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Dining Gratuity Proposal

Prepared for Doug Young, General Manager of Tejas Cafe

Submitted by (name)

(date)

Table of contents

Letter of Transmittal…………………………………………………1

Overview…………………………………………………………….2

Introduction………………………………………………………….2

Challenges…………………………………………………………3-4

Costs…………………………………………………………………4

Measure results……………………………………………………....4

Recommendations…………………………………………………...5

Appendices A-B……………………………………………………..6

Appendices C-D…………………………………………………..7-8

Sources Cited………………………………………………………..9

Appendix A - Interviews

Appendix B – Online article

Appendix C - Survey

Appendix D - Waiters and Waitresses Job Tasks

Letter of Transmittal

(name)

Assistant Manager

1404 Graham Street

Unit 203

Whistler, BC

V2K 0B9

604-935-8900

Doug Young

General Manager

Tejas Cafe

3150 Signal Hill Drive

Victoria, BC

V3H 3T2

March 23, 2009

Dear Mr Young,

Please accept the enclosed proposal regarding the dining gratuity for our servers. Through my proposal I hope to show to the General Manager that a mandatory gratuity system will benefit the overall organization by improving our employees’ satisfaction as well as informing our customers about the standard tipping system in Canada. I hope my recommendations will be seriously considered and implemented, since they will contribute to ameliorate the current organization climate.

The goal of this report is to have the mandatory tipping guideline implemented by the end of April 2009 at the latest. This report will point out the multiple benefits of adopting this policy but also the challenges to overcome. I have also included the interviews with three members of our staff and the satisfaction survey that I will conduct after 3 months of policy adoption.

With the participation of our staff interviews and the online research, I have prepared this proposal: I am very grateful for their support in my proposal.

Thank you for your time and consideration. If you should have any questions or suggestions, please do not hesitate to contact me.

Sincerely,

(name)

Overview

Nine years ago, I got a summer job as a server at Abracadabar, café-pub in Paris, France. I remember that customers used to leave approximately 10 percent tips for a party of eight or more and that was really appreciated. But on a daily basis, most of my customers left very small tip, if any. In France and some other countries in Europe, it is quite common to expect very low tips close to 5% of the bill at the most.

When I moved to Canada three years ago, I was amazed to see that people do leave generous tips in restaurants, cafés and bars. In North America, a 15 to 20 percent tip is the usual amount that should be left for good restaurant service.

The purpose of my proposal is to persuade the General Manager to adopt a mandatory tipping guideline in order to improve servers’ satisfaction.

For this proposal, I actually interviewed three of our servers to get their feedback and suggestion regarding the current situation.

Introduction

I’m writing to propose the adoption of a mandatory tipping policy of 15% at Tejas Cafe. As Victoria Island is becoming a growing touristic destination, some foreign tourists might not be aware of the Canadian tipping rules and therefore, leave small tips or none. Aside of tourists, our servers have noticed that many of our local customers leave no tips and consider tipping as an option or a sign of appreciation. By frequently being "stiffed" by customers, our servers are unhappy and worried about their future.

As the assistant manager, I’m really concerned about maintaining an outstanding level of service and I know that our servers are generally providing an excellent service. I believe that a mandatory tipping guideline is necessary to bring servers satisfaction back. Moreover, it’s important to stress that tips represent 80 percent of the servers’ income. By not receiving decent tips, our servers are facing a difficult financial situation that might push them to abandon the position.

I would like to take this time to point out the benefits that would be realized as a result of implementing a mandatory tipping guideline.

 Reduction of employees ‘complaints

 Satisfied employees means better service for our customers

 Reduce turn-over and keep more professional staff

Therefore, this solution is necessary from three points of views:

 Our customers: Many customers are familiarized with our staff and appreciate the servers’ enthusiasm and professionalism. By assigning mandatory gratuities, we would inform our customers

 Our employees: We want to keep our servers satisfied; they need to receive a fair amount of tips on a regular basis.

