Completely f'd up business practice I just found out about

[dorkzilla]

I am opening up a restaurant in a couple of weeks, and today I met with the project leader who is writing and installing my point of sale software. My executive chef and I met with her and she asked a bunch of questions, all seemed standard, until we got to credit card processing. "Do you want to levy a commission on your servers to offset the credit card fees?". I stared at her in disbelief. "Hang on, do you mean taking some of the waitstaff's tips?" I asked, hoping I heard wrong. "Yes, lots of restaurant owners do it. It helps to offset the loss you'll take on credit card fees". I sat there speechless for a moment, and all I could say was "Are you FUCKING KIDDING? If I'm so hard up for every dime that I have to take money away from people who are working their butts off for ME, then I don't deserve to be in business! NO WAY am I even going to consider doing that".

My executive chef just smirked at me, and the young project manager lifted up her face to me and said "good for you".

I'm sick to my stomach at the thought that this is a regular thing.

[FarCenter]

1. Aren't you charged a percentage of the tab by the credit card network?

For example, if you have a $100 tab with an $18 tip and the credit card company charges you 3.5%, then you get $118 - $4.13 deposited to your account.

$3.50 is the charge for your $100 and $1.13 is for the tip. The server should get $18 - $1.13 = $16.87.

[dorkzilla]

2. Yes, you are charged, but the point is...

I'm NOT going to do that. If a customer thinks they're giving the server $18, then they'll damned well get $18. Why should the customer and my staff have to pay? If I have to charge $1 more per item to offset the cc fees, so be it, but this practice is just dishonest all the way round.

Its all about profit. I'm sure I'll be successful but I don't need to be greedy.

[athena]

8. Wow.

I had no idea that the server was getting a smaller tip because of credit-card fees.

Good for you for doing the right thing. Some people may treat you as if you're being naive, but in the long run, I believe honesty is the best policy. At the very least, there is a feeling of peace that the dishonest person, or the less-than-honest person, will never get to experience. And your servers will probably be more loyal to you.

[Historic NY]

91. I always try to make sure I and friends tip in cash...

even if I only do it. The servers definitely like that & our service is

[jtuck004]

103. AND it takes profits from the thieving credit card companies, which is always the polite thing to do

Good for you.

[dorkzilla]

117. *snort*

Yeah I kinda like that. Mastercard World HQ is nearby so shhhhhhhhhhh…..

[Maraya1969]

170. I just realized this. I'm going to tip in cash from now on too.

[barbtries]

181. that's what i do

and i only learned recently why. actually i do it also to keep the tip off the books for the waiter or the driver, when i get food delivered.

[dchill]

190. Me too.

It's the only way to make sure they get the money.

[xxqqqzme]

232. I do that as well.

My son was a server in an upscale restaurant and he told me about this a few years ago. I'll use the card for the food amount only, then tip in cash.

[Warpy]

93. I suspected it, which is why I tip in cash even if I pay by card

Servers work damned hard for the money. I want to make sure they get it.

[Leith]

98. So Do I

I was a waitress once. I know from experience that the restaurant does not always pass the tip from the credit card to the server. I have always tipped in cash and cash on the table only.

[SoCalDem]

113. We do that as well..

My best friend waitressed for years and she hates it when paying by credit card allowed people to "add the tip" .. She kept meticulous records and EVERY paycheck was "off" based on her records.. getting paid every two weeks was hard enough for her, but then having to fight for her tips and prove to accounting that she was owed them was a real ordeal.

[Maraya1969]

171. I think I might just ask some restaurant owners if that is their practice

Just to get the chance to say I think it is very unfair. Maybe I'll say it kind of loud. (after I eat. I'm not that dumb)

[hollysmom]

156. me too. Probably common for people who know people who waited. n/t

[Jackpine Radical]

197. I generally tip in cash for the reasons cited in this thread

plus the fact that it's my little way of making the withholding tax a little more "progressive." If somebody's base pay is not much over a couple bucks an hour and they're paying SS on every reported dime, it doesn't bother me a bit to subsidize them with a little cash they may forget to report.

I'm assuming that their total incomes are so low they end up not paying income tax, but if i'm wrong in a few cases, it just sweetens the pot.

[Doctor_J]

200. I always tip in cash

Some of my students who wait tables told me of this bizarre loophole. Getting $2.50 in wages, and then having your tips skimmed. Appalling is the best word to describe it

[TeamPooka]

10. I love you. Tell me where this place is and if I'm ever in your town Im eating there.

[dorkzilla]

20. Aw shucks...

Are you in the NYC area?

[Skraxx]

36. I am, and would support your business

[RedCappedBandit]

38. I am. I'd love to patronize your business.

[HappyMe]

46. We go to the city pretty regularly.

We will be happy to eat at your place.

[The_Commonist]

53. I'm in NYC also.

Send me a PM with the name of the restaurant, so I can keep an eye out for it.
Of course, I usually pay cash, and tip well!

Good luck!!!

[intersectionality]

54. Seriously!

Where is this awesome restaurant going to be? I'm in for sure if its in the city!

[dorkzilla]

60. Not in the City, its in Westchester!

But if you're or anyone is in that general area, PM me and I'll give you the name and address!

[TeamPooka]

92. I'm originally from Larchmont NY but I live in Los Angeles now.

I go home a couple times a year though.

[dorkzilla]

108. Team Pooka-sent you a pm

My step-dad started his business in Larchmont (East Ave) and now lives in Los Angeles (South Bay area). How long have you been in LA? I lasted 4 years…and came running back so I could have a "cuppah cawfee" and walk my "dawg".

[JackInGreen]

195. Next time the wife and I

are roadtripping from Northwestern New York down that way, we're stoppin in. No idea when though We live in Seattle.

[tabbycat31]

218. What part of Westchester

I grew up there (Pleasantville) and am planning on returning there for the holidays to see my parents.

[dorkzilla]

219. I used to live in Pleasantville. At one point, the town was lousy with my relatives!

I'm in White Plains, but we're not opening till 1/21. But next time, definitely come see me!!

[tabbycat31]

220. I will tell my friends

I have to be back in NC by 1/2 but I'll tell my friends and family in the area.

No idea when I'm making another trip up after that.

[FarCenter]

11. Everybody knows that when you use a credit card the business doesn't get the charged amount.

If you want to pay the business the whole amount, use cash.

If you use debit, the business is only charged a small fee.

Credit card discounts are high due to uncollectibles, better user fraud protection, etc. The business is taking a risk because credit cards charges are easier for the cardholder to reverse. The fee is high and split between your merchant acquirer, the credit card network, and the credit card issuer.

[athena]

15. Some of us didn't know that the fee is taken from the servers

who can ill afford to contribute a part of their earnings to line the pockets of the CEOs of credit-card companies.

If it were all about the risk, as you claim, credit-card companies would be less casual about offering credit cards to everybody and their dog.

