Mandatory? Gratuity

Discussion in 'Professional Catering' started by joan, Apr 8, 2002.

  1. joan

    joan

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    Hi there,

    My company policy has always been "Gratuity is based on your descretion", where as a lot of my fellow caterers have a mandatory 18% in the contract.

    My people work VERY hard, as I am sure most others do as well, my recent caters have found me with a great deal of "Budget " minded clients.
    Just recently I did a Wedding $14.00 per person, Pasta's Hor'd, beverages, cake cutting, the clients including the parents on both sides hugged me and said I exceeded their expectations, however no tip, how do I gracefully tackle the gratuity issue?

    I bill 1/2 thirty days before the event with the balance due the week of the event (I don't like tracking down clients during the event for payment) I was thinking since they are pre-paying the tip issue may be slipping their mind?

    Thanks for any input.
    Joan
     
  2. the saucy cajun

    the saucy cajun

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    Boy Joan, did you read my mind! I've got exactly the same problem. When bidding a job, I stress to the client that the only additional charge that will be added automatically is tax. I point out that other caterers in the area will be adding 15-18% grat as well as the possibility of other charges (uncorking, rental on chafers, etc.-I really don't like the idea of all these charges that are at the end on the menu in print too tiny to read.) They seem to either tell me the other caterer is $1 pp cheaper (which they're obviously not after the 15-18% is added) or they seem to understand and then don't tip! They act as if I've basically told them not to. But same as you, the feedback is fabulous - but all words & no cash! I did a Student Council banquet at LSU where I was hired by the President who works part time as a waiter at a local restaurant. He had put himself threw school on his tips. (I have a friend who works there - they adverage $35 a hour!) The tip on that one - you guessed it - zip! The only client I've have who always tips is from California. (I'm in Louisiana) I'm thinking of either adding that 15% like everybody eles or moving to California!!!! Maybe we're just too nice?
    The Saucy Cajun
    p.s. I do a lot of weddings too. Maybe after paying top dollar on the gown, the flowers, etc., they feel like they're finally getting a break. Maybe they're looking at what the whole wedding is costing by the "week of" and freaking out!:eek:
     
  3. fodigger

    fodigger

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    Our contracts state quite clearly that they will be charged a 18% service charge. We don't charge for rentals(we don't need them), cake cutting our any other misc. charges. We do get 50% one month out w/ final due 1 week prior using their number of people. final count due 3 days prior w/ any adjustments made the day of the function. To cover any cost such as liqour consumed at the event we have a credit card # and a signed wavier giving us the right to charge any outstanding expenses.
    Btw, at 18% we are one of the cheapest as t5he going rate seems to be 20% at least in my area.
     
  4. chefteldanielle

    chefteldanielle

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    Ditto,
    I charge a 18% service charge which is standard..
    Especially when iam using servers..
    Danielle
     
  5. w.debord

    w.debord

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    The way I understand it is the 18% is not really gratutity even though that's how it's billed. That charge is the money used by the cater to pay staff, not to tip staff. Unless someone tells me otherwise, I've never seen it passed on to the staff as a tip over their rates.

    There's a piece of your profit right there. Leave it on the table or take it like everyone else. Or change the industry.
     
  6. phatch

    phatch Moderator Staff Member

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    Gratuity is based on the word gratitude. If you include it, you're telling the client how grateful you require them to be.

    Either raise your rates, include the required gratitude, or stop griping. The gratuity should be the grateful customer's option. When I've hired, I've always included it.

    If you get repeat business from them again, raise your rates to compensate for their ingratitude and let them tip you if they feel like it.

    Phil
     
  7. the saucy cajun

    the saucy cajun

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    I did raise my rates somewhat (not 18%) to help cover the lack of grat. However, that's what I meant when I said then they tell me, well this caterer is $X cheaper per person - conveniently forgeting that the other caterer's quote will have a percentage added.(But this is assuming that they have been told.) It's almost like the majority just want the base bid to be low, but don't really care what the bottom line is. You know, like the women who drives 30 miles to save 10 cents a lb. on a chicken! Most of my clients are women, whose husband pay the bill. Hum.....Maybe they are conveniently forgetting to tell him about the "add ons" (if they know)so they can talk him into the party or whatever.
    I began with grat optional because a friend of mine had a catering biz with a name very like another one here in town. He did not automatically add grat. The other caterer did. He constantly received irate phone calls (at least 3 a month) from the other caterers clients after they had reviewed their bill. Obviously, this other caterer was not making it clear what the final bill was going to be. But it obviously is not working "grat optional". It's not working by upping my prices, 'cause then they think I'm more expensive. But I'm afraid that if I add the grat and explain it up front they'll think I'm more expensive UNLESS I explain that 18% is hidden on the back page of the other caterers proposal. I think a big part of both Joan & my problem is that we do a lot of weddings. Therefore, we deal with people that have never hired a caterer before - and may never again. I guess we're going to have to do a "Public awareness" program.I just feel bad exposing other companies bad business practices.But then, the consumer would benefit.
    The Saucy Cajun
     
  8. phatch

    phatch Moderator Staff Member

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    On a related note, ADP. You'll see this on many car price stickers. It means "Additional Dealer Profit". It's really just a bigger buffer with the client.

    In rereading my earlier post, I was a bit harsh. I am not a cook for hire. I have had friends ask me to cater parties and such. I have always told them I'm too expensive as I would charge my base consulting rate for time plus materials. I am a computer consultant by trade.

    When I got married, my caterer included a tip of about 12%, but it was a relatively small party. I tipped him extra 'cause it was outstanding.

