I have a question on this....I read somewhere that the fees to run your credit card are tax deductible, and establishments that charge you to run your card are just adding another revenue stream and hiding behind this fact. Is this true?
Tipping culture is out of hand
- Thread starter 615dawg
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Sure. That gives me the choice - is it worth the hassle of getting cash in order to obtain a discount? Being quoted one price for goods and services and being charged more because of my payment method rubs me the wrong way. I always pay it, but I also remember it the next time I need the goods and services.
Better not fly too close to the sun on this one.
For delivery you’re paying for convenience. You could always go pick it up yourself and save the $5. I know if I was a door dash driver and knew I was getting a $5 tip I’d turn the order down.
The one that always sticks out to me is The Red Bar in Grayton Beach. It’s pretty much an institution. No credit cards. No reservations. Menu is 3 choices and that’s it. Couple of ATM’s in the restaurant if you don’t have cash. Minimum of probably 1.5 hour wait anytime between 5 PM and 10 PM from April - October. So basically they are max revenue / min overhead…..making absolute bank.
Ohhhhh…...but the cost of seafood is always going up, they are always training 5 new servers per night due to “high turnover”. Couple of hurricanes came through within 100 miles last year and delayed their shipments. Lots of their kitchen equipment had to be replaced! The fuel costs for going to and from the market each day is crazy. I’ll be damned if they aren’t just barely scraping by…..
A few years back they had a “minor fire” that forced them to close for a little while. Not the Flo and Eddie’s type of fire, just a minor inconvenience. I joked with my parents that they probably got an audit letter from the IRS, and that probably the only thing that got damaged in the fire was the restaurant office that “had all their accounting books”.
Far be it from me to tell a business owner how to operate, and if a cash preferred model is working for one, more power to them. That said, show me a business that isn’t making customer convenience one of its absolute top priorities, and I’ll point at that business as being one that probably isn’t going to be around a whole lot longer
I know multiple restaurants--typically the small franchises or "mom and pops"--that do exactly that. Cater to the predominant pay methods, yet offer a bonus to the smaller few that will pay with cash (maybe encouraging a few others here and there to do so).
I value profits. It's my goal as a business owner to make as much money as possible. One way I do this is by attracting the best and most loyal staff and customers I can. In a digital ecosystem you can earn loyalty rewards on every purchase. Our average tip (a gift from a customer to my staff for their service) per order is 70% higher on credit card orders than cash. This literally puts tens of thousands of extra dollars in my employees pockets every year.
Cash customers are typically much older, less affluent, and spend and tip considerably less money per order than a credit or debit card customer. They slow down the transaction process during peak times and create extra labor during non business hours.
As for the gubment, freedom, China, data breaches and blah, blah, blah... Not my problem. When I accept a credit card payment I am accepting payment from a private business (Visa, MC, Amex). We have brief internet outages every so often. My system will run the card, store the information locally and then process the payment in batch once connectivity is restored. My bank is way less dependable than the credit card system. Those 17ers closed Thursday for Juneteenth and screwed up my day.
My employees are incapable of hacking my credit card system and so are retail criminals. And if it does happen, I will know and it will only cost one day's revenue. If I flip to 90% cash 10% cc, I will tempt all kinds of theft and risk till skimming that can last for months or years before being detected costing me 10-20x what a credit card meltdown would.
I love credit card users because they make me wealthier. If the day comes that reverts back to cash or 17ing bitcoin I will redirect my love appropriately. I understand the fees for bigger ticket low volume transactions might have the opposite effect, but for a business like mine, you'd be a fool to risk alienating CC users by tacking on punitive fees. I instead capture their email address and phone number, encourage them to come in more, give them discounts for their loyalty, and promote extra purchases that grow my business.
When I walk into a restaurant or convenience store that applies a CC fee or even minimum, I know we are dealing with a rube business owner. You can back test this by seeing the success of McDonald's, Domino's, 7-11, and even 17ing Bucees compared to the local joint that "don't take credit cards" or charges you more to use them. Costco is the one exception I can think of with their Visa deal, but that's because they had the power to negotiate a fee of around 0.3% or 1/10th of a normal fee... Now that's what makes me jealous. Everyone using a Visa for a nothing merchant fee.