 The entire organization: A high turn-over is negatively perceived by our stakeholders, that’s why it’s crucial to solve this issue and keep our servers. We’ll also generate higher performance by increasing our profits.

Challenges

There are a number of challenges which need to be identified:

Losing our loyal customers: many customers avoid any place that will force them to tip.

⊗ Solution: We are providing excellent service that justifies our policy. Some restaurants like the new Chez Marie in Montreal, the Lebanese restaurant Kayan Mediterranean Cuisine in Vancouver has the automatic 15% gratuity to the bill.

Comment by Mark, Aug 2005: “I generally avoid any place that will force me to tip. You would better believe that if I do eat at one, the service had better be exemplary, and the manager will hear about it if not”

Article posted by Terence, January 2004: “I have absolutely no problem leaving a big tip if I think the service is exceptional.”

Customers don’t accept the mandatory tipping unless it’s large party policy.

⊗ Solution: Some diners don't understand that hourly wages for servers didn't go up, even though the cost of living has. Most of our servers are part-time employees who don't qualify for health care benefits.

Many servers also "tip out", or share a portion of their tips with the bartenders and hosts they work with. Some restaurant chains even require tip-outs as a cost-saving measure. If tips are shared with bartenders and hosts, the restaurants can pay those employees less than the non-tipped minimum wage. (Nichole Aksamit, world-Herald Staff Writer, September 1, 2008)

Some customers are not aware of the North American mandatory tipping system.

⊗ Solution: In restaurants with especially high percentages of foreign tourists, it would be a good idea for a few lines of type on the menu, or even a few lines of type on the check, to say something along the lines of: “A gratuity of 15 percent of the pre-tax cost of a meal is standard, and very much appreciated.”

Implement this mandatory tipping system without informing our clientele.

⊗ Solution: Notifying customers that “gratuity of 15% is included.” It's illegal for restaurants to automatically charge a gratuity without notifying customers; it must be printed on the menu or on a sign displayed prominently. Nonetheless, more restaurants in New York for instance, are adding automatic tip to the bill. (Appendix B: Article dated February 2009).

Costs

The costs associated with the adoption of a mandatory tipping guideline include:

Software Features of Business Plus Accounting Restaurant Professional v8.0*

($ 70 per month x 24 months: $1,680) $ 1,680.00

Update an print menus (Menu Pro 8 CDs for US $399.00) $ 495.00

Signage $ 420.00

First and Second year total costs $ 2,595.00

* - Supports a special tax for Dine Out or Dine In orders.

- Supports auto gratuity calculations Based on the number of guests at a table and the percent of gratuity that you define.

Measure results

I implemented a survey (Appendix C) which I’ll conduct after a period of 3 months - scheduled in July 30, 2009 - counting from the beginning of the implementation. My goal is to measure the following:

 Customers’ satisfaction: We need to determine what the current average of number of customers is before adopting the new policy. Afterwards, we can compare the average number of customers in 3 months: have we seen an increase, stagnation or a decrease in number of customers that frequent our café? Through this survey, I will also get customers’ opinions regarding the mandatory gratuity policy.

 Employee satisfaction and feedback: Has the number of complaints decrease compared from now? Are the servers satisfied with this new system? What are their comments and observations about customers’ behaviours?

 Organization view: Have we reduced our turn-over rate compared to our main competitors? Are we still profitable?

Recommendations

“A recent BMO Bank of Montreal Mosaik MasterCard study found that 78 per cent of Canadians regularly leave a 15 per cent gratuity after dining out.” (CBC news, July 2007)

Through this report, I believe that the need of having a mandatory tipping guideline of 15% at a minimum cost is essential to reestablish employees’ confidence and security at work. To implement this system, we have seen that we need to invest in the following:

Adopt a computer program that has a gratuity calculation feature on its terminals.

