ANALYZE THE SITUATION 12.3 JEFFERY AND LATISHA WILLIAMS arranged a fiftieth anni

Question

ANALYZE THE SITUATION 12.3 JEFFERY AND LATISHA WILLIAMS arranged a fiftieth anniversary party for Latisha's parents. They reserved a private room at the Tannery, an upscale steak and seafood house located two miles from their suburban home. The Williams hosted a total of ten people. Unfortunately, the ser- vice they received from the restaurant staff was not very good. When the check arrived, Mr. Williams noticed that a 15 percent charge had been added to the total price of the bill. When he inquired about the charge, his server informed him that it was the restaurant's policy to assess a 15 percent tip to the bill of all parties larger than eight persons. The policy, explained the server, was not printed on the menu, but was to be verbally relayed anytime a guest made a reservation for more than eight people. Mr. Williams replied that the reservation was made by his secre- tary, and she mentioned no such policy when she informed Mr. Williams of the restaurant's availability Mr. Wiliams refused to pay the extra charge claiming that it should be he, not the restaurant, who determined the amount of the gratuity, if any. When the restaurant manager arrived on the scene, he informed Mr. Williams that the server had misspoken and that the extra charge was in fact a service charge, and not a tip. Mr. Williams still refused to pay the added charge. 1. Does Mr. Williams owe the extra 15 percent to the restaurant? 2. Does it matter whether the surcharge is called a gratuity or a service charge? How would that be determined? 3. What should the restaurant do to avoid similar problems in the future?

Explanation / Answer

Q1) Does Mr. Williams owe the extra 15 percent to the restaurant?

If the extra 15 percent is a service charge as mentioned by the Manager, then Mr. Williams has to pay it. If it is a tip he is at the liberty of deciding how much to pay or to pay it or not.

Q2) Does it matter whether the surcharge is called a gratuity or a service charge? How would that be determined?

It does matter what it is called as a gratuity cannot be dictated by the restaurant. It is determined by the patron. On the other hand, a service charge is charged basis statu-tory payments that need to be made by the restaurant and the patron has to pay it. Usually for large parties of 8 or more a service charge is levied.

Q3) What should the restaurant do to avoid similar problems in the future?

To avoid similar problems in the future the restaurant should mention on the menu somewhere that a large party of 8 or more will be levied a service charge. Added to that if a prior reservation is made they should inform the customer about the same.

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