[dorkzilla]

18. Exactly the point...

I am fully aware of the fees and that the business doesn't get the full amount. But taking a fee from the servers? Really? We have to go there?????

[AAO]

81. Just chalk it up to the cost of doing business (which it is) and having a clear conscience.

[WinkyDink]

137. It ISN'T "the cost of...." You have missed the entire point. Entirely.

[AAO]

222. Well, why don't you help me out and explain the point I missed. Entirely.

[green917]

164. it's very common

I've been a server/bartender for more than 20 years and I can tell you that, here in mn it is very common for owners to charge their service staff a "tip refund" (as it's called where I work) to offset their credit card processing charges. It's not a huge amount where I work but it does add up over time. It's a bit below board but, sadly, it's not illegal and it is the norm in most fine dining places here. Kudos to you for not making your service staff pay to process your credit card sales!

[FarCenter]

21. CC companies can afford to offer to dog et al because some people pay 12% to 30% on a balance.

Credit card issuers can afford bad credit charge offs in the 6% range when some people are paying usurious rates on balances that they carry from month to month. The suckers make up for the shysters.

[athena]

25. OK, good point. However,

it doesn't seem very fair that the server's tip should be affected by whether the customer paid in cash or used a credit card. It's the restaurant owner who should pay that fee, since s/he is the one who makes the decision to accept credit cards, since the alternative would mean a potential loss of customers. The OP is absolutely right on this.

[FarCenter]

39. If the OP want to do so, fine by me. But the OP is kicking in an additional percent to the tip jar.

It is the customer, tipping on a credit card, who is causing the injustice.

[tazkcmo]

61. ?????

The place of business accepts cc. A customer pays with said card. The business deducts a fee from the tip. How is this the customer's fault?

[Incitatus]

115. The part about the owner adding to the tip jar by not charging the servers the cc cost

is also strange.

[DirkGently]

152. No. Credit cards benefit the merchant.

It's a way to attract customers by offering a convenience. It is, pardon me, utter insanity to suggest the business should surcharge the server for it.

Wow.

[skepticscott]

187. Well, that's not quite the whole story

Checks will be larger on average in the first place for people paying with credit cards than for people paying with cash. That's well documented and true even for fast food places. By accepting credit cards and the fees that go with them, a restaurant owner is increasing his employees tips. Even if he passes some of that fee on to the servers (and it has to come from somewhere, eventually-if not out of tips directly, then out of money that could otherwise have been used to pay higher salaries), servers are still doing better than they would if the same restaurant were taking only cash.

[Lars39]

196. The fees should be a deductible on taxes.

No reason whatsoever to take it out of servers' pay.

[kcr]

94. The merchant, yes. It shouldn't be the employees.

When I worked retail, I didn't get my pay docked every time someone paid with a credit card. It's wage theft. I didn't know about this until recently, and now I always tip cash.

[The Wielding Truth]

183. That's the point exactly.

[WinkyDink]

136. "The business" does not equal "the wait-staff."

[MrModerate]

22. You've just put your finger on the real issue: Why should the customer. . .

Be expected to make up the gap between your employee's wages and the value of their labor?

Tipping is a pernicious practice that disadvantages everyone, but most of all restaurant employees.

You seem like a fair person, so here's an idea — eliminate tips entirely, include service costs in the food, and pay your employees an appropriate wage.

AND THEN — promote your establishment as a 'No tipping' zone.

Where I live, no one tips (it's just not the custom). Instead, restaurant employees are paid a wage in line with their skills, experience, and contribution to profitability. The per-plate price is higher than the average in the US, but everyone knows why (it comes down to the respect owed by capital to labor), and everyone buys into the system.

-- Just my two cents (which I wouldn't insult you by leaving at my table).

[Brigid]

28. Dorkzilla, you might just set a trend this way.

[dorkzilla]

63. I'm just gobsmacked about this

The unfairness of it, visited upon the people who can ill-afford it. Not in my restaurant!

[dorkzilla]

33. You're not in the U.S. I take it?

In parts of the US (and in some restaurants) they do that, but people leave tips anyway. Even when i am in England or Ireland, and I know that they don't tip really, I still can't help myself (mostly because I know the server knows I am an American and they kind of expect it).

[MrModerate]

50. Nope, Australia.

And despite my obvious yank accent, I don't tip here and no one cares.

But that's because I live here. When I travel, I always look up the customs of the places I'm going to. As much as I dislike tipping, I also don't want to stiff the restaurant employees.

[Springslips]

37. I disagree. A bit.

When I worked as a server I liked the tip method. The more I had to work ( busy times) the more I got paid. It also made busier days welcome and charged me up. When I worked retail busier days drained me. (Go away customers, I get paid no more for helping an extra 100 people.).

On the other hand, when we were dead, I got nothing. So you had a point there. In the end though, I prefer tips and/or commission.

[Ms. Toad]

48. And as a customer, I would prefer to be charged a fair price for the food and service

and not "hire" a waitperson directly, since that is essentially what the tip method imposes.

[MrModerate]

52. Agreed. The waitperson is the restaurateur's employee . . .

And should be treated by the restaurateur as such.

[sharp_stick]

227. It also depends where you work

I worked in the business for ages before and through school and as long as I was in a good busy restaurant I did pretty well on tips.

Once I temped for a friend working at a Denny's of all places, it didn't matter how busy it was the tips absolutely sucked. I'd run a check back for $50 they'd give me the change that came back from the $51.

I only worked there for a couple of weeks to help him out and I'm not sure if it was location specific but based on conversations I've had with others it sounds pretty standard for the lower level casual restaurant (Denny's, Friendly's, IHOP etc.). He's still a friend and I still claim he owes me for my time.

[Luminous Animal]

55. Trust me. It would make the customers uncomfortable.

[MrModerate]

62. A.) How so?

B.) Tipping is an inherently bad system and you've got to start somewhere.

[Luminous Animal]

132. Americans are very uncomfortable with not tipping...

I've seen it in Great Britain, Europe, Australia, and New Zealand when meeting with other Americans. I've travelled with American friends through those countries who just can't leave the table without tipping. It is a standard that has been ingrained in us.

Also, in those countries, restaurant workers receive a much higher wage and benefits (i.e., universal health care) than their U.S. counterparts and greater worker protection.

Thus, until the average worker can enjoy a living wage and benefits, I wouldn't trust ANY proprietor to pay their employees on a par that would mitigate the loss of tips.

And think of the learning curve for customers. They are used to seeing a posted price and mentally calculate the cost of dinner with tip. Until they subconsciously know and feel that they will be walking out of the place only paying the posted price, they are going to suffer sticker shock because their mind is trained to see the base price and the tip, and avoid eating there.

It's a huge cultural change and a venture best taken on by someone with deep pockets or a sustaining loyal clientele... though, I agree, tipping is an inherently bad system.

