Restaurants must pay credit card companies a fee that?s a percentage of the total tab, including tips. So owners are passing on the costs to servers, taking a slice of their earnings.
The restaurant tip used to be simple: a few singles left under the coffee cup at breakfast, perhaps a $5 bill at lunch and maybe a 10-spot for a casual dinner with the family.
That was before credit cards became our favorite way to pay. Diners now use plastic 80 percent of the time at fine-dining establishments, 60 percent of the time at casual restaurants and even 25 percent of the time for fast food, according to the National Restaurant Association.
Restaurants have to pay fees on every card transaction, usually 1.8 percent to 3.5 percent of the bill. That includes the tip if it is added to the receipt.
Instead of covering the fees on those charged tips, some restaurant owners are making the servers pay, deducting that small percentage from the gratuities left on credit cards.
Is it reasonable for management to ask servers to pay their share, or are waiters and waitresses being shortchanged? The answer, of course, depends on where in the restaurant you?re standing.
Servers
For restaurant servers, tips are more than money. They?re personal. The amount a customer leaves is a measure not only of the dining experience, but also of the server?s skills, personality and likability.
It?s easy to understand why waiters and waitresses are passionate about their tips. And protective.
Most servers already share their tips with busboys, hostesses and/or bartenders. Some restaurants require that "tip-out" share, while others make it voluntary. Many servers recognize the value of the people clearing and setting tables, running food and mixing drinks and are willing to share their gratuities.
That?s not always the case when the boss announces that he?ll deduct the 1.8 percent to 3.5 percent credit-card processing fee from their charged tips.
"If someone told me that, I wouldn?t even take the job," said Mindy Fluharty. " ?We?re taking some of your money.? Why? It?s not yours to take."
Fluharty, of Cleveland, has been waiting tables for 36 years. She works mornings at Bucci?s Brick Oven in Middleburg Heights, Ohio. Virtually all her customers charge their meals. She gets the full amount of her charged tips. If she didn?t, she?d move on.
Servers are categorized as tipped employees. In New York, the minimum wage is $7.15 per hour. Food service workers earn a minimum wage of $4.60 per hour because their total compensation includes expected tips. In seven states, including California, restaurant servers make the same minimum wage as other employees.
The wait staff relies on tips to lift that wage to and beyond $7 an hour.
When tips are figured in, the nation?s 2.4 million servers made an average $8.93 an hour in 2007, according to the Bureau of Labor Statistics.
Customers
When it comes to tips, Judy Oliver refuses to leave even a dime on the table. Instead, she puts the gratuity ? always cash ? directly into her server?s hand. That way she knows the waiter or waitress is getting it, and no credit-card fees will be deducted.
She wishes she could go even further. "I would do a ?direct-deposit? tip if I could," said Oliver, of Twinsburg, Ohio.
She said she used to do what many others do when the bill came: She?d add a gratuity to the charge receipt, making things easy and convenient. Oliver assumed charged tips were like cash tips, and the full amount was going to the server.
When she learned that wasn?t the case at some places, she was stunned. "I was disgusted," she said. "I thought the servers were being ripped off."
Even Ed Elliott, chairman of the Ohio Restaurant Association, said he was unfamiliar with the deductions until contacted by a reporter. "I?ve never heard of it," said Elliott, who owns the Plaza Inn in Mount Victory, Ohio. "I?ve been in business 49 years."
And would he consider deducting the fees from charged tips? "I wouldn?t ask my employees to do that," he said.
Allen Hook of Westlake likes the convenience ? and the points ? that come with using a credit card, and he doesn?t like carrying bills and coins.
With costs soaring for restaurant owners, who already work on small margins, he sees no problem having a server cover the fee on a charged tip. "That?s not an unreasonable thing to ask a server to do," he said.
Well, except maybe the customers withdrawing from their ATMs.
Restaurant owners
How can they take their servers? tips? The answer, said restaurant owner Brad Friedlander, is that they are not doing the taking.
"It?s the credit-card companies that are taking the money," said Friedlander, owner of Moxie and Red the Steakhouse, two restaurants in Beachwood, Ohio. "We don?t take the money. We don?t get the money."
Friedlander said he deducts 1.5 percent from the tips charged to credit cards, roughly splitting the difference on a 3 percent processing fee. It has been the policy at Moxie and Red for years, said Friedlander, who seemed a bit surprised that it could even be an issue.
"It actually makes a lot of sense from where I?m sitting," he said. "We supply everything for the server. They?re like an independent contractor. They?re getting paid this money, and we shouldn?t lose money on their tip."
Marlin Kaplan, chef and owner of both One Walnut and Luxe in Cleveland, takes 3 percent out of charged tips. He believes customers need to look at the issue in a different way. Fees ? from credit-card companies, your favorite airline, even Ticketmaster ? have become a part of life.
"There?s a fee built into everything. Five years ago, did we all pay fees at the bank? No," said Kaplan. "It?s just what has happened in the world of business."
John Campanelli is a reporter for The Plain Dealer of Cleveland. He can be contacted at
jcampanelli@plaind.com
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