Manager Comps should be used for three very distinct purposes, and accounted for accordingly. There are Marketing Comps, Service Comps, and Product Comps.
Marketing Comps are used to treat a customer to food and/or drinks for the purpose of public relations or business-related activities. They should be part of your formal marketing plan and included in the budget, with guidelines placed on them to clarify total dollar amount allowed, who is eligible receive them (not friends and relatives), etc. I recommend having a targeted strategy for inviting individuals to dine at your restaurant to coincide with a press release, a new menu item introduction, a civic activity or any other newsworthy event. It doesn't hurt if your banker thinks you serve fantastic food, too!
Service Comps are used to compensate a customer for poor service or unacceptable food product. Traditionally (and normally) this type of comp is only made by managers. But it's our philosophy that all managers and servers should have the authority to "make it right" for a customer without hesitation. To hamstring an employee by not allowing them to make this decision on the spot is dangerous and almost always results in adding insult to injury. Just last week we experienced a combination of incredibly poor service and a slammed kitchen that produced grossly unacceptable food. When our server was unable to "help" us, we were forced to go up to the bar to plead our case with the MOD over what should be comped!
You might think that this would be abused by servers giving away food to friends, etc., but this rarely happens because the server would be pointing the finger at their own bad service, and unacceptable food is too easy to verify. As a safeguard, however, I recommend reviewing Service Comps at weekly management meetings to ensure that there isn't a problem that deserves your attention.
Product Comps are used to account for raw food product taken from the inventory by owners and their families, and not eaten on premises. We recommend that these items be written on the Employee Meal sheet to let "accounting" know to deduct the items from inventory.
It's important to keep these three types of Manager Comps distinct to help keep your accounting straight and keep your benefits and marketing costs in line. They make a great way to track returns and service quality, too.
For details on handling the accounting details and the employee benefits side of this often misunderstood aspect of Restaurant Business 101, check out the "Related Trade Secrets" listed to the left.