Don’t Do This When Leaving a Gratuity at a Restaurant

“You neglected to note that when the restaurant ‘calculates’ the tips they usually do it including the tax now which has nothing to do with the food purchased and simply pads the tip.”

Don’t Do This When Leaving a Gratuity at a Restaurant

What you just read was this comment which was posted by Jim Richter — who is a reader of The Gate — in response to this article pertaining to whether or not a gratuity of 25 percent has become the new default tip to leave to members of the staff at a restaurant after waiting on you and serving you.

You are supposed to calculate the percentage of the total bill prior to any taxes and fees added to it when leaving a tip at a restaurant. For example, if your bill was $100.00 and you want to leave a tip of 15 percent, you would leave $15.00…

…but if you dine at a restaurant located within the special district of the Metropolitan Pier and Exposition Authority in Chicago, be prepared to pay as much as 11.5 percent in combined taxes on your meal, which includes a sales tax of 10.25 percent — plus an additional meals tax of 0.25 percent and another one percent tax for the Metropolitan Pier and Exposition Authority. This will add $11.50 to the total of your bill used in the aforementioned example, bringing the total to $111.50.

Including the combined taxes in figuring out how much of a gratuity you want to leave the waiter or waitress who served you adds an extra $1.73 to your bill. That might not seem like much money — but calculate the number of times you dine out at restaurants within one year and see how much that figure adds up. For example, dining out once per week using $100.00 as an average means that you could be tipping $89.96 too much per year…

…and by blindly using 25 percent of the total as the amount you decide to tip automatically via the handheld electronic card reader, the total increases to $2.88 per dining experience — which becomes as much as $149.76 per year.

Summary

Ben’s Best Kosher Delicatessen

Photograph ©2015 by Brian Cohen.

By including taxes and fees as part of the equation of figuring out how much of a gratuity to leave to the person who served you in a restaurant, you are overpaying — and it seems that more restaurants are engaging in this sneaky practice by including those taxes and fees in the convenient calculation of the tip for you.

That almost seems to take a page from the deceptive practice of dynamic currency conversion, through which some operators of automated teller machines of banks and merchants in foreign countries offer you the opportunity to pay for a product or service in the currency of your home country with the illusion that it is being done for your convenience — but usually at a significantly increased cost which translates into pure profit for the seller.

Gratuities and tips have long been controversial with regards to travel and dining — to the point of contentiousness from all sides of the issue, as evidenced by the following articles which I wrote for The Gate over the years…

All photographs ©2015 and ©2019 by Brian Cohen.

34 thoughts on “Don’t Do This When Leaving a Gratuity at a Restaurant”

  1. Ken says:

    Actually the total tax on a meal in Chicago is 11.5%, which includes a city tax and the Metropolitan Pier Tax, and it will soon go up to 11.75% when the City doubles its .25% tax.

    1. Brian Cohen says:

      Thank you for that latest information, Ken.

      The article has since been corrected.

    2. Annette Griffith says:

      I leave a 10% tip. It’s all god asks from me and I figure that’s as good as a waiter/waitress is good for. If its good enough for God then it’s good enough for them. Actually I think tips should be done away with. These people work hard and deserve to be paid at least minimum wage by the employer. It shouldn’t be left to the customer to pay their salary.

      1. Jess says:

        Wow! Your church tells you to tip 10%?! Why, so you can still tip you’re church? So your pastor can have a nice house and car? You have obviously have never worked in the service industry. Do you realize till I tip out my bartender, busser, hostess, and back of the house I’m left with ‘maybe’ $6.(assuming your bill is $100, which probably wouldnt be even close for your cheap asses) Please do the service industry a favor and just cook your own food, I’m sure Jesus, I mean your church, would aprove!

        1. Jennifer says:

          When restaurants make waitresses pay the other staff or busboys bartenders and the hostess they base the amount you are required to pay off the bottom line of the check after taxes. Waiting tables is one of the hardest jobs ever as a good portion of the customers are rude and disrespectful.

