Tipping etiquette and Jamaica.

[Blake]

Blake,

It seems that you are not understanding the concept that the service charge IS part of the cost of the meal.

Except that a service charge is added AFTER the meal, it is NOT part of the meal unless you consider gratuity part of the meal.

To call it a tax would be incredibly dishonest and is also against the law. It is NOT a tax or some strange/double dipping additional charge - it could have been added DIRECTLY into the item cost.

It's no more dishonest than saying it's part of the meal, at this point I think we need to break down what the food price goes towards:

1. Rent
2. Food costs
3. Employee overhead
4. Utilities, bills, etc.

But to add it into the food cost would not help the employees take home pay when times are busy.

Why wouldn't it help the employees take home pay? Are you saying that the restaurants would withhold it and pocket the money? Why are we playing games of transparency when it comes to the cost of running a business?

This simple procedure allows the employees to have a bit higher take home pay when times are good. In order to help the employees receive a little more benefit from the tourism industry, the service charge is calculated as a separate item. As pointed out, this allows all the employees to receive a bit more money than just their hourly wages when times are busy. Think of the shared service charge as a bonus to their hourly wages.

Can we call it what it is, a tourism tax? I don't necessarily see anything wrong with it, what I have issues with is the sugar coating that goes into it.

I'm all for paying the employees fairly and especially when times are busy; but the meals should be transparent and the restaurant owners should be the ones to shell out and the prices should reflect it.

As I mentioned in the other Service Charge thread that was posted earlier, "It is often speculated that the employees never see the service charge. You may even hear that from the employees themselves. But this is simply not true. If a business has a service charge, then the business can be fined and even closed should they do not share this with all their hourly employees. A server may say they never see the money, but they do see their percentage of that charge which is of course much smaller depending on the number of employees. For the example above, the server may feel they didnt get anything from it, because they never saw 90% of the charge. But they did receive their percentage on their paycheck." Simply put, not every employee is privy to how the restaurant's accounting operates, nor is it in their immediate interest to let you know the exact details.

So are we in agreement that the servers need to be honest and say that they do see a portion of it?

Why was the manager lying to the other person about what the service charge is for?

It's in their immediate interest to be honest with the customers instead of lying through their teeth.

You ask why the food prices are on par with the US prices. That is because Jamaica is a small developing island nation and needs to import the vast majority of what is served. Take into account that fuel prices are way more expensive in Jamaica (gas is about us$6 a gallon, what did you pay this weekend?) and electric charges are higher than the US, and imported items are higher in cost than in the US

I understand that Jamaica is a small developing island and needs to import the majority of items. That said if it isn't sustainable then perhaps they need to reevaluate the business model, countries(the US included) need to try to not rely on imports to sustain the entire nation.

Fuel prices here are $4-5 a gallon, electricity is extremely expensive(Over $1,000 a month for each of my stores in utilities), rent is Ridiculous(up to $200 a square foot), regulations cost a lot to comply with, and shipping can kill our profit margin.

We also tend to have higher employee costs(I start my people at $10-$20 an hour), imported items are still prohibitively expensive, and we tend to have a LOT of taxes.

If you want to say that food prices in Jamaica are the same yet don't include labor(given that this is what the service charge is for) I have a hard time believing that the food costs reflect purely import costs(especially for the places using local seafood) alone.

All of what you described every US business deals with on a daily basis, yet we don't have service charges.

You are not in the USA but Jamaica, so you have to readjust your thinking to take into account the differences between a major world power with vast natural resources and a small developing island nation.

I will adjust my thinking when I'm actually in Jamaica, currently I AM in the USA. That doesn't mean I can't question why there is a service charge above and beyond the cost of the food+gratuity.
Transparency is key if you want to build good will, the service charge should be part of the food and if you want to keep gratuity go ahead(even though it doesn't foster better service).

Many restaurants choose to not have a service charge and raise their menu prices to reflect this. If the government dis-allowed service charges tomorrow, the menu item costs would go up at places that have a service charge. You would pay the same either way. But at present, for places that do have a service charge, this simple accounting breakdown allows the employees to directly benefit from tourism when times are busy. And of course you will pay GCT on the food bill - both the menu item cost AND the service charge (if applicable) are the cost of the meal.

