would essentially be an additional tip for a job well done.

                1. re: nocharge

                  i have no problem leaving additional gratuities for banquet servers.

                  imho banquet serving is inherently difficult.

                  right at the time when the food is ready and all the guests need to be served it is not rare for PITA guests to surface: ones that want their own special meal (a meal that a normal banquet kitchen is not prepared to make) .

                  often, it is the server who ends up bearing the brunt of this situation.

            2. I work mainly in the field of functions/banqueting, and here is Australia, at least, a "service fee" is normally built into the per head cost.
              Tipping is rare over here, because we have a high hourly rate for our employees and its not culturally ingrained to tip.

              Any charge related to labour costs does not go to the staff, but is included to offset their wage.
              This is also reflected in charges such as room hire, corkage, theming etc. All of these charges go into general revenue which are realistically used to offset our high labour costs.