(An interesting thing that I learned in Australia, when riding in a cab, one of the passengers - whether solo or in a group - rides next to the driver. To leave the front passenger seat empty is an insult. As if you view the driver as a member of a lower caste. This may not be true for every community there or for everyone who lives there but I was traveling with academics, IT workers, environmental engineers, and medical administrators, and they all confirmed that this was the case and absolutely contrary to U.S. custom.)

[MrModerate]

162. I think Americans would welcome the end of tipping . . .

Because it makes life easier, makes figuring out costs less scary, doesn't trigger a guilt reflex, and is just more straight-up honest. With regard to trusting restaurateurs, that's another matter. They're as much entrapped in the tipping culture as anyone else. But they can learn.

Hmm. Single-payer healthcare funding might go a looooong way to alleviating customers' anxieties on the equity front.

The 'ride up front with the cabbie' is universal in Australia, for exactly the reasons you explain. (With the exception that if the passengers are a couple, it's understood that they'll ride together in back.) It's part of the "tall poppy syndrome," where Australians really don't like it if you put yourself forward as better than the next guy. This has societal plusses and minuses, of course.

One interesting thing now going on in Perth is that they're trying to introduce London-style taxis, where all the passengers sit in the back, and the front passenger seat isn't even very accessible to passengers. People don't like it, and the experiment is likely to be a failure unless they modify the design somewhat. The fact that the taxis are not fully compliant with Aussie safety standard doesn't help, of course.

[Bonx]

215. Not me. I *LOVE* tipping.

Being able to reward exemplary service is empowering for me & the server.

[Egnever]

230. +1

[MrModerate]

239. Your mileage clearly varies. n/t

[Tien1985]

231. Not this American

I'd welcome fair wages for servers and no tipping.born and raised NYer.

[skepticscott]

233. Americans like to feel like

they have the power to "punish" the server by withholding some or all of a normally expected tip, if they feel they've been slighted or under served in any way. They scream bloody murder if that is taken away from them. Never mind that they don't think about such a thing with their auto mechanic, lawyer or sales clerk.

[MrModerate]

238. I'm American and I don't feel that.

I don't know anyone who does.

You would be the first such person I've ever run across.

Hmmm.

[skepticscott]

240. Certainly not ALL Americans

But it is a very American thing. And there are also people who like to curry special favor with servers by tipping extra high (and again, keeping the threat of withholding those big tips as a means of control).

Here, educate yourself, and learn that your personal experiences do not define the whole world:

http://jayporter.com/dispatches/observations-from-a-tipless-restaurant-part-1-overview/

Btw...take your hmmmmmm and shove it.

[MrModerate]

241. Interestingly, the author/restaurateur you cited . . .

Emphasizes that the behavior you ascribed to Americans as a whole was in actual fact exhibited by a very small number of patrons.

So, the source you give disagrees with you, and I still maintain that you've projected your experiences — real or otherwise — into the discussion in a way that isn't very credible.

Your uncalled-for response to my 'hmmm' pretty much proves my case.

[HangOnKids]

243. It proves nothing except you are full of yourself. Thanks in advance. n/t

[WinkyDink]

141. It's the American way. Restaurants will lose money if they go "Euro" in pricing (BTW, I personally

agree with you.).

[Swede Atlanta]

41. Exactly..........

Consumers fail to appreciate that in addition to any cardholder fees, interest, etc. they may pay to use their cards, merchants pay a fee of up to as much as 6% to the credit card company.

This is why I have no opposition to businesses that offer a discount for cash or check. They take more risk with a check but at least with cash there are no other fees associated with it.

The problem is most credit card companies have policies that prohibit their merchants from offering discounts for cash or charging the customer extra because they use a credit card. They are the ultimate usurpers.

If I purchase a good or a service and my choice of payment (which may give me protections such as defective merchandise) causes the merchant to incur additional cost above what someone paying cash would, I see nothing wrong with me paying extra for the convenience of using the credit card.

That's why when I am consuming services I try to pay cash (e.g. eating at a restaurant, etc.) but use a credit card for goods (to get the credit card protection). But I would have no problem if the merchant charged me a surcharge of 2-3% for using the credit card.

I pay no fees to my credit card issuers. I don't pay an annual fee and I never pay interest. They hate me and have tried a few times to come up with some lame charge that I reject. I have told them repeatedly they are already collection 5-6% on every purchase I make. That is enough.

[mwooldri]

172. 6% discount rate? horrible merchant account!

Anyone can go the PayPal Pro route and pay less!

Also the credit card companies... they're looking the other way on surcharging in states that don't prohibit it... as long as it's the same for all credit cards. I speak as I work for one (my views are mine, not my employers) and that's the rule that is customarily observed... though merchant agreement says any other card... debit, prepaid, mobile wallet.... have to be treated equally too... but generally ok if same for visa, mc, amex, jcb, diners, unionpay and discover.

[Xithras]

67. The problem is that not doing it directly cuts profit margins, and many owners wont do that.

The problem with the numbers presented above is that the credit card company is going to charge you that extra $1.13 anyway. If someone buys $100 worth of food and pays you with a credit card, leaving NO tip, you'll actually end up with $96.50 after your 3.5% fee is paid. But if someone leaves the waiter an $18 tip, and the restaurant doesn't collect the fee, then the waiter gets the $18, but the restaurant only earns $95.87 on the sale. The larger the tip, the more money the restaurant loses. Presuming a standard 18% tip, it would have the effect of reducing your overall sales revenue by about 1% WITHOUT reducing your expenses to match.

A 1% revenue reduction may sound trivial, but you need to remember that your typical successful restaurant operates at a 2% to 5% profit margin. Through THAT lens, you're suddenly not talking about giving up "dimes", but 20% to 50% of your net profit after the bills are paid. If you're operating at a 2% profit, and you're giving 1% of each sale total away on every sale, you're burning a huge portion of your profits so that your waiters will have higher tips.

THAT is why many restaurant owners charge the fee. They aren't being predatory, but are making a simple business decision. If the tip comes with a 3.5% fee attached, they feel that the person getting the tip should pay the fee. That fee isn't being levied by the business owner, but by the credit card company. Its being applied by the customer who chose to pay the tip using a credit card with those fees attached.

FWIW, I used to write POS systems, including register systems for restaurants, and have asked the same question as your project manager. I'm sympathetic to both sides, and don't think that owners who pass the fee on are necessarily bad people. The real villains are the credit card companies who assess the fees on tips in the first place.

[dorkzilla]

112. Agreed, but since I can't change the system I'll opt for protecting my people.

Come what may, I'll be able to sleep at night, and I'll be able to look my servers in the eye. I won't cringe when I hear them complaining about the cost of diapers or tuition or bread. Or, god forbid, daycare so they can go out in all kinds of weather to wait on my customers.

[alato]

96. You're awesome

[Moostache]

118. I hope that you succeed BIG TIME!

My best wishes to you and I love your stance on this...I have always said the world would be a far better place when we had more people concerned with doing what is RIGHT instead of doing what is PROFITABLE. If you ever franchise into the St. Louis market, please let us know and I will frequent your establishment early and often!!!