I would prefer that there be no service charges and allow the restaurants to compete on an even foot.

I'm of the opinion that a service charge does Jamaicans a disservice because when foreigners sit down they're not going to have this entire forum's worth of perspective, most people will see a service charge and assume(right or wrong) that it IS the gratuity, especially on meals that are more expensive.

When you Mandate a fee to pay the employees it isn't optional and it doesn't foster good will, it leaves a bad taste in a lot of people's mouths, especially when the managers don't even know how to explain the service charge!

[Rob]

Except that a service charge is added AFTER the meal, it is NOT part of the meal unless you consider gratuity part of the meal.

Huh? It IS part of the meal charge. It is not optional or at your discretion like the gratuity/tip. They are in no way the same thing. I suppose you could say it is added AFTER the meal, because it would be impossible to calculate a 10% charge for something that you havent ordered or eaten yet... But when the menu says 10% service charge, you simply add 10% to each item that you order on the menu.

It's no more dishonest than saying it's part of the meal, at this point I think we need to break down what the food price goes towards:

1. Rent
2. Food costs
3. Employee overhead
4. Utilities, bills, etc.

It is dishonest AND illegal to call it a tax. It is not charged by the government and it is not paid to the government. It is NOT a tax and cannot be called one. And all those costs do allow the restaurant to arrive at a cost for their food items. And the service charge is most certainly a part of the final meal cost. It is an accounting procedure that allows for employees to benefit when times are busy as a wage suppliment.

Why wouldn't it help the employees take home pay? Are you saying that the restaurants would withhold it and pocket the money? Why are we playing games of transparency when it comes to the cost of running a business?

Just because you dont understand something does not mean there is anyone playing any games. I will use a simple example to illustrate how it works. Lets use a restaurant with 10 employees. In slow season, when times are slow and no meals are sold, the employees get their hour wage and that is all. In busy season, when the restaurant sells jm$100,000 worth of food in a day, the employees each receive an additonal 10% of the 10% service charge, which would increase their daily take home pay by jm$1000 per day (10% of $10,000 service charge collected). For a business that does not have a service charge, the wages may or may not be slightly higher, but there is no guarantee as wages in tourism have to take into account slow season. But the service charge is one way to provide a bit more take home pay for employees who share in the benefit from that practice.

Can we call it what it is, a tourism tax? I don't necessarily see anything wrong with it, what I have issues with is the sugar coating that goes into it.

It cannot be called a tourism tax because it is NOT a tax. It is an accounting procedure that benefits the employees who share in that service charge.

I'm all for paying the employees fairly and especially when times are busy; but the meals should be transparent and the restaurant owners should be the ones to shell out and the prices should reflect it.

You keep using the buzz word "transparent". How is the service charge that is printed on the menu NOT transparent? It is not being hidden and is being called exactly what it is. It is a service charge, not a tax or gratuity -which it is not. And, are you not aware that as a paying customer that you are the one who is actually paying their wages? The owners dont print their own money and pay wages, they receive it from their paying customers and pay their employees wages accordingly.

So are we in agreement that the servers need to be honest and say that they do see a portion of it?

Why was the manager lying to the other person about what the service charge is for?

It's in their immediate interest to be honest with the customers instead of lying through their teeth.

One cannot explain what they do not understand. You are having problems understanding this concept and you are a business owner. As I have already mentioned, not all employees or even managers understand this perfectly. To demand an employee to understand this and be able to quickly explain it seems a bit unrealistic.

I understand that Jamaica is a small developing island and needs to import the majority of items. That said if it isn't sustainable then perhaps they need to reevaluate the business model, countries(the US included) need to try to not rely on imports to sustain the entire nation.

Have you taken any time at all to research the realities of Jamaica before making this statement? How can a small island, the size of Connecticut with minimal natural resources NOT rely on imports to feed 3 million plus people?

Fuel prices here are $4-5 a gallon, electricity is extremely expensive(Over $1,000 a month for each of my stores in utilities), rent is Ridiculous(up to $200 a square foot), regulations cost a lot to comply with, and shipping can kill our profit margin.

We also tend to have higher employee costs(I start my people at $10-$20 an hour), imported items are still prohibitively expensive, and we tend to have a LOT of taxes.

