Monthly Archives: March 2007

Suggested Gratuity

Several restaurants are now printing a “suggested gratuity” right at the bottom of the check. However, if you take a close look, you’ll see that restaurants are trying to bump up the tip by calculating the suggestion on the check total, not the total minus tax.

For instance, if the check total is $50, the suggestion claims the following:

  • 10% = $5.00
  • 15% = $7.50
  • 20% = $10

This seems to be correct at first glance, however, the total includes tax and the tax is an extra cost that the restaurant neither charged nor keeps. By including the tax in the total, you’re basically tipping 10%-20% on the tax.

So, let’s assume that your tax rate is 8%. If the check total is $50, you really should be tipping on $46.30. The suggestions should then be:

  • 10%= $4.63
  • 15% = $6.95
  • 20% =$9.26

To put things into perspective, if the suggestions for this check that includes tax in the total are followed, here’s how much you’re actually tipping:

  • 10.80% = $5.00
  • 16.20% = $7.50
  • 21.60% = $10

While this seems minor, it probably is. However, you should be aware that the suggested tip is not accurate if you are depending on it to tip appropriately.