[ProudToBeBlueInRhody]

145. I always pay tips in cash, even when I use a card for the meal. nt

[Monk06]

177. Transaction fees are a corporate tax and should be outlawed. Banks already charge high interest

on unpaid balances and that's all they should get.

[tazkcmo]

58. The tip isn't yours to fiddle with. n/t

[Trailrider1951]

127. yes, that's it

You nailed it. Too bad some people don't seem to get this.

[freebrew]

199. A local restaurant owner took tips

from his employees because his business sucks.

I worked for the asshole, not in the restaurant, but the bartender came in once and told me this.

I don't doubt it at all. Somehow this guy gets away with cheating everyone. He put his parking lot on MoDOT property, to this day he pumps his septic tanks out onto an open field.

He owns the local gun shop and gets away with all kinds of shit.

Don't eat there, he acts the same way with the food they serve. Horror stories.

[Ikonoklast]

210. Three phone calls would end that.

And to the responsible people at the state, not local level.

[freebrew]

244. Missouri?

Republican congress, veto-proof.

Republicans in every important office, The cops love this guy(free guns/ammo/shooting time).

To top it off, the wait staff is under the impression that it's the only job they can find. They may be correct, the boss-man can and would blacklist them all if he wanted. It's a very small business community, lots of retail jobs, servers and cooks. Most manufacturing left about 2008.

And I did tell the cook to call the labor board, then he got a raise. That's about time the guy told me to leave.

I do believe in the cold-served revenge theory.

[okaawhatever]

75. The credit card fee losses was one of the reasons used to keep the minimum wage lower for

servers. IIRC servers still make a little over two dollars an hour because of the tips they receive. In most restaurants they still have to do work in addition to their serving duties. The server minimum wage hasn't gone up for 22 years!!!!! Every time an increase is proposed someone makes an argument about how their costing restaurants more than in the past, the cc fees being one of the reasons.

[dorkzilla]

116. AMEN!!!!!!

In fact, I hired a person to do a lot of the side work for them because I don't think its fair for them to come in 2 hours early just to do extra prep work while they're getting less than minimum wage. As it is, I am paying them $2 and hour more than I'm "supposed" to because tips are unpredictable. If they come in during a snowstorm, then they'll be able to have some money (and I will feed them--FOR FREE WHICH IS ANOTHER THING RESTAURANT OWNERS DON'T DO ANYMORE). If they do well, and make a living wage, then they'll stay with me, and learn the customer's names and make them feel like family which will mean my restaurant is thriving which will mean higher profits etc etc etc.

[Hoyt]

84. And, most businesses set their prices to cover such costs. Only a greedy

person would try to recover it from already low paid employees.

I applaud OP for recognizing this, and saying No. You, on the other hand, should be ashamed for trying to rationalize such greed.

[dorkzilla]

121. Thanks, Hoyt, that's what I think (about the prices). I don't know why this is so convoluted. n/t

[nashville_brook]

150. +1000000

[grahamhgreen]

109. OMFG. You just turned my stomach.

[svpadgham]

123. 63 cents not $1.13

That's it.

[Hoyt]

130. Good catch. My experience with greedy business owners is they are always trying to

extract more off employee's backs than fair, and when they make a "mistake" it is always in their favor. Their brains are just wired to steal from people. Sadly, it often works and they don't give a damn as they sip their expensive scotch and laugh.

[nashville_brook]

151. wage theft: in for a penny, in for a pound

[eggplant]

139. Sorry, but you're wrong.

The restaurant owner chooses to accept the credit card penalty as a cost of doing business. The server has no say in the matter, and doesn't get a cut of the profits. So there is no reason the server should have to pay the fee, any more than they should have to pay part of the electric bill.

[nashville_brook]

148. it's also illegal as there's laws against wage theft

amazing that's it's being discussed by a DUer as if it's something acceptable.

[nashville_brook]

147. that's called WAGE THEFT and it's not something I'd expect to see promoted by a DU'er

[justamama83]

208. You would think it would be....

But actually it is not. Depends on state law. Off the top of my head I know it's illegal in California- not sure where else.

[bluestate10]

163. Some businesses charge credit card users extra to offset some of the fee taken by the

card company. Some small restaurants dot's take credit cards because if enough of their sales are credit card sales, their profit is eliminated.

[Maraya1969]

169. I can't believe you even said that.

Just sad.

[dem in texas]

178. You are exactly right

You the owner, the waitstaff, the customer and everyone who every owned a credit card all know that there will be a fee charged by the bank if you pay with the card. I don't see anything wrong with the server paying the credit card fee charged for his portion that was put on the credit card, such as the $1.13 you mentioned. Now if the waiter was charged anymore than that, I do not think that would be fair.

[eggplant]

194. Wow. Harsh.

The waitstaff doesn't get a cut of the profits. They don't pay for the overhead. Credit card fees are part of the overhead. The server didn't agree to the credit card terms, they have no say in the matter.

[Hamlette]

207. 3.5% of $18 is 63 cents, also merchants should shop around for a lower rate

not saying its right to take it from the wait staff, the numbers just didn't look right to me.

American Express is a closed loop system so the fees are non negotiable. You can find deals for visa and Mastercard which are lower anyway, more in the 2-2.5% range. As a business owner, you can check around with other businesses to see who they use. Even Costco has a program that might be cheaper.

[mragsdale45]

3. Can't imagine how much of this goes under the radar

Wow... unreal at the practices that exist. I never even thought of that. Offsetting it to the servers? I'm willing to guess a lot of people take that option. Pretty refreshing to hear you didn't and thought to post this. It's those kind of loop hopes that just boil my blood. Like writing off things and passing them off to customers, the taxpayer, etc.

Can you even imagine how many things like this probably happen and go under the radar? I've been in a small business for years (not restaurant based) and never heard of such a practice.

[dorkzilla]

9. Its SO SCREWED UP!

And yes, she said most people take that option. Its unconscionable to my mind. I'd think twice about frequenting restaurants that do this to their people. It just got me so upset I had to vent. And I also want to know how much of this stuff happens without our knowing it.

I mean jeebus rollerskatin' christ, how many waiters/waitresses do you know that have even a penny to throw around??? Sickening.

[arcane1]

4. Sounds like a good advertising point!

"At Dorkzilla's, we don't scam our staff"

[dorkzilla]

13. LOL!!!

Great tagline!!! Love it!!!

[Egalitarian Thug]

5. I take it that you are new to being a SBO? In the Big Book of Employment, this is one

of the lesser screwings of workers that our system allows, and in many cases demands.

[dorkzilla]

12. Yes, always in business but never 100% my own.

And I don't really care what is allowable. Its bad fucking karma.

Part of the beauty of being the boss means I get to make decisions that are good for me, and whats good for me is not screwing people over.

[Egalitarian Thug]

23. You're absolutely right, and that's how we've run all of our businesses.

But in the SBO community, we are a despised minority.

