Suggested Gratuity
Summary
A gratuity is an optional payment that guests can choose to pay in addition to the check amount. This is usually done to express appreciation of customer service. Based on how a site is configured, suggested gratuity amounts, based on a percentage of the gross sales, are provided to make it easier for guests to calculate the amount of gratuity they wish to add.
The suggested gratuity can be displayed on:
- Printed guest receipt
- Guest UI payment screen
Suggested Gratuity Formula
Suggested Gratuity Formula
Definition: Gross Sales - Includes all revenue sales before subtracting discounts. Does not include non-revenue sales (e.g., gift card sales, donations), taxes and gratuities (both manual and automatic).
Scenarios
The following scenarios further illustrate the calculations. Each example demonstrates a 20% gratuity.
Scenario 1: No automatic gratuity applied
| Gross Sales | $100.00 |
| Suggested 20% gratuity | $ 20.00 |
Scenario 2: Automatic gratuity applied
| Gross Sales | $100.00 |
| Auto Gratuity | - $ 20.00 |
| Suggested 20% gratuity | $ 20.00 |
Scenario 3: Based on partial payment; no automatic gratuity applied
| Check total | $100.00 |
Payment 1 | $60.00 |
Suggested 20% gratuity (100 x (60/100) x 20) | $12.00 |
| Payment 2 | $40.00 |
Suggested 20% gratuity (100 x (40/100) x 20) | $8.00 |
Scenario 4: Based on partial payment; automatic gratuity applied
When there are split payments and an automatic gratuity has been applied to the check (i.e., $20 due to large party size):
| Check total | $100.00 |
| Auto Gratuity | - $20.00 |
| Payment 1 | $60.00 |
| Suggested 20% gratuity (100 x (60/100) x 20) | $12.00 |
| Payment 2 | $40.00 |
Suggested 20% gratuity (100 x (40/100) x 20) | $8.00 |
A gratuity calculator can be downloaded to verify calculations: Gratuity Calculator
Receipt examples
Single payment
Split payment
Automatic gratuity
Configuration
To configure suggested gratuities in ECM:
Go to Sites > Receipts
Enter the percentages for the suggested gratuities
Up to a maximum of three suggested gratuity percentages can be configured.
If a percentage is left blank (NULL in the database), then that suggested amount is not displayed.
Enter the text for the message displayed for suggested gratuity (e.g., "Suggested Gratuity")
- Choose how the gratuity is computed
The percentages and dollar amounts are calculated and printed on the guest payment receipt and shown on the guest payment screen.
Operation
When paying for a check, suggested gratuities appear at the end of the payment process.
Receipts
Receipts are indifferent to payment type. The suggested amounts are printed at bottom of the receipt with the display message.
Guest UI
Although gratuities are suggested, the customer may enter their own amount for gratuity.
Credit card - When paying with credit card, the gratuity amount is added directly to the check when the guest taps the percentage they wish to add.
Cash - When paying with cash, suggested gratuity amounts are shown, but the money is given to a server rather than added directly to the check by the guest. The server can then manually add the tip to the check.
Related articles
Internal Only:
/wiki/spaces/ED/pages/732397806 (design doc; internal only)
/wiki/spaces/ED/pages/19169332 (design doc - original; internal only)
For reference from the California State Board of Equalization:
When are tips taxable?
Generally, tip charges are only subject to sales tax if they are mandatory.
| Mandatory tip charges | Taxable | These are taxable whether or not the tips are paid to an employee. Automatic gratuities, service charges or tips added to catering contracts can also be mandatory tips. |
| Optional tip charges | Generally not taxable | If customers add an additional tip at their discretion, that amount is not taxable. |
Per the Board of Equalization, California https://www.boe.ca.gov/news/pdf/l199.pdf
For sales tax purposes, tips associated with taxable sales and services are separated into two categories:
(1) optional or voluntary tips, which generally are not taxable, and
(2) mandatory tips, which are taxable.
When a preset amount is added to the customer's bill (such as an automatic gratuity), it is considered mandatory. On the other hand, if the customer decides how much to tip when the bill is received, it is considered optional.
Test verification
Suggested gratuity calculations have been tested and verified on the following:
- SIngle payment
- Split payment
- Evenly split
- Split by amount
- Entered amount of gratuity
- With adjustment (calculated on gross sales, not net sales)
- Gift card reload/sale - No suggested gratuity printed on the receipt; this is a non-revenue sale
- Check with ordered items and gift card reload (calculated on gross sale less the non-revenue sale)
Reference: OE-11844