lansbury

What is the logic of those restaurants who impose a tip for groups over a certain size. As an example I often see an 18% tip will be added for groups of 6 or more.

tinman0

Larger groups tip worse. They won't tip say $6 each and make $36, they'll leave a single tip of say $10.

SanDiegogirl

Having recently gone out to dinner with a big group we found out that if the service charge (tip) is mandatory on the menu, then the service charge is levied on the food and drink and THEN the sales tax is levied on the total of the food/drink AND service charge.

So one pays more tax as well. This is because by law a mandatory service charge is deemed part of the bill as a whole and is supposedly reported to the IRS. Whereas an optional tip is not.

RICH

Logic? Nah.
Reasons:
A table of 20 could take up the space & time of 6 tables of 4 (and stay twice as long)
They could deter others from coming in.
They cause disruption to the routine.
They expect bulk discount (and may get it)
People will pay it,
I'l stop there as I can think of just as many counter arguments.

Michael

I suspect it is because there seems to always be one or two people in a large group who don't contribute their fair share of the bill including a tip. When the total tip ends up being very little, everybody then claims that they contributed the correct amount. This seems to occur more often when there are big differences in prices between the meals and drinks that people order (especially if the group is sharing bottles of wine).

Therefore the restaurant levies a specific percentage tip for groups and lets the group figure out how to make up any shortfall.

I know this happens since it happened to me for a bill of about $300 and I collected money and discovered that I received about $30 less than the total bill including tip.

sir_eccles

Yeah but I only had a glass of water and a starter.

RICH

Is that like an appetizer?

kimilseung

Let me try to understand this.
I Should pay tax on any tip I give, it's just that it doesn't get reported, so they do not bother to ask for it?

The receivers of the tips should report the tip and pay tax, and I understand that they would be taxed at an assumed rate of tip even if they say they got none. So wouldn't the tax man know or assume that the tip was paid, and if so, why do they not come after the tax that the giver should have paid for non-mandatory tips, and in turn, why don't the establishments ask for the giver portion of tax on a tip; or is the amount given to the staff less the giver portion of tax?

I am not sure if any of that makes sense, I know what I am trying to ask. Maybe someone will understand.

SanDiegogirl

Hi I'm not sure what you are trying to say, and I probably did not explain myself properly. This is what our group found when we did a search on mandatory tips.

We know that we paid sales tax on food/drink and the 18% service charge.

Mandatory Tips
Often, restaurants and bars will add a preset tip when serving a large group. The percentage that will be added as a tip is usually posted in the menu or advertising brochures. When this preset service charge or "mandatory tip" is added by the retailer to the customer's bill, it is subject to tax. These charges are part of the restaurant or bar's income and should be reported as taxable sales. Tax is due on these amounts even if tax was not charged to the customer. Mandatory tip charges are taxable whether or not the tips are paid to an employee.

Mr Weeze

I saw this on the guardian website today: http://m.guardiannews.com/commentisf...ess-needs-tips

RICH

That is not unlike UK. The included service charge is part of the revenue of the restaurant, and therefore taxable to the restaurant, and up to the business what they do with it. I worked for a company that distributed 40% of the after tax amount to staff, via payroll, so they also paid tax on it...

kimilseung

thanks, I think that answered my question.

Michael

I suspect that person thought he was a big spender and was treating everybody at the table for a total of $34.93 for a party of at leat 8 people ($4.36 per person for 8 people but even less if more than 8 people).

I suspect he was more embarrassed at the small amount per person that he paid than not including a tip.

GeoffM

It was probably you that didn't pay their way! I've seen it happen a couple of times - the bill payer is so engrossed with paying the bill that they forget their own share.

lansbury

People will pay it sums it up. No reason why they should impose a mandatory tip over a certain number.