Have you done the local Chamber of Commerce thing yet? They're usually a "fun" group to deal with. Bunch of Rmoney wannabes with even less to justify how much they take out of their businesses.

[dorkzilla]

40. LOL, no and I refuse to join!

I've heard about the CoC people…I'm okay with keeping their noses out of my business.

Tell me, since you seem to be of the same mindset, by your estimation do you have less staff turnover? I'm assuming that the Rmoney wannabes are probably shitty employers who have turnover issues.

I'd rather pay a couple of dollars per check more to keep my staff happy--I want them to WANT to come to work.

[Egalitarian Thug]

77. Yes, but you are in the one business that we've considered and rejected time and time again,

so I'm not sure how much of our experience is valid in your very competitive and finicky business. We just rejected a little Bistro we were thinking about buying because it was one of those once-in-a-decade opportunities that you just have to look at. It is almost perfect in every respect, but in the end it is still a restaurant and will still require lots of hard work, very long hours, and constant supervision.

Generally, I avoid employees like the plague as the number of problems in a business increases exponentially with employees. Once you hire one, you come under the authority of innumerable agencies, regulations, and laws that increase costs and hinder your actions. I've always built businesses on a partnership model (I call it the law firm model). Doing it this way, I've certainly made less money for myself but everybody has made far more overall, and that's one of the factors that has always attracted buyers when I'm ready to move on to the next thing.

Turnover can wipe out your bottom line and the only businesses that run with high turnover for long are those that exploit their workers. The more skill required, the worse it gets. OTOH, it usually takes more than money to keep good people in a dynamic employment environment like food & beverage. One thing I've found to help this is to make good employees out of average employees. It takes longer and costs more, but I think the returns are sufficient justification and when those inevitable and unforeseeable disasters strike, they are the people that will go above and beyond helping you get through it.

[nadinbrzezinski]

6. You will have to tell us where the place is

so we can go visit, if we happen to live within drivable distance.

Trust me, I would make a point to support such a restaurant.

[dorkzilla]

16. Suburban NYC - I think its a wee bit far for you!!!

But thanks for the support!

[nadinbrzezinski]

17. You mean the east north east county?

Yup, just a tad far.

Good luck though.

[keroro gunsou]

47. open a branch in milwaukee...

call it dorkzilla's west i know a guy who will work for you... who can probably get you a complete staff for back of the house too

[myrna minx]

7. My server friends are grateful when they're tipped cash - specifically because of this practice.

I was shocked when I heard about it - so now I try to tip cash whenever possible.

Add - Good on you for looking out for your staff and respecting their work.

[dorkzilla]

14. I try to tip cash because sometimes the servers don't get the cc gratuity for weeks

I had NO idea that this was "normal".

[myrna minx]

24. Many times servers are forbidden to talk about it too, even if asked by a customer

(I've asked in the past - when I first heard about the practice - and I was told it's not something they can discuss) which is another reason why it's not commonly known except within the industry.

Again thanks for looking out for your staff - I'd dine at your restaurant anytime!

[Le Taz Hot]

30. Well, I'm doing that from now on.

I had NO idea! Like the OP, this pisses me off to no end! Ripping of the wait staff, who make diddly squat anyway and who have to rely on the goodwill of others to reward good service.

[KansDem]

201. I tip in cash...

My daughter works two jobs as a server and I want her to get all the tip. I don't want any CC record that might be used to take any money from her.

My attitude extends to all servers.

[PDittie]

19. Tip in cash

and tip 20-25%, especially if it's a place you go to regularly. You won't ever regret doing so.

[valerief]

29. Good advice! nt

[Yo_Mama]

26. Well, the thing is that if the tip is given in cash, the restaurant gets the whole tip,

and so the server does. But if the diner pays by credit, the amount of the tip is never received by the restaurant, so if you give the nominal amount of the tip to the server, you are in fact adding to the tip given by the diner.

Not that I don't applaud you for your stance, but it is understandable why people do this.

Taking from cash tips would be sooooo wrong. But the restaurant never gets the whole tip with CC charges.

[Le Taz Hot]

32. I don't understand your post.

Are you saying that if I tip in cash the wait staff doesn't get that tip?

[Glassunion]

51. You're not understanding

If you pay by CC, and tip in cash the server brings food and the bar gets paid, but if you pay cash the tab is paid with money, but not if with a CC, unless you are at a restaurant. Now if you pay with a CC and include a tip the diner pays but not in cash under tip and the diner gets nothing.

What's the problem?

[tazkcmo]

68. When you tip me cash

I keep that cash. In some restaurants, when you tip on your cc I do not receive the entire tip and some cases will receive the cc tip minus the fee weeks later or added to my check.

[Glassunion]

86. Yep

[Yo_Mama]

146. Yes, and the collection time is a factor

That's why I always tip in cash.

If you can't tip in cash, at least use a debit card.

[ohheckyeah]

73. What?

That's so convoluted I have no idea what you are saying.

[Glassunion]

88. What's so hard about it?

It's really quite simple.

[Le Taz Hot]

78. Clear as mud.

[Glassunion]

90. What part don't you get.

It's quite simple. Really.

[ohheckyeah]

95. No, not really.

Maybe you could explain it better.

[Glassunion]

101. Ok... Look at it like this.

Let's say you are working for tips. There are two parts to obtaining a tip. One is the total tab and the other is what's left over (this is the tip).

So you have the tab, which could have a charge for the CC which would go to the table for service which needs to be charged somewhere. So depending on if it's cash or charge would determine if it's good. So to get the money from the charge the diner would charge the card to the bill but not if it's cash, because then it's just money. So the money goes to the food and the tip is the extra. But if the extra is a charge then it costs money, so it goes to the restaurant, but the waiter needs a tip so they would need to get the extra, but only if it covers the extra. Now in the off chance that the charge is not extra the more goes to the server, but not all because it is customary to tip out the busser and the barkeep.

If you have not picked up by now that I'm yanking your chain... Well... I'm sorry.

[ohheckyeah]

111. Okay then.....

it's not nice to mess with dense people.

[Glassunion]

122. I couldn't resist.

It's been a while since I've tossed a good word salad.

[ohheckyeah]

124. As a smartass I have to say....

well done.

[Glassunion]

128. I didn't start it... But it needed finishing.

[ohheckyeah]

138. And you finished it well...

any honest smartass appreciates being had when it's well done.

[kcr]

102. That made absolutely no sense n/t

[Glassunion]

106. You're not reading close enough.

See post 101.

[kcr]

174. oh

I didn't notice you were a different poster from post 26

[Yo_Mama]

64. They do, or should.

Some restaurants have pooling policies, and sometimes the wrong people get a cut.

[tazkcmo]

65. what? n/t

[valerief]

27. Wow! I never heard of that before. nt

[Fantastic Anarchist]

31. Two of the three chefs on Master Chef have been caught doing it. nt

[dorkzilla]

43. I hope they were shamed for this! n/t

[catbyte]

107. Which one didn't?

[dorkzilla]

120. EXCELLENT question!

I'll go there!

