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Automatic gratuity at restaurants is re-classified by the IRS

Vincent Gisriel - Monday, January 06, 2014

As of January 1, 2014, the Internal Revenue Service will classify the automatic gratuities that most restaurants add to a table of six or more customers as a service charge. Service charges will now be classified as taxable income just like regular wages and will be subject to payroll tax withholding.

So what does this mean for the employer and employees in the restaurant business?

Employers (restaurant owners) have pretty much decided to do away with automatic gratuity practices to avoid the nightmare of additional accounting. Employees such as bartenders, servers and bus persons are basically screwed because customers can get away with not tipping the correct amount on large checks. A waitress who did not want to give her name from a large restaurant corporation explains, "The only good part about taking care of large parties was that you always knew that you were going to be paid fairly for your hard work. Now that security blanket is gone and we will just have to take our chances. This is a just another example of how the rich continue to get richer and the poor stay poor."

Some restaurants have decided to add a suggested tip amount to each and every check that starts at 18% goes to 20% and even shows 22% to combat the recent changes. It will take some time to see if customers decide to do the right thing when it comes to tipping. And here is a quick reminder for anyone who doesn't know already, most bartenders, servers and bus persons are living day by day on the tips that you leave at your favorite restaurant. The tips are their salary.

Restaurants should use their website to hire stellar employees

Vincent Gisriel - Wednesday, January 09, 2013

We have applied to a few restaurants over the years and the one piece of advice that we always give restaurant employees is to interview the restaurant manager in the same fashion that they interview you. Restaurants need talented people to exist. By showing that you have as many questions about their business as they have about your experience, shows that you know the restaurant business. Managers always want to grill you on every restaurant situation that they can imagine, so grill them back. By asking these four key questions, it can turn the table on any interview and earn you instant respect.

  1. What are some of the reasons that made you want to come work for this restaurant?
  2. How often do you seek employees to fill this current position?
  3. Can you briefly explain the management style of your restaurant?
  4. What type of benefits does your restaurant offer your employees?

The other side of the restaurant hiring scale is the management side. Some restaurants consistently complain about the quality of their staff and never take credit for their own poor hiring practices. We see the ads on Craig’s list where the restaurant never advertises their name or location because in their mind, that shows weakness. This is simply not true.

Great restaurants understand and admit that there are going to be times that they need to hire great employees. Jim Sullivan, the chief executive and founder of Sullivision.com, a website that provides leadership programs for the restaurant industry has powerful ideas on this subject.

He preaches, “That 80% of all turnover in restaurant staffing is due to poor hiring practices. Your managers should be trained to only hire qualified, nice people who are being hired for a long-term position. You can’t train someone to be nice, but you can teach them something new every shift.” Mr. Sullivan also believes that, “A restaurant should never lower their standards of the type of employee they hire just to fill a position. This will always come back to bite you in the ass. Set high standards for your employees and create a welcoming culture with a thin rulebook. If you can’t trust the people that are working for you, then they shouldn’t be working for you.”

Every restaurant wants to attract the best employees in the market. Restaurant websites these days should do more than advertise their menus, give their location, and talk about the owners. Advertising a job opening online through a website can open the door to a new batch of talent.

By positioning your website with a portal to take applications online, it will increase your ability to find excellent prospects. In the design of your website, your restaurant can explain the job, the daily requirements of that job and your restaurant can explain what sets them apart from the competition. Giving specifics like, we offer a daily Family Meal or Comida to potential employees will speak volumes about your commitment to taking care of your staff. With our Restaurant Website Platform, your restaurant can create an online portal to find the greatest employees in your area. Allowing potential employees to submit an application directly through your website. Use your website to find the best employees in the market by making them understand that not only do you care about them but that the restaurant would never be successful without them.

For information on our affordable restaurant websites and our website support and maintenance packages contact me directly at vincent@rwp123.com.