If you want to say that food prices in Jamaica are the same yet don't include labor(given that this is what the service charge is for) I have a hard time believing that the food costs reflect purely import costs(especially for the places using local seafood) alone.

All of what you described every US business deals with on a daily basis, yet we don't have service charges.

You really do need to research the cost associated to running a business in Jamaica. That is well beyond the scope of this tourism focused message board. But please remember that the service charge does not pay for the labor costs, but adds a bit of bonus when times are busy to that hourly wage that is already being covered by the menu item cost.

I will adjust my thinking when I'm actually in Jamaica, currently I AM in the USA. That doesn't mean I can't question why there is a service charge above and beyond the cost of the food+gratuity.
Transparency is key if you want to build good will, the service charge should be part of the food and if you want to keep gratuity go ahead(even though it doesn't foster better service).

To understand the service charge in Jamaica, you have to keep Jamaica in mind when doing so. Trying to understand it from a USA point of view while in the US will only lead to the confusion you seem to be experiencing with this accounting practice.

I would prefer that there be no service charges and allow the restaurants to compete on an even foot.

You can prefer that, but that doesnt change the fact that service charges exist. Business owners here in Jamaica dont seem to have any problem with competing with this accounting practice.

I'm of the opinion that a service charge does Jamaicans a disservice because when foreigners sit down they're not going to have this entire forum's worth of perspective, most people will see a service charge and assume(right or wrong) that it IS the gratuity, especially on meals that are more expensive.

This is why I am taking the time to explain this as clearly as possible. So that everyones understands that a service charge is not a tax or an optional gratuity/tip. It is part of the cost of the meal that is purchased.

When you Mandate a fee to pay the employees it isn't optional and it doesn't foster good will, it leaves a bad taste in a lot of people's mouths, especially when the managers don't even know how to explain the service charge!

The government is not mandating the service charge, so it is up to the business to choose to have one or not. You can choose to patronize the businesses or not - that is your right as a customer. I agree that managers should understand the concept, but in reality, not all do.

[Blake]

Huh? It IS part of the meal charge. It is not optional or at your discretion like the gratuity/tip. They are in no way the same thing. I suppose you could say it is added AFTER the meal, because it would be impossible to calculate a 10% charge for something that you havent ordered or eaten yet... But when the menu says 10% service charge, you simply add 10% to each item that you order on the menu.

It isn't part of the meal charge if it isn't applied until the end of the meal. Why can't the 10% be calculated as part of the meal?

It is dishonest AND illegal to call it a tax. It is not charged by the government and it is not paid to the government. It is NOT a tax and cannot be called one. And all those costs do allow the restaurant to arrive at a cost for their food items. And the service charge is most certainly a part of the final meal cost. It is an accounting procedure that allows for employees to benefit when times are busy as a wage suppliment.

It's not illegal for me to refer to it as a "tax", given that I don't mean it in the literal term. To me the service charge is like a "tax" on stupidity, except it's geared towards tourists.

It's an accounting process that shouldn't be around in the first place in my opinion.

Just because you dont understand something does not mean there is anyone playing any games. I will use a simple example to illustrate how it works. Lets use a restaurant with 10 employees. In slow season, when times are slow and no meals are sold, the employees get their hour wage and that is all. In busy season, when the restaurant sells jm$100,000 worth of food in a day, the employees each receive an additonal 10% of the 10% service charge, which would increase their daily take home pay by jm$1000 per day (10% of $10,000 service charge collected). For a business that does not have a service charge, the wages may or may not be slightly higher, but there is no guarantee as wages in tourism have to take into account slow season. But the service charge is one way to provide a bit more take home pay for employees who share in the benefit from that practice.

They sure as hell are playing pricing "games", a service charge is nothing more than a way for the business to have "advertised" lower prices with the requirement that customers pay the service charge in addition to the advertised price.

Do you really see nothing wrong with a business having ala cart additiotional charge?

You can talk about it being a bit more as a take home pay for the employees, but at the end of the day the business can just charge 10% more and pay their employees more. It's a net wash in terms of take home pay for the employees.

It cannot be called a tourism tax because it is NOT a tax. It is an accounting procedure that benefits the employees who share in that service charge.