[Fantastic Anarchist]

191. To be honest, I read about all three and I can't remember which two.

I don't want to accidentally implicate anyone.

If you go their Wiki, (I would, but late for work), I think it says "scandals" or some such about two of the three.

[Glassunion]

34. Nothing new

Back in my day, the owner would take cash from me on all charges.

This is one reason folks pay for their tab on the CC and tip in cash. They can't skim a tip that does not exist.

PS. If you have questions on the POS stuff, drop me a PM. It's what I do.

[Lex]

35. Thanks for posting about this. I had no idea.

Now I will tip in cash whenever I can.

[heaven05]

42. I always put the cash in their hands.

after that, it's on them. They work pretty hard in the places I eat when I'm out.

[Ms. Toad]

44. Here's a thought -

How about setting your prices high enough so you can pay your wait staff a decent wage and not force them to rely on tips (or the customer to pay the wages directly for the employees). And then implement a no-tipping policy.

[truedelphi]

45. What a sweet person you are.

Bear in mind, I think being sweet is one of the best things a person can be.

Fingers crossed your business is a wild success! (Something tells me it will be.)

[dorkzilla]

56. Thanks!

I have a great product and an AMAZING location, and I got a great under-market rent to boot. I've worked for some great people in my life, and they always got 110% out of me. The jerky ones? Not so much.

I wouldn't say I am sweet (I am from the Bronx, after all ) but I really believe that a successful business--especially one that works closely with the public--has happy, contented employees and work in a positive, supportive environment in which they are respected. It means MORE money--people like to frequent businesses like that, because happy people give good service, and happy people are making happy food back in the kitchen. It also means less turnover, and turnover is a very bad thing for business.

[haydukelives]

49. I Always tip with cash

even if I use a credit card to pay the bill.

[tazkcmo]

57. I already want to work for you!

You're already better than 90% of my past employers. Stay classy!

[sheshe2]

59. Congratulations,

on your first 100% dorkzilla owned restaurant! You rock girl~

Your honor and integrity ain't to shabby either.

Thanks so much for the post.

[dorkzilla]

66. Thanks sheshe!

You always make me smile

[sheshe2]

131. If I get up your way, I will stop by~

Mass~ NY

Break a leg, or what ever the saying is in the restaurant business~

[dorkzilla]

133. Break an egg? LOL!!!! n/t

[totodeinhere]

69. To the people who say tip with cash. You know we are on the way to becoming a

cashless society and that advice won't work much longer. Myself, I hardly ever carry any cash on me and so I am forced to put the tip on my credit card.

[dorkzilla]

72. Excellent point

I'm in a location surrounded by finance and law offices and a huge court system. They're all card-centric and most of them will be expensing their meals. Cards will be used probably 90% of the time.

I just checked my wallet--i have $3.57. One of the dollars is a silver one i found in my coin jar the other day. I use my debit card most of the time.

[Incitatus]

76. Cash is becomming less common, but I don't see it going away anytime soon.

Congress and people like Rush need to pay for their drugs and prostitutes somehow and I doubt they want an electronic record. There's probably quite a few other powerful and influential groups that prefer using cash.

[Egalitarian Thug]

80. Not for a couple more generations, barring some dramatic social change.

BTW, eliminating cash is one of the essential steps toward absolute control by the parasite class, so you might want to think about that before eschewing hard currency.

[AAO]

97. I always carry $300-$400 in my wallet. I only use cash.

I've been hearing about the cashless society for 30 years now. Not worried.

[bluestate10]

166. I do the same. I prefer paying in cash when visiting a restaurant. nt

[mnhtnbb]

186. We were recently in Europe (Austria, Czech Republic, Germany)

and decided to take euros with us to pay for everything--hotel bills, restaurants, etc--
because we were concerned about the dollar declining if the Repubs didn't
give up on their shutdown/fiscal cliff crap last October (we were leaving the end of Oct).

Not only did we not have to pay the standard 3% credit card company charge on all international
transactions, but we also got a good deal on the euros we bought ahead of time.


BUT...to the point of the OP...we saw many, many people paying with cash in restaurants.
However, we also had understood that many European places indicated service was included
on the menu. One pricey--very pricey--lunch we had with our son in Berlin, the maitre'd came running out after us,
asking whether we had been displeased, because we didn't leave a tip. I went back in and put
a 20 euro tip down (almost a $30. tip which is 20% on a $150. lunch!) But my point is, that
we never seemed to know if tip was included or not. It was very frustrating. We think
that many times it was, but we were identified as Americans so expected to add a tip.
Maybe that's paranoid, but it really began to bother me that we were being taken advantage of.

I wish it would become universal practice to pay waitstaff a living wage and stop the whole tipping
business.

[Ikonoklast]

212. Due to business needs, it is not uncommon for me to have three to four thousand dollars in my wallet

at any given time, due to getting discounts when I pay in cash.

Those cash discounts can quickly add up to be quite a sizable amount at the end of the year, think of how much 3 to 5% of $120,000 is and you get the idea.

Cash is never going to go away for me, as long as I can save money just by using it.

[Curmudgeoness]

104. Well, as long as I am alive, it will not be a cashless society.

Don't expect all of us to give up using cash. I refuse.

[Incitatus]

70. Wow

I've read a number of threads about serving and tipping here, but this is the first time I've heard of this disgusting practice. I tip well, but I can also run up a good bill and often used a cc for both. I'll start bringing cash for the tip or use debit.

[Gothmog]

71. Thanks posting and thanks for your humanity

I was not aware of this practice.

[FarPoint]

74. Tell us about your restaurant....

My son, he is going to attend New England Culinary in Vermont next summer after he graduates from High School. We love cooking.

[Spitfire of ATJ]

79. I'm waiting for the banks to act like they can charge you for accepting cash.

[Half-Century Man]

82. Tip with cash

Even if you charge the meal, tip with cash.
Years ago, I had got a deal on some old silver dollars (5 for $12.00 ea, regular price $14.00). I carried one around as a good luck piece(1892, the year paternal G G Grandpa came to US). Left it as a tip on a hundred dollar meal. Always wondered what the waitress thought of it.

[indie9197]

159. She probably wasn't amused at the time...

But if she still has it she is happy!

[Half-Century Man]

160. A full sized Morgan silver dollar over a hundred years old.

...Money, the way it was meant to be.

[busterbrown]

83. I’m a small business owner and always felt if you needed employees and could not afford to ..

pay them a living wage then you better learn how to operate it with just your relatives and friends..

But to hire people in need just because they are willing accept pitiful pay just keeps all of us in this current abyss.

[47of74]

85. There are a LOT of ASSHOLES in the resturant industry

That's the nicest thing I can say about them too.

[mbperrin]

87. Good for you!

I'm far off in Texas, but this practice sounds like the company charging carpetlayers for the blades they use. Ridiculous.