        2. Obviously you don’t go to church, the gentleman was talking about 10% tides, as I’m sure you don’t know what that is either look it up!

          1. Kissa Miassa Don says:

            Tithes

      2. Robert says:

        If servers and bartenders “were paid at least minimum wage” they would be taking a pay cut. They are paid less because with the tips, they make substantially more than minimum wage.

  2. Billy Bob says:

    My wife (from a non-tipping country) and I eat out much less now due to tip lines appearing on everything. We don’t like the coercion.

    1. Brian Cohen says:

      I find your statement interesting, Billy Bob.

      Do you believe that — based on your experience — restaurants may be pricing themselves out of the market due in part to the increasing expectation of more expensive gratuities?

  3. Jon Ben says:

    I do tip but I find myself eating less and less at places where tipping is required or expected. Its just not worth the money any more as there are now healthy fast choices in most places. Not really worth the time commitment either, its just energy, if its healthy then thats good enough.

    1. Brian Cohen says:

      That is an interesting perspective, Jon Ben.

      I wonder if more and more people are feeling that way…

  4. Marco Esquandolas says:

    People that can afford to spend $100 on a dinner, but can’t afford to throw $2 more to the server that showed you a nice time are cheap, and you should stay home. It’s $2 people. That’s not much, but it’s everything to your waiter, who depends on tips for their income. Sheesh!!! What’s a couple more bucks when you’re already dropping a C note! If you can afford $100 you can afford 2 more.

    1. Brian Cohen says:

      I think you missed the point of the article, Marco Esquandolas.

      If diners want to pay the extra two dollars, it should be voluntary — not deceived by the restaurant by automatically including that extra two dollars into the gratuity…

      …but let’s go with your point for a second: should people who can afford to spend $100.00 on dinner pay $5.00 more? $10.00 more? $20.00 more? Than a 15 percent tip? A 20 percent tip? A 25 percent tip?

      Should the meal, gratuity and taxes be so expensive that dining out in a restaurant becomes an exclusive activity once again because few people can afford it?

      In other words: what is the threshold? What is the limit, in your opinion? Where does it end?

      1. Arazorbacker says:

        In my town, there is one major restaurant that calculates the tip without the taxes. I find myself eating there. The attention to detail in this area makes me believe their attention to detail is better in all areas. While I frequently tip 20 percent, I don’t think I can go higher. Food prices have increased. That has already led to an increase in wages for the wait staff. Ten years ago, I could by a meal for $10 and a $1 tip was expected. Now the meal is $20 and a $3.60 tip is expected.

      2. william schmitt says:

        $100 the tip 18 or 20 percent quite generous you have to considered a restaurant is it over price or under price tip should be evaluated by the client

      3. Dee says:

        I tip the subtotal amount and usually 15 to 20% depending on the server and I try to give cash instead of adding it onto my credit card. They do work hard and as long as they’re courteous and attentive I tip well.

    2. Lack says:

      If you can charge patrons $100 for dinner, perhaps you should be paying your employees enough that $2 is not everything to them?

      1. Karen Crow says:

        Then that dinner would cost the patron $120.00

    3. Greg says:

      Price is not a function of what you can afford. It’s a function of what the customer is willing to pay vs what the cost is to provide what they’re willing to pay.

      I applaud restaurants that operate with a cost that supports professional staff who are able to thrive without tipping.

      1. Brenda says:

        I’ll bet that server remembers your cheap butt the next time and pawns you off to another unsuspecting server, avoiding you like the. plague

  5. JZ says:

    The fact is that the waiters in the US expect tips because the restaurants are allowed to pay them below minimum wages. Obviously the higher expected tips result in lower wages restaurant owners need to pay to retain their employees. Tips are subsidies to restaurant owners rather than the serving staff.