    If I were to negotiate business with a caterer who included the gratuity, I would likely respond with, "I'll agree to 5% up front, the rest at my discretion based on the quality and service." I don't know if they'd take it but I'd try it.

    Try raising your rates. It seems you're not getting what you feel you're worth now. Show that confidence to the client in your rates. That way tips really are cream and representative of your quality.

    Phil
     
  9. fodigger

    fodigger

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    It may be just symatics but that is why we call it a service charge and not a gratuity. If they want to include a tip(gratuity) some have, that is great. But as DeBord said it's a nice piece of profit.
     
  10. joan

    joan

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    Hello everyone and thank you for your replies they are appreciated!
    The main reason I had not included the tip is I also believe it should be based on gratitude.
    I also believe that with weddings with so many other inherent costs food does become almost an afterthought and therefore I believe the tip is at times (for economic reasons) conveniently forgotten.
    However, when everything is said and done, I believe all my colleagues in this area charge the "gratuity" or "service charge" so I guess I can fall back on the industry standard option.
    One of the draws for on-call catering help is the lure of the "TIP", I don't want to narrow my options for good help by being the only caterer that does not include this perk.
    Again thank you all for your insight!

    Joan
    :)
     
  11. w.debord

    w.debord

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    I honestly think most pricing issues have to be evaluated with what's happening over all in your market. If everyone is charging it, then you should too. No you don't want to be dis-honest and have hide these fees. I think if your up-front and tell them and additionally you explain (educate) them that everyone caterer does too then at least your helping them compare the real costs. Then of course once they get past the money, your sale is your the best quality in that price range, right.

    As far as help, do the same thing. Find out what other caterers are really paying them for exactly what work (hours, set-up and break-down work some do and some don't require it.).There's temp. waitress services in my area, maybe there are in yours. Our help always complained about money and how hard the work was but when we checked... we were paying top dollar. Some people who don't work for other caterers might be mislead that theres more money on the other side of the fence....also some people don't realize this is harder then waiting tables in a restaurant...too bad.

    Weddings are hard on the buyers too, their new to all of it and every where they turn there's a fee for the smallest dumbest things. Who would believe someone would charge you to cut the cake? Or that the party consultant doesn't stay for the whole party?....

    I say just do your best to help simplify even if it means changing how you price so that at least the clients can really do a side by side comparision.
     
  12. kuan

    kuan Moderator Staff Member

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    In most hotels...

    The 18% is to pay the servers, chef, sous, banquet captain, sales, FNB director, etc. You can get away with tacking on less if you don't have a chef who is taking 1.25%, or FNB director who gets 1.5%. After everyone gets their cut, the rest is split between the servers depending on how many hours they worked during that pay period. And THAT, is the real reason why 18% is added to the bill :)

    Kuan
     
  13. beckynyc

    beckynyc

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    I am getting ready to do my first ever job. It's a strictly hors d'ouvres party for 45 and I'm planning to do it alone. I had heard about the standard 15% gratuity or service charge and mentioned it to the client in an email exchange. When we eventually spoke, she said that she had checked around with other caterers and that such a charge was not at all standard. I was pretty dumfounded. (Never mind that she's getting a great deal.) Whether or not she's right, I don't know. I was certainly under the impression that it was standard. So do I just call it a wash and chalk it up to a learning experience?
     
  14. w.debord

    w.debord

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    As to if "it's standard" I think it depends upon: where you are located (big town/little town), and the size of the catering company. If she' talking to small caterers maybe even working from their homes...well they don't have service charges and alot of other things that established caterers do.

    You have to KNOW your market. You can't sell your product with-out knowing what your competitors are doing. Sounds like you need to make some phone calls. You'll never have to backtrack if you really know your business, know your competition.

    I think you were premature in asking for this for a couple reasons. First, as the owner of a company you won't be tipped so that was a mistake. Next it's a buffer to cover your labor and as an owner you have no labor.

    Bigger companies have all kinds of policies. I was just talking to a freind that owns a big caterering biz this morning and he has a $15,000. min order for parties on Sat. and then a $6,000. on Fridays and Sundays. On weekdays he'll take any size. He can set limits because he has the reputation and gets it. Anything else he'll drop off the food and send some rent a staff people. Not too many caterers can command those min.

    But when your small you take anything that keeps your doors open. Yep, that's a learning experince....1 down, tons more to learn...you have to start somewhere somehow. Good Luck
     
  15. beckynyc

    beckynyc

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    Thanks for the tips. I sure do have a lot to learn. A follow up question:

    According to your explanation, or what I understand of it, if I hire one person to assist me, I get to add on the 15% service charge, but if it's just me then I don't. (This assumes, as you said, that service charges are standard where I'm working--which is in NYC). In this particular case, then, this one person would be making $135 for about 5-6 hours of work--which seems like a lot in this case. So how do I account for the surcharge then?

    These are highly amateurish questions, I realize. I'm just trying to find my way around these murky waters...

    Thanks.
     
  16. w.debord

    w.debord

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    No that not amuteurish at all, and I'm sure someone will jump in with a different opinion then mine. It's all food for thought. It helps to have a place to come and bounce some questions around.

    Standard is that owners of any business are not tipped....ocasionally people do but usually they aren't.

    No one said you hand over the service charge straight to your employees. Only tips go straight to them (some places don't do that). I think each business has it's own reasons or ways they explain the service fee. To me gratuity means tip, service charge means a fee for providing a service. The service being: providing waitstaff and your costs and work involved in procuring and maintaining them (taxes, bookkeeping, organizing, etc...), or they could hire them themselves (good luck to that).

    Don't pay your help much more then the going rate. If you start at sky high wages you'll just need to pay them more and more. Treat them well, praise....not enourmous wages....it will one day get you.