Convenience is the name of the game these days. Even price doesn't matter as much as it used to. Some business owners just can't get this through their head.
Wisdom here, folks. You might not like it, but everything here is truth.
No kidding. In the case of DoorDash, the price of the menu items is 10-15% higher across the board, depending on the restaurant. That’s before you even pay the “delivery fee” (which is NOT the tip), as well as whatever other fees they dump on if you aren’t using their upgraded version (DashPass, etc.). Then there’s the driver tip. So yes, you pay for the convenience, 3 or 4 times. The driver tip is just one of the times. Even if you pick up yourself, you still pay a higher price for using DoorDash app for the order than you would if you just called the restaurant to place the order.
Pizza delivery is the same way. Delivery price is higher than the takeout price. That still doesn’t mean that the driver is doing any more work for 2 pizzas than they are for one. So why should the tip be higher?
Absolutely. That’s always the trade-off. The $5 was just an example for pizza. It’s not what I’m applying as some blanket amount for any DoorDash order. But I’d be curious what you think is an acceptable tip is for a single DoorDash food order from a fast casual place. It’s probably going to be ~$25. $5 is 20% tip. You’re saying those customers should tip what, 30-40% just to the driver, AFTER paying all the other markups within the app? That’s insanity.
Cash only is suicide today. The only plausible reason I can think of to be cash only is money laundering.
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20% is what I pay on delivery, but all I have delivered is pizza. Those orders are usually $40-50. So I’m typically giving $8-10 in tip. Everything else I go get myself because of the up charge.
Those 17'ing tips should go to the Bulldog Initiative. We are 8 feet tall, bulletproof, & multi-millionaires when we are buying beers at MSU sporting events anyway, so I just solved NIL for us.
Convenience is the name of the game for a particular business owner, again depending on the business model, and depending on how much you as a customer value and want to receive service or doing business there, can and will determine if the business owner wants to take cards or not.
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Agreed, and another wrinkle is that waitstaff are limited in the number of tables per shift, so if you have people lingering with a smaller bill, they are costing the waiter $$. Two people sitting at a 4-top entrees only with no drinks tipping 15% is shite when that table could be 4 with bigger orders.
Or they have all the business they want, need, or can handle. Plus it makes their life simpler. Again I’m sure you can’t put a price on that.
All good **** esp the customer data part. That is where it’s at it these days. All that said, I still think indy businesses are morally doing the right thing to offer no fee on cash payments. Because if you bake it in, you’re passing some of the convenience to cash customers. Your point to incentivize cc for the perks is well taken. And as I said in previous post, it wasn’t a business strategy for most in MS that do it as much as it was a survival strategy in 2021ish. It was back engineering & not forward engineered. And even then, most doing any volume are probably 80-85% cc today but that number is likeky is tilting more everyday.
Americans were conditioned to dining out from the 70s forward with comparatively low food and certainly low food service costs, the rise of fern bars (Applebee's, TGIFriday's, and those staples of long dead malls across the nation) being the best example.
With interest rates returning to historic averages in the last 4 years and the attendant cost increases seen since 2020, it's harder for the average American family to go out and have a meal without it being a much bigger hit in the wallet. I would argue that this is the norm, not the exception.
I think the real cost has finally caught up with most Americans, thus the "debate" about tipping, which is really just a rationalization about how to avoid doing it because it's already too expensive for that person.
With interest rates returning to historic averages in the last 4 years and the attendant cost increases seen since 2020, it's harder for the average American family to go out and have a meal without it being a much bigger hit in the wallet. I would argue that this is the norm, not the exception.
I think the real cost has finally caught up with most Americans, thus the "debate" about tipping, which is really just a rationalization about how to avoid doing it because it's already too expensive for that person.
I've seen this alot at food trucks out in Midland, TX...not so much money laundering as they were likely undocumented.
Come on, now. I think you meant "accounting."
