The Caterers Corner
"Service Charge" Caterers Corner: "Service Charge"
By Cindy on Saturday, September 08, 2001 - 02:50 pm: Edit

Hi! I have a question about service charges. I have noticed a lot of other caterers automatically adding a 15-22% "service charge" to their fee. (1) Do you charge this fee? (2) What is it for? (3) How do you explain/describe it to you potential clients?
Just curious.

By Chefmanny (Chefmanny) on Saturday, September 08, 2001 - 03:02 pm: Edit

That's usually a charge to further fill the caterers pocket and used as a lame excuse to screw the servers out of a proper tip. It is usually used to pay the labor for the function. I think it's BS, if you know your costs you should work them into the price you chartge the customer.
Don't screw the customer in the name of "TIP" for the staff. It sucks!!!!

By sam on Saturday, September 08, 2001 - 06:52 pm: Edit

I personally don't charge a %age, we charge a flat labor/staffing charge based on the event, complexity, style of service, china/disposables, ect....ect...I explain that it is just like getting your car worked on "parts & labor".....if the client wants to set up/knock down, then they don't get charged for that, or if they want us to set chairs for the ceremony, $1.00/chair, or extra servers, ect, is all relative......caterers like any other business, has the right to profit from their staffs time...I pay my staff a good wage, and if a client "tips" above & beyond my bill, then that amount gets divided by all who worked on site at that particular event, from an owner to the dishman..set up/knock down crew, servers, bartenders, stewards, captains.ect.....hope this helps.....and I don't see this as screwing the service staff out of a tip, tips are generally for those who are making less than minimum wage,and I assure you mine make much more.....sam sears, cec

By Peachcreek (Peachcreek) on Saturday, September 08, 2001 - 07:54 pm: Edit

I charge for everything that the client wants us to do. I don't, however have any nebulous "service or misc." charges. Everything on the bill is itemized, as per our pre-event agreement. Usually any changes to the agreement are from the client- changes in number of guests being #1. I add a gratuity to the bill and itemize it so.
To me a "service charge" like you are talking about is almost a bait-and-switch type thing. The caterer can underbid the competition on per-plate price, then add enough "service charges" to end up costing as much or more.

By Chefmanny (Chefmanny) on Saturday, September 08, 2001 - 08:04 pm: Edit

Why not work all those charges into the price per person for the event and call it the "price per person" for this event? It's like banks now charging you for writing checks, talking to humans, making deposits in some cases...etc.
When the event planner sits down to work out the details, all those relevant questions about chairs, china and everything else should be resolved and the customer should get a quote.
When I give a quote I always get that question, no service charge?, I say no service charge! This is your cost for labor for a set number of hours after that they have a fixed $$$ amount per hour, this is your cost for food, this is your cost for set up and break down...period. The only extra is the tax and gratuity which is at their discretion.
I do collect all my $$$ before starting the event, 50% deposit and 50% cash or cashier check the day of the event or before, if they don't have it I don't unpack.
Does anyone make less then minimum wage in catering anymore? In the past 15 years? Where? Anyone making minimum wage out there is getting paid with the service charge!!!!!!and getting screwed!!!
In my opinion tips are for servers, they have to deal with the customers and make them happy; why should the $15-18 cook who was done 3 hours before the servers were get an even cut of the tip. I know, the cook started earlier, so what cooks get paid by the hour, a descent wage. The server has to set up, serve, break down (not tables and chairs now) just S & P shakers, sugars, silver, flatware, decorations...etc. I'd be pretty ticked if the cook and the setup guy (tables, chairs) got the same tip I did if I was a server!
I think the tip issue is also something getting out of hand, who should get tipped? Now you see a tip jar everywhere, Starbucks, Dunkin Donuts, Delis....I think we should tip the people that deserve it, like cops, teachers, garbagemen, those people deserve tips not an excuse for a coffee maker at Starbucks, they are already scrrewing you with the 2 ozs. of product in the 22 oz. cup.!!!
Sorry for the rant Sam!!!!!!!
Manny J. Delgado, CCE ,CEC, CFE

By Chefmanny (Chefmanny) on Saturday, September 08, 2001 - 08:06 pm: Edit

Excellently put Peachcreek!!! Thank You.

