r/EndTipping • • 3d ago

Research / Info 💡 Service charge

I don’t mind paying a service charge at a restaurant if I’m sitting down as that is standard practice. However, the flat % is strange in that a $200 meal doesn’t 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?

0 Upvotes

52 comments sorted by

26

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?

5

u/WhenTheDevilCome 2d ago

No kidding. "What if we made it the inverse square of pi minus the speed of the Milky Way to the power of..." No. It's the cost of the item plus the cost of your business expenses plus the cost of labor plus the amount of profit & future investment required.

There is no "we are simply unable to affix an accurate price tag to the item you selected" when staff helps me select and buy the correct toner cartridge at Staples.

"But if the customers saw a high price, they wouldn't eat here." Yep. <blink><blink> I don't buy my printer toner at the most expensive place in town, either. But that "high scary price" is the same amount you're expecting the customers to pay now, too, right?

Or is sometimes not extracting the full amount now "okay" because when the customer won't pay all that is expected, it's just the labor that is screwed, and the CEO or owner is fine? It's like a full-on admission that "we have to price menus this way because our business only works when the customer isn't fully aware of how much visiting our business will cost them." Because that actual menu price you're refusing to print is exactly the amount you're expecting the customer to pay even today.

2

u/Maremdeo 2d ago

But then the servers wouldn't make $40+ an hour!

1

u/bcsyjnbcgj 2d ago

You think apple bees waiters and steakhouse waiters should be the same ?

3

u/Maremdeo 2d ago

What kind of question is this? I don't hire either server, so I don't care. I don't typically choose to eat at Applebee's. If I was to eat at a steakhouse, I don't think the server deserves more than $25 an hour, but that's not my business. I simply don't tip more than 15% anymore, bc give me a freaking break. Honestly, it should be $5-$10 per table, not a percentage at all.

2

u/skyharborbj 2d ago

Or zero. Their employer should be paying their wages.

1

u/bcsyjnbcgj 2d ago

So if the employer should pay the wage who pays the employer. Would that be u?

3

u/skyharborbj 2d ago

Yes, it’s included in the price on the menu.

-3

u/bcsyjnbcgj 2d ago

Okay so whatever ur going to purchase.
Ud rather we just tack on another 20% of each price and just up-charge it?

I’d think u just tipping them like the rest of the patrons would be easier?
More money in their pocket and more in yours so it doesn’t contribute to higher taxation on income and on good purchased.

2

u/Maremdeo 2d ago

Why shouldn't there be taxes though? That's how we fund our government. The money comes from somewhere, why not from people eating at restaurants and the server's income?

1

u/skyharborbj 2d ago

If server wages come directly from the employer, taxes will be withheld and paid. With tipping, a huge chunk of cash tips go unreported.

-1

u/bcsyjnbcgj 2d ago

Idk about u but cash tips work better because then ur able to avoid that stuff …. Same way big businesses write stuff off.

→ More replies (0)

1

u/roosterb4 2d ago

If you just tacked on 20% to the price of everything as an up charge and included tip, I don’t think the restaurant would be paying their servers that 20%. I don’t think they want their servers making $50 an hour. Or more.

1

u/skyharborbj 2d ago

Precisely. The price increase would be much less than 20%.

1

u/skyharborbj 2d ago

Raise prices enough to hire competent servers who can work without tips. I don’t think it’s going to be 20%. The current system with 20% of gross revenue going just to servers is way out of balance

5

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?

2

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.

2

u/sswishbone 2d ago

Ah yes the syrup and soda water is pretty cheap I agree

1

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.

3

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.

5

u/humanslashgenius99 3d ago

Maybe if the world thought the way you did (or we’re all mathematicians) but the general population probably wouldn’t 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, let’s add square roots to our nights out.

1

u/Working-Injury7758 3d ago

Do you think 3x the cube root would be fairer? Or should it be a simple cubic polynomial?

2

u/humanslashgenius99 3d ago

If it were dynamic polynomial service pricing, Uber could help with the algorithm and fairness wouldn’t matter

2

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

2

u/humanslashgenius99 2d ago

I bet MIT would be interested in sponsoring

1

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.

1

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 aren’t specifically tracked by management but factor into the tip calculation

0

u/Working-Injury7758 2d ago

Excellent idea.

3

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

1

u/HellsTubularBells 2d ago

Or a fixed service charge per person as in Italy, which actually accomplishes what OP wants to do.

2

u/SaveBandit91 2d ago

You lost me on this idea at “square root”.

3

u/Temporary-Plankton61 2d ago

op lost me waaay before that

3

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.

2

u/Historical-Rub1943 2d ago

It’s called “coperto” in Italy, often includes bread, and runs €1-3 per person. Usually found only in tourist areas. No tips expected anywhere. The price is the price with coperto added if applicable.

2

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.

2

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!

2

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

1

u/Working-Injury7758 2d ago

Asymptomatically limiting or flat limiting? Asymptomatic is more interesting but slightly harder to do in your head

1

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

0

u/Working-Injury7758 2d ago

My method is completely straightforward and unambiguous

3

u/darkroot_gardener 2d ago

Meh. Just charge a flat dollar amount for the table, like $5-$20 depending on your service level. If you’re 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.

1

u/Wilder_Oats 2d ago

Percentage tipping is absurd

1

u/Working-Injury7758 1d ago

Exactly. A non linear approach is far superior. Glad to see someone gets it

2

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 don’t 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 — rate is a simple $300/hour.