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How to overcome short tips on parties with deposits

restaurant bill

Question:

Your column last week addresses the auto grat topic but doesn't discuss how to overcome short tips on parties for which there is a deposit. Most guests tip on the amount shown on the charge slip rather than the actual amount of the bill—I think it's an oversight on their part, but one that it seems indiscreet to challenge.  We require a $250 (sometimes larger) deposit for private parties, which is applied to the bill. If the guest tips on the net amount, the tip would be about $50 short.  The same is true for us on New Year's Eve. We require a 50 percent deposit, based on the prix-fixe menu price—a party of 6 with a $450 tab and a $50 deposit may only tip on the $225. How do you suggest we overcome this?

– Denise Leroux, Owner, Barrington Bistro, Barrington, IL

Answer:

As operators shift from automatic gratuities (auto grats) to suggested gratuities as part of a new IRS rule, the wrinkles and nuances associated with the change come up.

Yours is a good example.

Previously, you are saying, you would have assigned an auto grat to both the deposit and the remaining charges. So for a $1,000 private party with an advance deposit, the bill would have read:

Advance Deposit: $250 plus $50 (20 percent) automatic gratuity = $300
Remaining: $750 plus $150 (20 percent) automatic gratuity = $900
Total charge: $1,000 plus $200 (20 percent) automatic gratuity = $1,200

Now that you are no longer including gratuities automatically, the guest, who never sees or has long forgotten the advance deposit bill, isn’t tipping on it. When they are presented the $750 remainder, they tip only on that, leaving your servers short.

I have a few alternative suggestions that can help:

  1. Keep the deposit on file so that, if, for example, the guest cancels at the last minute you can run the card. Otherwise, have the guest settle the total bill at the time of the event.
  2. Rather than presenting just the POS charge slip for the remainder, present a full invoice that details the deposit, all additional charges, total, and includes a space for the desired gratuity on the entire party. That way the guest sees the bigger picture.

Finally, while it means more work for you and may have tax implications, you might consider continuing to use automatic gratuities (now considered service charges) for large parties and catering to simplify things for your guest, even if it means more behind-the-scenes work on payroll. The net result will be treating the service charges as wages from a payroll standpoint.

More on automatic gratuities here.

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