By cindyscatering on Sunday, September 09, 2001 - 12:00 am: Edit

Thanks for the input. I also itemize food, services, serviceware, linens, etc. with my clients when pricing an event. The problem being that mostof my competitors charge as much as 22% service charge...Joe Public, doesn't seem to get that they are going to pay more in the long run. I also list on my menu that gratuity is at the discretion of the client. We have only been in business for a few years and are doing well. My quandry is that due to the amount of business we have, we are now in a position to raise our prices and I wasn't sure whether to raise prices per item or start tacking on a service charge like everyone seems to do in my area. I prefer being able to give my clients a specific fee. I think charging a service charge would make me uncomfortable. Like selling something you don't believe in.
Thanks again,

By cindyscatering on Sunday, September 09, 2001 - 12:04 am: Edit

Thanks for the input. I also itemize food, services, serviceware, linens, etc. with my clients when pricing an event. The problem being that mostof my competitors charge as much as 22% service charge...Joe Public, doesn't seem to get that they are going to pay more in the long run. I also list on my menu that gratuity is at the discretion of the client. We have only been in business for a few years and are doing well. My quandry is that due to the amount of business we have, we are now in a position to raise our prices and I wasn't sure whether to raise prices per item or start tacking on a service charge like everyone seems to do in my area. I prefer being able to give my clients a specific fee. I think charging a service charge would make me uncomfortable. Like selling something you don't believe in.
Thanks again,

By sam on Sunday, September 09, 2001 - 03:57 am: Edit

well manny, my operation works a little different, in that MOST of my employees make within two - four dollars/hour of each other ($11 - $15) and are trained front & back of house, and when a discretionary tip is given by a client the mere fact that it is divided evenly between all staff, including supervisory & owners (who worked that function), then no one can claim preferential treatment, and I don't understand your position that the server has more invested since he/she dealt with the guests, the bulk of my back of house staff deals w/ guests during buffet work, station work, ect...and the kitchen staff who has put a lot of effort, imagination & pride into their food, display work & menu developement would feel slighted in my operation if the service staff got to divide up a 1500.00 tip between 20 -25 servers....and yes I have been a server before in my life, so I understand the unique challenges they face, but when I was a hotel chef, I use to lament, that when the poor front of the house staff was run ragged, well the back is busy too - one area can't be busy - by its nature-unless the other is busy, it rolls down hill.....and another thing,,,my staff all of them, stays til its over, after coffee/dessert service, some of the service staff will fall back, help load out, stack dishes, wash is a community effort.. (but now we do have a set up/ tear down crew)..and my point about sub-minimum wages, was not directed toward the catering industry..but to restaurant servers......just my thoughts...............Sam Sears, cec cfbe cpce ccp fmp (LOL)

By Chefmanny (Chefmanny) on Sunday, September 09, 2001 - 08:38 am: Edit

Sam, that's a pretty close salary range between skilled cooks and set up crews, I don't understand why you would keep all the kitchen staff throughout the whole event though, it has been my experience that they rescent it at times , since there may not be any actual kitchen work the last 2-3 hours of a party at times(dancing & mingling), yes some may enjoy the $$$ but, you could be saving that $$$ also. Another thing I don't do is bring the whole staff in at a specific time, for example all cooks (working stations) in at the same time, they are usually standing around for the first couple of hours anyway waiting for things to get set up and guests to actually arrive. I stagger the starting time depending on the menu and complexity. I also use a set up and breeak down crew, the kitchen and serving staff appreciate that they don't have to lug tables and chairs around after putting in a long day.
I disagree with mgmt. and ownership getting a cut of the tip completely!!! While I agree that the kitchen is busy before hand during events, the kitchen staff has always been paid substantially more then servers in hotel/restaurants, in catering the scale is much closer, we pay servers $10-15 depending on the function while the hotel/restaurant server will get the $2.50 per hour or whatever it is now. The catering cook we'll pay $20 with a 5 hour minimum, in a hotel/rest. they might get $10-13 in this area.
I strongly believe the service staff should get the tip, set up crew could also fall into the equation but not an equal cut, maybe 20% of the total tip! It's the server who has to put up with surly customers, drunks, verbally abusive, demanding,....etc. I have never been a defender of service personnel but, in this instance I have to give them their due, I did work as a server a long time ago (high school) and I can say from that one experience that it is a tough job, I could not do it for long! I had the kitchen personality!!! I respect what they do and realize that if they don't make the kitchen look good, they can have a drastic affect in your business.

