Compulsory Gratuity Charges

This month's Cornell Hospitality Report has a well written study of compulsory tipping on prix fixe menus, by Shuo Wang and Michael Lynn, entitled The Impact of Prix Fixe Menu Price Formats on Guests' Deal Perception.

In their Executive Summary, the authors state: "The chief implication for restaurants is that even with a prix fixe menu, guests are making value calculations at all times, and the service charge is one of those value issues-one that seems to stick out in customers' minds."

For my international readers, you may want to put the 15% standard USA gratuity in proper context. Generally, I have always been put off by compulsory tips. Even though I normally tip higher than our 15% standard, it really hits me negatively when I'm required to tip 20%.

The study shows required tips below the 15% standard are perceived as good value. Most diners expect to pay the servers an extra 15%. Building in a 12% mandatory gratuity, allows these guests to provide an extra 3% or more at their discretion. Asking for 18 or 20%, makes additional tips for extraordinary service unlikely.

Caterers often ask for the additional 18% in their menus and contracts. I encourage you to read the Cornell study. You will be rewarded with excellent insight and a few suggestions for turning the compulsory gratuity to your advantage. In our value conscious society, an aggressive tip strategy could hurt you in the word-of-mouth arena (both in social media sites and regular discussions in social networks).