Recently I was meeting with a prospect to talk about their client Stampede Party for the upcoming year. Through the course of conversation, it came out that the company they used last year to plan the event was not only their caterer, but also their event planner. They felt kind of “ripped off” that they are paying this company a fee to hire themselves (among other things) but I digress … that’s for another blog article.

The prospect told me that at some time during the event, one of the catering staff told her (let it slip??? I doubt it…) that they did not receive gratuities from their employer – the catering company. The client was puzzled, because she was SURE that she had paid an 18% Gratuity Fee on the invoice, so she wanted to know why the gratuity that she had paid didn’t trickle down to the staff.

So – was it an ADMINISTRATION FEE or was it a GRATUITY?

Do you know the difference? Most people don’t.

If you get a catering invoice, you will see a line item at the bottom for 15%, 18% or even 20% (or more).t. That’s the staff gratuity, right? Wait staff depends on tips for the majority of their income – so, of course, that tip gets paid to the staff that worked my event. Right??

Well – maybe. Maybe not.

Many, many … many … catering companies, will charge an “administration fee” at the bottom of the invoice – which is not the same as the staff gratuity/tip.

So – what is an administration fee?

Catering companies may state that their admin fee is an “industry standard fee” which covers the costs of the event and menu consultation, transportation, employee uniforms, liabilities, vehicle maintenance etc.

Well – in my opinion – all of these things fall under the “cost of doing business” and should be included in the cost of the product (menu cost) and not added as a separate fee. Imagine if you go to a restaurant for dinner, get your bill and it includes an 18% administration fee. Would you add a tip on top of that for the server?   Or, would you assume that the 18% fee is indeed for the server who took great care of them for the last few hours. But – it’s not. You are still expected to leave a tip – probably 20%.

Are you prepared to pay 38% to 40% (or more) over the menu price for your meal – to include the service/admin fee and the tip to the server? If your caterer adds an administration fee to the invoice (rather than including this cost into the price of their product) then that’s exactly what they are expecting you to do.

Why aren’t these costs factored into their menu prices?  Because it makes their pricing look inflated next to their competitors, and they fear losing out on business because their prices “appear” to be 15% higher than everyone else’s menu posted online.

I have seen this on invoices as well:
If you would like to reward your server(s) for exceptional service we encourage you to do so. However, while it is greatly appreciated, a gratuity is certainly not mandatory. This may be paid directly to the server(s) or may be added to your invoice.

So – if you want to tip the service staff, you either have to come up with some cash, or approve the invoice for an additional 15% (or more)for the gratuity so that the service staff gets a tip.

Has this been included in your catering budget? Are you prepared for this extra expense? Do you think it’s reasonable?