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Operations

How to succeed with a service charge

Initial implementation is key

Because the model is unfamiliar to guests and employees, the introduction has to be pitch perfect, says Stephen Zolezzi, CEO of the Food & Beverage Association of San Diego, where a number of restaurants have taken the plunge. He recommends three steps:

  1. Meet with front-of-house staff to explain the change.
  2. Add an explanation on the menu so guests know about the change and why it’s being made.
  3. Reconfigure guest receipts to include a line for a clearly identified Administrative Surcharge, along with a terse explanation.

Clarity without over-explaining

Regulators in San Diego initially threatened to hit local restaurants with fines or other legal actions for not providing enough information about service charges and where the proceeds were going.  Zolezzi says that friction point has been eliminated, “to the point that the information is being put on every page of the menu.”

Too much information can be just as dangerous, he suggests. “There have been some indications from attorneys that so much information can be used [in a lawsuit] to allege something different was being said” and customers were being misled, he explains.

“Keep it simple.”

Turn servers into program experts

Guests will likely base their opinions of a service charge on how servers assess the setup. For that reason, says Zolezzi, it’s essential to have “a real education program for employees so they can impart that information back to their customers.”

Take a long-term view

On slow days, it’s tough,” says Hinoki & the Bird GM Annette Yang. “The back-of-house wages have gone way up. Front-of-house wages have gone way up.” They still have to be paid for their hours, but less money is generated by the service charge.

“The idea is, it evens out,” she continues. “It’s not looking at it shift by shift. You have to wait a moment, to look at it on a weekly or a monthly basis.”

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