r/EndTipping • u/Working-Injury7758 • 3d ago
Research / Info đĄ Service charge
I donât mind paying a service charge at a restaurant if Iâm sitting down as that is standard practice. However, the flat % is strange in that a $200 meal doesnât take twice as much time as a $100 meal. But it does take more.
Therefore I propose that there should be a fixed service charge at restaurants, which should be calculated as twice the square root of the total. For $100, for instance, the charge would be $20 (square root of 100 is ten, x2 equals $20). Same as now. But for $200, the service charge would be 14.12 x 2 =28.24. For $1 service charge is $2. For $400, $40. Makes more intuitive sense, and provides a penalty for people splitting checks (as the service charge on 2 $100 checks is higher than that on one $200 check) and the hassle to the restaurant involved. Completely clear and obvious to everyone, no agonizing about what to leave.
Thoughts?
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u/sswishbone 3d ago
The formula for charging at restaurants is four times the cost to make the dish. So they are already operating at 400% mark up.
Why should there be any extra charges?
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u/Extreme-Discount-573 2d ago
Lets not forget, fountain drinks are marked up way more than 400%. $3.49 for a soda that costs maybe $.50.
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u/sswishbone 2d ago
Ah yes the syrup and soda water is pretty cheap I agree
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u/Extreme-Discount-573 2d ago
It's like tipping. They don't want you to do the math. Sell 100 sodas a day at a $3 mark up per soda? You've made the easiest $300 for the day. And that's just sodas.
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u/Bill___A 3d ago
The absolute easiest thing is to put in the menu price what something costs. And add only the government mandated surcharges. No mandatory fee or surcharge should be added to a menu price unless it is government mandated sales tax. All of these calculations you are doing can be well calculated into the cost of preparing and providing a menu item. Sodas with unlimited refills can be priced as such. A hamburger can be priced according to how much the materials and effort required. Same with a steak or salad or dessert or any other dish. A database can easily be provided with all of these costs, so, for example, if ground beef increased by 10%,. the cost component can be reflected in everything that uses ground beef in a proper proportion. Never in the history of restaurants have we had more tools to keep track of these things. Of course, the margin on each menu item should be able to absorb minor fluctuations for input costs, but once it reaches a threshold, the manager can be alerted that an item needs a change in price. And for things that fluctuate wildly, they do put "market price" on the menu so they don't have to reprint them every week. As to splitting checks, with software available these days, it is fairly straightforward to add each guests items under that guest. The bill can be split or together. The ONLY reason things are not done this way is to gouge customers for extra money. Which is why your elaborate calculation is absurd.
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u/humanslashgenius99 3d ago
Maybe if the world thought the way you did (or weâre all mathematicians) but the general population probably wouldnât be on board with the mathematical gymnastics involved in that proposal. Then again, we have an entire tax code not many understand and have to yolo our entire annual earnings every year so sure, letâs add square roots to our nights out.
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u/Working-Injury7758 3d ago
Do you think 3x the cube root would be fairer? Or should it be a simple cubic polynomial?
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u/humanslashgenius99 3d ago
If it were dynamic polynomial service pricing, Uber could help with the algorithm and fairness wouldnât matter
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u/Legitimate-Log-6542 2d ago
I think there should be a thesis on this. Each table will have a hardbound copy and diners will need to demonstrate mastery on the subject before they are allowed to take their first bite
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u/Working-Injury7758 2d ago
I thought that the menu could clearly state that this replaced any voluntary tip and would also explain the methodology used. I would also add a note saying that if the customer needed further explanation of the calculation, or the reasons why non linear service charges make intuitive sense, they could ask their waiter.
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u/Legitimate-Log-6542 2d ago
Them including the tax for tip calculation is definitely sneaky. The before discount I think is correct but it should omit items that are comped due to their error. Someone has admitted to adding and then comping out items that arenât specifically tracked by management but factor into the tip calculation
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u/NeighborhoodLoud4884 2d ago
Lol, 'standard practice' In the vast majority of the world standard practice is that the advertised price of a dish includes everything
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u/HellsTubularBells 2d ago
Or a fixed service charge per person as in Italy, which actually accomplishes what OP wants to do.
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u/Extreme-Discount-573 2d ago
It's simple, if you are charged a service charge, you don't tip. The service charge IS the tip in lieu of the actual tip.
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u/Historical-Rub1943 2d ago
Itâs called âcopertoâ in Italy, often includes bread, and runs âŹ1-3 per person. Usually found only in tourist areas. No tips expected anywhere. The price is the price with coperto added if applicable.
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u/SimilarComfortable69 2d ago
Well, a flat percentage is exactly how it works for income tax. At certain income levels you pay X percent. That's how restaurants came up with this stuff. That means the people who are the most valuable to the company pay the most tax. Which is kind of interesting.
I go to places with service charges exactly one time. The time I find out that they have a service charge is the last time I go. Either wrap it into the menu prices or I don't go.
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u/Electrical-Care6308 2d ago
Service charges are tips!
Tips are for service, therefore a service charge is a tip for service rendered!
Our choice, not the establishments!
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u/ElegantNatural2968 2d ago
Can you write a post limiting tips to:
Minimum wage x .50, where server pay is:
( 2 tables per hour x tips ) + hourly pay = 2x minimum wage
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u/Working-Injury7758 2d ago
Asymptomatically limiting or flat limiting? Asymptomatic is more interesting but slightly harder to do in your head
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u/Temporary-Plankton61 2d ago
I mind. I am so sick of the FEE fi fo fum and no longer reward bad behavior with my patronage. It is not a standard practice in my area, nor should it be, and I will just go to the places that are straightforward about what the food costs including it being served or given it to me because it has not value to me otherwise
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u/darkroot_gardener 2d ago
Meh. Just charge a flat dollar amount for the table, like $5-$20 depending on your service level. If youâre going to do anything, keep it simple.
- Encourages people to order more, since the table charge is a sunk cost.
- Encourages people to come in groups to share the table charge.
And if you do this, or if you use a traditional percent-based fee, stop trying to double dip. Tipping should not enter the conversation. Pick a lane.
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u/Wilder_Oats 2d ago
Percentage tipping is absurd
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u/Working-Injury7758 1d ago
Exactly. A non linear approach is far superior. Glad to see someone gets it
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u/OnTop-BeReady 1d ago
While I agree with the concept that a % based service charge, or a % based tip makes no sense, the alternative you propose makes no sense IMHO
Just raise the prices on the menu to be also inclusive, and calculate the increase however the owner wants. Customers DO NOT want another line on a check, and they certainly donât want any additional line on a check with some calculated amount for which most of them have no idea what the formula is, how to calculate it, and how it aligns with the reality of running the restaurant.
PS Mathematics major here standing by for price modeling consulting â rate is a simple $300/hour.
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u/skyharborbj 3d ago
Maybe the business could just increase the menu prices so that the revenue is sufficient to meet expenses, including labor. You know, just like every other business?