Tax evasion is a pretty good reason. Not really scalable, but if you don't have any interest in expanding to a lot of locations, you are putting a lot of money in your pocket.
I'm not sure how consistent that it. Best I can tell, when restaurants are advertising no delivery fee, they are jacking up the prices. If they have delivery fees, they might have the same prices as instore.
I try to tip delivery drivers based on mileage. Pizza delivery for us from the restaurant to the house probably takes 10 minutes from the time they grab the pizza to the time they get back to the store for another order. I think usually they are dropping ours on the way to another order, so they are doing even better. I make sure they get $5 because that seems like the bare minimum to get in the car, but that alone works out to about $30 an hour cash wage. If it's nasty weather I'll make sure it's more. And I give more for bigger orders, but when we have a bunch of people over, I'm not giving them a $30 tip to drive 2.8 miles total just because that's what 20% works out to. I would just go get it. I would hope anything that works out to more than $50 an hour cash they'd much rather have the money than be pissed that they aren't getting 20% based on the order cost.
Yep, I bought a bag of ice this season with credit card because they don't take cash there and it had the tip question on the screen after I swiped the card. The lady NEVER GOT OUT OF HER SEAT, and pointed to the ice cooler and said "use that one". Why should I tip for that kind of shatty service, she never even got up!
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My barber is an old friend that I went to school with. He does a heavy cash business and has shown me the drawer at the end of the day. He hasn't said but I know he reports none of that and only the few CC transactions he does.
I don’t have pizza delivered and an ATM is just around the corner where I live. But do what’s best for you.
Well, anyone’s free to spend or save their discretionary income as they see fit. But out of curiosity, I guess I would ask how you developed that 20% standard for pizza delivery?
My larger point is this - the 15% standard tip % (which sort of evolved into 20% for many folks) originated from what is customary for minimum wage exempt servers in sit-down restaurants. They make $2.13 per hour or whatever it is now, and must survive based on what they bring home from tips. As such, their duty is to process orders correctly, deliver food, beverages, and the check in a timely manner, be knowledgeable about the menu, and have at least a somewhat pleasant disposition while doing so. The more food / drink they have to deliver, the more info they have to process, and the more trips they have to make to keep everybody happy. So, on that model, a percentage-based tipping structure makes mathematical sense, because the cost of the bill is largely proportional to the work done by the server.
The problem is that these other fast casual food places, and other businesses that don’t even serve food at all started latching on to that same baseline and trying to interject it into their operation, even though their employees do NOT fall into the same min wage exempt status. They use this socially accepted baseline to areas that are far outside the scope of the intent for said baseline. That’s a bogus premise, when you start to unpack what’s really happening. It’s simply the restaurants trying to pass on a larger portion of their labor cost to the consumer, so they can stiff their own workers a little bit more.
Back to your pizza delivery example, Pizza Hut can either hire a driver for $12 an hour, and let the customer choose their tip amount manually, OR they can pay only $10 an hour, and make a one time update to their ordering app that puts in a 15%-20%-25% option for the tip. Then they tell the drivers they are recruiting, we pay only $10 / hr to drivers because our app produces the highest tip revenue of any franchise. It’s bullcrap. The drivers aren’t min wage exempt, so they have a much higher guaranteed wage regardless of how shítty they are at their job. And even if they don’t end up having to pay any taxes, the mileage rate for using their personal vehicle is so generous that they can often get a nice refund from that once per year. Finally, the tip for pizza, when paid by credit card, is paid before your shít even goes in the oven. That’s nonsense. Why am I guaranteeing an incentive on the front end without even knowing whether or not the pizza will show up looking like it got peeled off of Walter White’s roof? Then of course, the work the driver does is again not at all proportional to the price of the food.
I’m real happy for anyone out there who is Scrooge McDucking it well enough to just throw a huge % at any service like that without thinking about it. But I’m not, so I do consider those things from time to time.
I don't usually tip at places like Jersey Mike's because I believe the employees are making $15/hr or so. Sit down restaurants where the waiters are making $2/hr is where I will tip
So...you are jealous of tax evasion.