Maybe tax is the wrong word to use, but have you never heard of the term tourism tax? It doesn't HAVE to be a tax, it can be used to refer to any charge or cost generally pointed towards tourists to part them with their cash.

Calling it an accounting procedure that benefits the employees is a bit of a stretch, that implies that the base price of the meal doesn't cover employee wages.

You keep using the buzz word "transparent". How is the service charge that is printed on the menu NOT transparent? It is not being hidden and is being called exactly what it is. It is a service charge, not a tax or gratuity -which it is not. And, are you not aware that as a paying customer that you are the one who is actually paying their wages? The owners dont print their own money and pay wages, they receive it from their paying customers and pay their employees wages accordingly.

They're not transparent given that it's often not clearly stated what the service charge is for. If it's LITERALLY what it's for then why am I paying a gratuity to the server?(Ethics about taking care of the server aside and how poor Jamaica is or isn't) If you say it's a literal charge then the restaurant is charging me for the service provided.

Do you enjoy paying for services rendered twice?

As a paying customer I expect to pay the stated price+gratuity(when in a country that operates on a tipping system), I don't expect to pay for the same service twice.

One cannot explain what they do not understand. You are having problems understanding this concept and you are a business owner. As I have already mentioned, not all employees or even managers understand this perfectly. To demand an employee to understand this and be able to quickly explain it seems a bit unrealistic.

I'm not having a problem understanding why this concept is so favorably looked upon, I understand why businesses think they can get away with nickle and diming the customer, I don't understand why people would support it.

If a MANAGER of an establishment can't explain why a charge exists on a bill for HIS establishment then I don't see why a customer should be forced to pay it.

Have you taken any time at all to research the realities of Jamaica before making this statement? How can a small island, the size of Connecticut with minimal natural resources NOT rely on imports to feed 3 million plus people?

Sure I have, that doesn't mean I agree with the massive amount of importing occurring. The problem is the fact that there are 3 million people on an island the size of Connecticut, we should all strive for a sustainable future that uses minimal importing.

You really do need to research the cost associated to running a business in Jamaica. That is well beyond the scope of this tourism focused message board. But please remember that the service charge does not pay for the labor costs, but adds a bit of bonus when times are busy to that hourly wage that is already being covered by the menu item cost.

Service charge+employee pay+benefits=total compensation. The service charge does affect how much customers "pay" the restaurant for labor.

I understand the service charge, I understand it's supposed to be a "bonus" for the employees, but it is a fee directly paid by customers, and does affect the price of a meal.

To understand the service charge in Jamaica, you have to keep Jamaica in mind when doing so. Trying to understand it from a USA point of view while in the US will only lead to the confusion you seem to be experiencing with this accounting practice.

That's silly, you can understand a service charge and understand a culture without being confused. I'm not confused with this "accounting practice", I'm annoyed by it's existence and annoyed that the restaurants think customers aren't capable of understanding that we're getting hit twice for "service"

You can prefer that, but that doesnt change the fact that service charges exist. Business owners here in Jamaica dont seem to have an problem with competing with this accounting practice.

That's nice that all of the businesses feel that having an additional fee on top of the meal works well for them. That doesn't mean the customers don't have a problem with it.

This is why I am taking the time to explain this as clearly as possible. So that everyones understands that a service charge is not a tax or and optional gratuity/tip. It is part of the cost of the meal that is purchased.

Then why isn't it factored into the price of the meal? It's quite simple, if it isn't optional then it should be automatically rolled into the price of the food.

The government is not mandating the service charge, so it is up to the business to choose to have one or not. You can choose to patronize the businesses or not - that is your right as a customer. I agree that managers should understand the concept, but in reality, not all do.

So it isn't government mandated? Which means it's businesses tacking on additional fees because they want to, not because they "have" to.

A restaurant's goal should be to have happy customers, happy customers shouldn't have to sit there doing math and the prices should be one price, that way customers can make an informed decision.

I'm not sure I can word it any plainer in that service charges just breed resentment and confusion, they don't benefit the customers and in my opinion they don't benefit the restaurant workers because the restaurants will see the service charge and manipulate employee compensation accordingly.

[captaind]

Ditto