    1. Jess Owen says:

      There are a few states in which servers are paid the full State mimimum wage, $13.50 in Washi gton State as of 1/1/20,and up to $15.00 in some municipalities.

      Restaurants make 2-5% on average per transaction. That means that on a $100 transaction the credit card processor gets ~$3.00, the restaurant gets ~$4.00, and when you leave a 15% tip the server gets ~$15.00 (before tipping out other staff if the establishment has a tip sharing policy) plus their hourly wage. Yes, the severs earn ~ 3 times what the restaurant earns on every transaction.

  6. Zack says:

    You obviously never worked as a server. If you did you would never put out an article telling people to pay you less. Your article is now the reason i deleted this news feed from my phone.

  7. J.M.D. says:

    How about we raise server pay to the number that everyone thinks they earn with that pitiful minimum the law states and their tips. Not what they actually make, what people THINK they make as clearly that’s a high number. Then restaurants adjust prices to compensate, and nobody has to tip ever again. This removes the concern over the extra $1.37 you might accidentally pay the people who serve you.

  8. Mick says:

    I just hate the practice of listing several suggested tips on my bill e. g. 15%, 18%, 20%. This is all too common now and puts me right off tipping even the minimum.
    If tipping is for service it makes no sense to have the amount as a percentage as all customers are entitled to the same service, regardless of how much they spend.
    Americans are totally obsessed with customer service and there is a fake over the top niceness in the provision of services everywhere to meet their expectations which is something that foreigners like me find very irritating. This is most obvious in the restaurant where the server is constantly checking on me without my asking, in effect reminding me that I will have a tip to pay.

  9. Richard vore says:

    They should do away with tipping and pay servers a living wage, if that requires me to pay more for my food then so be it. I tip and I tip well but I don’t like it as I feel I’m paying the restaurants staff. Maybe everyone should be payed two dollars an hour and everyone gets tips depending on how good of a job they do, that wouldn’t last long. Plus if you do tip then tip on how well you were served, it seems too many servers don’t know the definition of gratuity. When you go to a restaurant with a larger group why is the tip added to your bill automatically? It is no longer a tip at this point it is a service charge yet they still call it a gratuity.

  10. Divas says:

    The USA really is a mucked up country.
    Just pay the people properly and do away with this nonsense.
    Join the civilised world.

  11. Pat winkle says:

    A tip is a reward for doing a good job and giving good service with a smile come on people its not something you owe

  12. Jess Owen says:

    Any directly tipped employee is working a Base+Commission Sales Position. The Tip left by the customer is the Commission for the sale. Unlike other Commission Sales jobs, the Customer is in complete control and decides what the Commission will be.

    Imagine if you had that kind of power as a consumer when you purchased your next House, or Car, or when you took out the loan from the bank for those items. Yep, when you take out a loan, the loan is a product that you are purchasing and somebody is making a commission.

  13. James says:

    Tithing is of your first fruits.tith equates to 10 % .that is all GOD Ask for so why should anyone else ask for more? JGB

  14. Melissa Patton says:

    Tipping is not for the service you get, it is to make up the difference between what the restaurant pays per hour and minimum wage. If a server does not make enough in tips to equal minimum wage then the business is required to make up the difference. If you enjoy going out to eat then tip your servers regardless of how you feel about their service. You are there and they are waiting on you. If the servers were not there you would not be able to go out to eat and you would have to cook your own meal and do all the clean up. Quit bitching about the tip. The server may be having a bad day. Do you get docked at work when you have a bad day? I seriously doubt it. Servers are only human! As are people who work at McDonald’s and other fast food chains and they deserve to make a decent living too!!!

  15. Chris says:

    The main thing I learned from this article: Don’t eat out in Chicago.

    1. Doug says:

      So I generally tip 20% of the total but I never leave less than $5.00 because the servers deserve decent compensation. As to the guy that gives 10% because he believes that is What the Bible says, he is wrong in reality 23% is what the Bible commanded in the days of the Pharasies.

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