By Panini (Panini) on Sunday, September 09, 2001 - 08:56 am: Edit

I understand all of what's being said. The one problem I have is with Chef Sam's" business has the right to profit from their staffs time".
I think this is where the problem lies. Like Manny says, build it in, if you have to. You should be profitting from the event.
Just like any other business, cogs, labor etc. You servicing the customer standing over the range the same as the servers are taking care of customers. They are both skilled in what they do.
You don't tip the desk person at the car dealership becaused they greeted you and got you a cup of coffee or made transportation arrangements.
Labor is labor, Tipping a server because the management does'nt pay them is rediculous to begin with.
Should I charge a service charge for wrapping pastries, boxing cakes, carrying things to the car,plating a muffin and bringing it to the table,
serving coffee. I don't think so.
Just my 2 cent rant.

By catergreat on Monday, September 10, 2001 - 02:30 am: Edit

Profit can and should be everywhere it can be. This is a tough business with a high failure rate... If you are fortunate to make it, should you not be compensated as well as other professionals? I think so!!

I charge a 15% Service charge.. it is not a gratuity, but rather an industry accepted practice that I use to offset the cost of service staff(I dont charge a service charge for pick up or drop offs).. I don't itemize insurance, fees, overhead etc...

HOWEVER, at first I was pissed at Manny's response, but as I read more and gave it thought, I think he makes a great argument... I think the customer is screwed... I think that the restaurant should pay servers as do I, a fair and accepted wage and no tips, just as I do other workers.... Tipping is a bogus practice...

As far as service charges %, I am going to seriously reconsider the practice and adjust my prices accordingly.... I like separate service labor charges because I can itemize it when I have servers and not charge it when the event doesnt require them...

It is perfectly acceptable to charge the client 25.00 per hour for a server while paying the server 15.00. CPA's, attorneys all bill that way...... It is ok to profit from the service labor charges and any other service/product you sell....

THanks guys and gals.... Nice points made and I am listening to you and making changes... Please clarify about profiting from staff's time, Panini... I don't see the problem with that..


By Chefmanny (Chefmanny) on Monday, September 10, 2001 - 06:00 am: Edit

I don't think tipping is a bogus practice in general but, I really think we as a business should give that option back to the customer. When you have an automatic charge to any check, rest. or catering, it is a sign for the waiter NOT to give good service because he/she has made their $$$ already, why try harder! Also, the slackers will slack even more and the hard workers will work even harder picking up the slack for the slackers. I do believe restaurants should pay a fair wage to servers but, that's a dream!
I agree Carl, you can and should charge more for the labor then you actually pay the laborer, I do the same. I make ten $ per hour on any labor quote (for the house)
Everyone is instituting these service charges though, even the car dealer I take my car to for common maintenance charges me "shop charges" (6%-$25 max.)for misc. items used in the shop!!!
It makes me scream!!!

By catergreat on Monday, September 10, 2001 - 02:17 pm: Edit

To clarify, I pay my servers an hourly wage which is acceptable to them... The occasional tip they receive from a client is gravy....

I am guilty of charging the 15% service charge because it is an industry practice.... I would much rather itemize the labor and eliminate the percent charge... WHy should I make less "serving" spaghetti than beef tenderloin? Percentages do that, while hourly catering labor assures a fair return...

Hopefully someone here will shed light on how they have done this...


By Panini (Panini) on Monday, September 10, 2001 - 08:35 pm: Edit

well I think you just answered your ? to me.
a charge for nothing being done. I have no problem with charging for everything!!and I do, but I don't agree charging a fee that you cannot itemize.
no big deal, I'm just a baker.
The big trend here is to automatically add the tip to your check, no matter how many guests and monies spent. I went to a new chop house last weekend, no I don't do this often!! but 4 people, some wine. They put 18% right on the chit. I refused to pay it. My wife was quick and escorted our guests to the car because she knew what was comming. 10 minutes later I was in the chefs office demanding the waiters address so I could bring him his 99.00 tip in person at his house.
Well I can't go there again! Who cares. I threw the front waiter a c-note and told him if I was not forced he would have done much better.
I'm getting so tired of this industry crying the blues and ripping off the customers, by the way, the ceasar(not made at the table) had sysco dressing and the dessert sucked.