Display clear signing at the front of the café.

Re-edit our menus to add the lines “gratuity of 15% is included calculated on the basis of the total bill, before tax, and before any coupons or discounts taken off”.

I also recommend getting a sponsorship from the association Fairtip.org and signup to their official website in order to support our employees.

Finally, the mandatory tipping guideline of 15%, which is already adopted by many restaurants in North America and Canada, has proved to be beneficial for the employees’ satisfaction and the entire organization.

Appendices

Appendix A - Interviews

You’ll find below one of the question asked to our servers during an interview dated March 11, 2009: Greg Timorten, Kelly Radic and Jen Mann.

 Question: Do you get offended if a customer doesn’t leave any tip?

Greg T.: “Receiving a small tip or no tip at all would just make the staff member feel really horrible, as if they had done something wrong."

Kelly R.: “I can tell you that nothing is more aggravating and demeaning than providing excellent service to customers only to receive nothing in return.”

Appendix B - The Fixe Is In: More Restaurants Adding Automatic Tip to Bill (New York)

Appendix C - Survey

Appendix D Waiters and Waitresses Job Tasks

• Escort customers to their tables.

• Describe and recommend wines to customers.

• Check identification in order to ensure that they meet minimum age requirements for consumption of alcoholic beverages.

• Present menus to customers and answer questions about menu items, making recommendations upon request. • Write food orders on order slips, memorize orders, or enter orders into computers for transmittal to kitchen staff. • Take orders from customers for food or beverages. • Check with customers to ensure that they are enjoying their meals and take action to correct any problems. • Serve food and/or beverages to customers; prepare and serve specialty dishes at tables as required. • Prepare checks that itemize and total meal costs and sales taxes. • Remove dishes and glasses from tables or counters, and take them to kitchen for cleaning. • Inform customers of daily specials. • Prepare hot, cold, and mixed drinks for patrons, and chill HYPERLINK "http://www.careerplanner.com/Job-Descriptions/Waiters-and-Waitresses.cfm" \t "undefined"bottles of wine. • Explain how various menu items are prepared, describing ingredients and HYPERLINK "http://www.careerplanner.com/Job-Descriptions/Waiters-and-Waitresses.cfm" \t "undefined"cooking methods. • Prepare tables for meals, including setting up items such as linens, HYPERLINK "http://www.careerplanner.com/Job-Descriptions/Waiters-and-Waitresses.cfm" \t "undefined"silverware, and glassware. • Perform food preparation duties such as preparing salads, HYPERLINK "http://www.careerplanner.com/Job-Descriptions/Waiters-and-Waitresses.cfm" \t "undefined"appetizers, and cold dishes, portioning desserts, and brewing coffee. • Fill salt, pepper, sugar, cream, condiment, and HYPERLINK "http://www.careerplanner.com/Job-Descriptions/Waiters-and-Waitresses.cfm" \t "undefined"napkin containers.

• Collect payments from customers. • Bring wine selections to tables with appropriate glasses, and pour the wines for customers.

• Clean tables and/or counters after patrons have finished dining.

Sources Cited

Aksamit, Nichole. Servers Say Diners are Leaving Smaller Tips. World-herald staff writer Published Monday September 1, 2008

Business Plus Accounting Restaurant Professional v8.0

<http://www.businessoftware.com/restfeatures.asp>

CBC news. Canadians need tips on tipping: survey. Last Updated: Tuesday, July 24, 2007 <http://www.cbc.ca/consumer/story/2007/07/24/tipping-canadians.html>

Del Signore, John. The Fixe Is In: More Restaurants Adding Automatic Tip to Bill. HYPERLINK "http://gothamist.com/food"Food on February 9, 2009

< HYPERLINK "http://www.nypost.com/seven/02082009/photos/news003a.jpg"http://www.nypost.com/seven/02082009/photos/news003a.jpg NYC restaurants>

Fair tip, what we want.