You're a good person, and you will get back far more than you'll pay in employee loyalty and efficiency.

[Sgent]

89. Its illegal

its done by a lot or restaurants, but its against labor law and if an employee eventually sues they will win and be awarded damages.

In my experience many restaurants are extremely abusive of staff, and dismissive of labor laws. Their turnover is so high that they figure they'll fire anyone who complains, and the amounts are relatively small so its not worth it to any one employee (or attorney) to seek redress.

[ReRe]

99. This is the shell game business plays on us...

... and they go to college and graduate with degrees on how to do it. They expect the employees to pay these fees, but then when it comes time to rake in the profits, the employees are not remunerated for their share in the business expenses. It's legalized theft. Or slavery. It's a shell game, pure and simple. IMHO.

[EC]

100. think I'll start leaving the tip in cash.. n/t

[B Calm]

105. Oh no, the cat is out of the bag! So many ways

to screw over the little people it makes your head spin.

[SoLeftIAmRight]

110. Tip With Cash

Makes them smile.

[Liberal_in_LA]

114. never heard of such a thing. good luck with your new restaurant.

[dorkzilla]

125. Thank you! n/t

[Notafraidtoo]

119. One of the reasons

Pizza company's started paying Delivery drivers under min wage now, more people use credit cards, people used to ask me all the time if the delivery fee was a tip ( which it isn't) we were told to say it was for insurance on drivers but that's only a half truth,I told people the truth that it was what the investors wanted to increase profit, the one i worked for made a extra 200,000 a year off delivery fees after insurance cost.

The delivery fee's purpose is to encourage carryout so less workers can be hired and hide the true cost of the pizza for the advertising department. Sorry republicans more profit does not mean more workers or higher wages and to believe it is beyond stupid.

[Scuba]

126. I never knew this. I'll do all my tipping in cash from this point forward.

Good on you dorkzilla.

[GeorgeGist]

129. Trickle down ...

phuck up.

[dionysus]

134. it's just as easy to levy the fee onto customers (if anyone at all)! good on you

[dorkzilla]

142. I live in one of the wealthiest areas of the United States

THEY can afford it, but moreover, I'm just trying to make a living, not a killing.

[WinkyDink]

135. Thank you for posting this! I will be sure to ask about this practice next time I go to a restaurant

This is really CRAPPY.

[Recursion]

140. Yep. I used to sell POS systems, and I made a point of not mentioning that option (nt)

[pansypoo53219]

143. i am gonna stress cash tips. we do not go out much. or i do not. but i will carry cash.

had to explain to a danish man visiting about tipping in USA.

[eridani]

144. People like you demonstrate why we should always support local businesses n/t

[RebelOne]

149. You need Robert Irvine of Restaurant Impossible.

He would straighten everyone out and have you profit without taking money from the employees.

[niyad]

153. k and r--good for you, dorkzilla. looking forward to hearing how well you are doing. will have to

send good thoughts only, since it is unlikely I will be in the area.

[nashville_brook]

154. thank you for posting this -- this is wage theft, and it's sad that it's so common that

servers and project consultants would assume you'd participate in it. please keep talking about this. it's a value proposition for your restaurant, as you've seen here. people will seek out businesses that do "good business." it's good for the workers and it's good for profits.


PM me if you like -- i actually work with small businesses on issues such as this. there a lot you can do to fight high CC swipe fees -- avoid using AMEX if you can. there's also a lot you can do to as a leader in the business community to put an end to these practices.

Best of luck to you in your new endeavor! you're off to a great start

[thesquanderer]

155. Some restaurants don't permit you to put tips on credit card, a different solution (n/t)

[dorkzilla]

157. Thats a great idea n/t

[Zorra]

158. I know, huh? It would never even cross your mind to do something so...conservative.

Love, kindness, compassion, respect, ethics, integrity ~ it's what real liberals do.

[technotwit]

161. Tipping

In California state law forbids deducting credit card fees from the wait staff's tips. Luckily in CA the minimum wage is $8.50 an hour in restaurants, not the $2.13 an hour that is common in many states.

Also, in California. if the menu says something like a service charge or gratuity will be added to all parties of 6 people or more, it does NOT have to go to the wait staff. Many businesses keep these charges to enhance the bottom line.

In California the business can also tip "pool" , meaning that they can pool the tips to all non management employees (that being those who can hire or fire). So your tip might be split between waiter, maître-d, cook, busboy, dishwasher, shift manager, and janitor.

Also remember the IRS expects all wait staff will be tipped at certain rate and may force them to pay taxes on tips they did not receive.

[WillyT]

165. Two Things... & a K & R !!!

1) From my best friend's mom, when we were about to turn young adults...

"If you can't afford to tip, you can't afford to go out."

2) I usually leave NO TIP on the card, and tip in cash instead.

[lupinella]

167. As a person who waited tables for years

I just wanted to say, "Thank you!!"

[bluestate10]

168. You did the right thing, Servers shouldn't suffer because credit card company greed.

Your post explains some of the strange pricing that I see in restaurants. I could never understand why something costs $19.58 when it is just more logical to charge either $19 or $19.60. I assume that the odd pennies is the restaurant's way of covering the credit card fee without changing their gross margin target.

[Kurovski]

173. K&R

Very sexy!

[Hoyt]

176. Good point. If we could just make doing the right thing "very sexy, " most of our problems

would be solved quickly.

[ananda]

175. Sounds like you need a new exec chef.

..

[dorkzilla]

188. Nah, he smirked because our opening has been delayed since July and Ive paid him...

..and the 3 other chefs the whole time (its not their fault my old GC screwed up the opening). He smirked because he knew what my reaction was going to be!

[Archaic]

179. I have never heard of this. And will tip cash from now on.

That's just offensive. Thank you for posting this.

[Cha]

180. I did not know this, dorkzilla.. thanks for letting us know!

But, the other thing.. you're starting your own restaurant! Wow, Good on ya!

I'm so happy for you!

[dorkzilla]

189. Thank you, Cha!

I'm very excited! Stressed out of my mind, but excited!

[Fearless]

182. For what it's worth, I work for a restaurant company that

does NOT do that also.

What an awful thing to do!

[TomClash]

184. If your new restaurant was in NYC

I'd go and send customers.

Good for you!

[yellerpup]

192. That is a f'ed up thing to do.

My friend's boss deducts 5% for credit card fees from her wages. It is illegal to do so in some states and it should be in all states. Businesses can deduct those fees from their income taxes, so if the employees are charged as well, that is double dipping.

[DebJ]

193. Thanks for the info. I will always tip in cash whenever possible from now on.

And if I shop at a small business, I should use cash too. I want them to get the profits, not MC or VISA.

[xmas74]

198. I've waited tables and tended bar.

It's far too common. Quite often the wait staff has to wait until the card goes through to receive their tip, then they will pay for the cc processing fee. After that they still have to pay their hostess, their bus staff, a bar tender if drinks are involved and even the cooks and dishwashing staff. And I've even had an additional percentage automatically go "to the house" for "incidentals".