By sam on Monday, September 10, 2001 - 08:50 pm: Edit

just as panini says itemize....that is what we do, as carl stated a labor/staffin charge based on the labor/staffing that each particular event requires, so those clients who want to lower their own bill can set up/tear down, arrange for the subs, hire their own bartenders & provide their own liquor, but the %age method, more often that not, screws the house,,,,based on my method, much more than 20-25% of my yearly food revenue is padded w/ labor/staffing charges, and I believe it is a much more honest way to deal with each client, I say to them "we'll do as much OR as little as your event requires"...and they pay for the labor that their arrangements dicate......sam sears,cec

By catergreat on Monday, September 10, 2001 - 11:32 pm: Edit

So you are not charging a service charge, Sam? For clarity, how does the %age method screw the house?

I also dont understand what you mean that more than 20-25% of your yearly food revenue is padded ....etc...????

Thanks Sam.


By cindyscatering on Monday, September 10, 2001 - 11:39 pm: Edit

I currently charge a fee for servers, bartenders, carvers, etc. I also give the client the option of providing their own in order to save $$$. The problem I have with that is for example, if I am catering a wedding and the client wants to have a friend serve the cake instead of paying a server, it ultimately ends up being a headache and just as much work for us. Same with bartenders, etc. I like to give people the option because I really try to help stay within their budget. But I lose money when I have to have someone take up the slack of unskilled labor. Does anyone else have this problem and if so, how do you handle it?

I have decided against charging a service charge and will simply be raising my prices per item and service. I think if you charge gratuity it is by definition no longer gratuity, it is then a fee.
Although I do wish I had a better way of getting the point across that my staff really appreciates gratuity and works very hard for the client. It really makes me angry when a client doesn't tip or tips poorly. I pay my staff very well, so they are not dependent on tips, but it makes everyone feel more appreciated.

I would love to have just one client say
"Money is no object"
"The menu? Oh, whatever you think is appropriate"
"Don't forget to add 25% to the bill for you and your staff".


By Fodigger (Fodigger) on Tuesday, September 11, 2001 - 05:02 am: Edit

I do charge a "service charge" but don't separtly bill out labor. I have found that it breaks out about even. At least for me anyway. It covers my setup, cleanup and service. I pay my staff $11.00 p/h no matter the job as they are cross trained and might be doing any job based on my needs.
I did recently charge labor for a wedding she was Cindys dream customer. She wanted 1 bartender for every 50 guest, 1 server for every 16 guests, 2 cordinaters and 8 additional "helpers" to pull plates and the likes(the party was for 200 people) she gave me a list of her likes and dislikes and said make me a menu from this. It was fun and profitable and we booked 2 additional parties because of it.

By Fodigger (Fodigger) on Tuesday, September 11, 2001 - 05:09 am: Edit

unfortunately the word is spelled separately. I guess I can't spell at 2am. LOL.
As a restaurant person I also tip better than 18%,more along the lines of 20-25 min. It's a shame to see more restaurants going to adding the tip. Some of my worst service came in restaurant that have that policy.

By Chefmanny (Chefmanny) on Tuesday, September 11, 2001 - 06:19 am: Edit

Let's charge for what we provide and eliminate service charge, I'm with Pan if a restaurant adds 18% to my check I tell the waitron, I would have done better but, usually it's like fodigger says, you get the worst service at these auto. add on service charge establishments. You find most of these at tourist trap areas, like South Beach, Cocunut Grove, Ft. Lauderdale Beach...etc.
The house always profits on the service charge, how can they lose? (Catering..not rests.) Especially if it's use to pay the staff, how dare anyone say that's a loss!!!
If you charge XX dollars for 4 hours, then you say it will be XXX dollars for additional hours, even if it's only a fraction of the hour. When we work on this charter boat that's very important because on the weekends we do a cruise from say, 12-4PM and we'll have to turn it for another charter from 6-10PM, for an extra hour on the boat we charge like $1500 for crew and boat only, there can be no extra food, bar is $13 PP extra for the hour, this usually dicourages this extra hour add on but, weddings go slow and the time goes fast. For the later cruise we are glad to seel the extra hour and actually change the boat and crew charge to $1200.
It's a screwing but not a loss to the house!

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