Its a lighthearted thread so take this as friendly ribbing I guess?
If a business does 70%, 80%, 90% credit card transactions, their pricing should have any transaction fees built in as a cost of doing business.
If they want to give a discount for cash, despite PooPop's reasoning against it, then give a cash discount.
There is no reason for any business that relies on credit card transactions to charge a separate transaction fee atop the purchase price. That is straight up dumb.
If they want to give a discount for cash, despite PooPop's reasoning against it, then give a cash discount.
There is no reason for any business that relies on credit card transactions to charge a separate transaction fee atop the purchase price. That is straight up dumb.
Or just don’t advertise that you are doing it. If a company is taking cc payments and staying open, they are building the cost into the price.
I had a long discussion a few weeks ago with a group that used to order DD exclusively for catered events. The up-charged prices within DoorDash app (and others) are based on the specific restaurant’s agreement with DoorDash. It varies based on each restaurant, but its always going to be something…..never nonexistent. A baseline number that I heard was that DoorDash keeps 30% of every transaction that they facilitate (NOT including tip), which is an absolutely astronomical number. This is why there is variation on the menu mark-up. Some restaurants will utilize their DoorDash sales simply as loss leaders, something to get their product out there to those who otherwise might choose a competitor, in hopes that they’ll generate repeat business on-site, or through direct take-out ordering. Others still want some form of profit off every sale, so they will have an even higher mark-up on the menu items vs. direct order with the restaurant.
The $0 delivery fee is entirely facilitated by DoorDash though. They do that across the board for DashPass customers, but do it selectively for certain restaurants as well, on a promotional basis. That’s all part of the individual contracts between them and the restaurants.
That makes sense. My last pizza delivery order was literal walking distance from the restaurant. But it was our neighborhood pool, and everyone’s soaking wet and there’s 3 small kids. Going to do pickup wasn’t very practical. I tipped the $5 on two pizzas without thinking twice about it. I certainly agree with the concept of tipping extra for bad weather, etc. However, in those instances, I’m likely preferring to do pickup because I don’t want a cardboard pizza box or brown paper bag placed on my porch in a downpour.
Do you guys remember Groupon? it put plenty of restaurants out of business in its prime. There was a time where people would only eat at places that had a Groupon. Here was their business model.
"We'll get your name out" by promoting a half price gift card. So people can buy a $50 gift card to your restaurant for $25.
Groupon would keep $12.50 and give the restaurant $12.50, so the restaurant would effectively be giving the customer a 75% discount. The problem is that people would buy 10+ Groupons and repeat customers would be heavily discounted as well.
Groupon started limiting the number of purchases and they suffered. They are still around but a shell of what they were circa 2010-2012
"We'll get your name out" by promoting a half price gift card. So people can buy a $50 gift card to your restaurant for $25.
Groupon would keep $12.50 and give the restaurant $12.50, so the restaurant would effectively be giving the customer a 75% discount. The problem is that people would buy 10+ Groupons and repeat customers would be heavily discounted as well.
Groupon started limiting the number of purchases and they suffered. They are still around but a shell of what they were circa 2010-2012
It has gotten a bit ridiculous. We usually go 15 or 10%. Now I just let my wife make out the tip, and I get better sleep.
I am definitely jealous of tax evasion. Us suckers out here complying with the law paying >25% of our gross between between federal, state, and fica, (and that's after deferring tax on retirement contributions, so it's really worse), and then we have to pay property, sales tax, special sales tax like gas taxes or for local taxes, etc.
Even when small business owners do show the money on their books, in addition to being able to run a lot of personal expenses through the business they also get basically unlimited SALT deductions just because they are an LLC. And then they get to deduct up to 20% of their income with the QBI deduction, just because some legislators in 2017 claimed to be dumb enough to not understand that paying 21% in corporate taxes and then paying 15% or 20% taxes on dividends was still as high or higher in basically every situation compared to just the individual rates that caps out at 37%.
There's a restaurant here in Ocean Springs, sign on the door that says cash or check only. If you go pick up food there you will almost always see someone walk up to the door, turn around and walk away. It's idiotic.