The owners always loved cc tips. They could keep track of how much the server received and tax accordingly, even though the tax was done before the cc fee, the house fee, the tip outs to all the other staff, etc. In places like that I've had weeks where I never even received a pay check, though I didn't bring home all that much in tips.

No one knows how often wait staff are ripped off-until they become wait staff.

[dorkzilla]

202. I grew up around the business...

I've waited tables from a very young age, bartended too, and you're right--unless you've been in that position you can't possibly know how incredibly shitty the job can be. That's why I feel so strongly about this. I've already told my kitchen staff they're not allowed to be divas--that job is mine alone!--and I also said when they're at work they must speak English so the waitstaff doesn't get paranoid that they're being talked about (I knew all the Greek swear words when I was a kid and it was upsetting to hear the cooks talk about the waitresses). I have a great bunch of guys working in the kitchen so they understood the rule and why it was.

[madville]

203. I would run it through your accountant at least

There may be a hidden benefit to it and you could pay the servers $0.25 or whatever more on their hourly wages to make up for it, but keep the employees in the loop so they're aware.

Say you did $2,000,000 in credit card transactions a year and the average tip was 15%, at 3.5% that's $10,000 a year in credit card fees on just the tips. Like others have said, that would be 0.5% of your gross revenue, that's a big deal, especially in the restaurant business where profit margin can be thin at 5% or less.

[dorkzilla]

204. Nope. Decision made. I'll charge $.25 more for the food

I don't want to have to explain anything to my staff or my customers. Keep it simple and clean and ethical.

[Egalitarian Thug]

205. +1.

The reply you replied to reminded me of a thing that might be new and useful for you, hire an accountant to go over your accountant's work every quarter. In my experience accountants come in two flavors, the ones that work for themselves and the ones that work for you.

There are still a lot of gray areas in this area and an accountant that is primarily concerned with his own firm will always err on the side of the IRS to keep his ass covered, the accountant that works for you will err to your benefit and be prepared to deal with any questions that arise. This can be the difference between profit and loss, a good year or a bad one, especially in NY.

[dorkzilla]

206. I have a GREAT accountant, who happens to be my aunt!

She teaches accounting at university, and she's honest, loyal, and very very knowledgable. But you're right, I probably should have an auditing accountant. Also, she is my company's accountant, but not my personal accountant. I don't know why, but I thought it best to keep them separate.

[Egalitarian Thug]

209. LOL! A close personal relationship is always the best way to go.

There's one of those people that will go above and beyond for you.

[ieoeja]

213. You should still check into the accounting.

First, some numbers:

$100 = customer charge for food and drinks
+ 20 = tip to server
--------
$120 = total credit card ring

100 x 2% = $2.00 discount fee charged by the credit card company for YOUR income
020 x 2% = $0.40 discount fee charged by the credit card company for the server's income
-------------------------------
120 x 2% = 2.40


A1. With you paying the discount fee for the server's tip, does the IRS consider that taxable compensation for the employee? If so, you have to add that $0.40 to their W-2. It's the law. Maybe.

A2. Or maybe you can call it a "gift" which is untaxable up to $14,000 a year per server?

A3. Conversely, if you let the server pay for it, they could (presumably) write that off as a legitimate expense of doing their job. But only if they itemize, which I imagine most do not.


B. If the IRS doesn't consider it compensation for the employee, do they consider it a legitimate business expense for you since you are paying that $0.40 on behalf of the server? The IRS might consider that a gift (see A2) regardless of how you view it. You may not be able to legally write off that portion.


You may find that you are actually harming your employees by doing this. I doubt it. But it should be researched to be safe.

[CrispyQ]

211. Good for you! I'd eat at your restaurant!

Are you near Denver/Boulder?

BTW, I had no idea they did that. Cheap, cheap bastards, everywhere!

[rrneck]

214. When you wake up in the morning

and start your routine just remember that there is an army of MBA's out there whose mission in life is to figure out a way to screw another nickel out of you.

[dorkzilla]

217. LOL, yes there are! My response to them?

┌П┐ (•_•)┌П┐

[KurtNYC]

216. My cousin worked almost 2 years for a restaurant owner who kept ALL the tips

He would fire kids a day or two before they were eligible for unemployment. Get drunk and sit down with the customers then take the tips. The delivery driver was off the books and had to split tips with him also.

I try to tip in cash even if paying by CC. And directly to the server.

[ryan_cats]

221. I always tip cash...

I always tip cash, that way, the gov has no idea what the tip was and they can only charge 8% as a tip which is B.S. but better than them taking it from a 20% tip.
I've never heard of this and I thought the credit card companies forbade businesses that use them from passing on the fee to customers. I wonder if the law has changed.

This is bad news, they're taking money from people busting their butt and making less than minimum wage, very creepy.

[tartan2]

223. this is why I always tip in

CASH and I'm going to brag, if you wait on me and give me good services I will tip you a good 25%. Waiting tables is rough work and when I get waited on with by a waiter or waitress who does good job I make sure they know that I appreciate it.

[catrose]

224. Because of this thread

At breakfast this morning, I tipped in cash and told my friend why I was doing it. I pledge to continue.

[dorkzilla]

228. Good for you!

I think people really need to know about this practice, so we can squash it like a cockroach.

[Pretzel_Warrior]

225. first of all, Congratulations on opening your own restaurant

running a business is exciting and grueling work. I hadn't heard about this practice. Pretty evil.

[dorkzilla]

226. Thanks, Pretz!

Yeah it's pretty sick what people get away with doing to people they expect loyalty from. Bad bad bad karma. And they're precisely the kind of assholes who were boasting about how "they built that" or whatever the dumb GOP battle cry from the '12 election was. They really mean "I stole that"

[DrewFlorida]

229. Good for you for being an intelligent business owner.

So many business owners don't get the concept of being concerned for the financial outcomes of their employees, the same as you expect, employees to be concerned about the financial outcome of the business. It's called a win/win, but too many greedy capitalists don't understand how it benefits them to not be so greedy.
Good for you, for caring about your employees, I have no doubt you will be successful, because your employees will see to it that you are successful!

Best regards.

[pnwmom]

234. One more good reason to tip in CASH. n/t

[neffernin]

235. Never heard of this in the 6 months I installed and setup POS systems

Which POS provider are you going with out of curiosity?

[dorkzilla]

236. How long ago were you doing that?

Its not my POS company, they're just trying to program my system. They asked because other owners want it. Sickening.

[neffernin]

237. Gosh... about 7 years ago now

Was my entry-level position getting into computer systems. Our system was a bit of a smaller player though so that kind of functionality might have been over and above what we had. Not to mention I'm sure POS systems have come 1000 lightyears ahead in the better part of a decade.

To my surprise the software still exists:
https://www.facebook.com/pages/First-POS-Systems/141399475985573

[shanti]

242. i did not know this...

thanks for the heads up. i shall tip cash in the future.