Catering & Event Service Fee 101
“Service Charge” Explained
It is the most commonly asked question in the event industry: what is the service charge, and what does it go toward? It doesn’t always mean servers, which we know can be confusing. Most catering companies (and venues) have a lot of odds and ends that cost them money to make your event happen, and in turn, the company will apply a percentage to your event in order to cover those costs. In lieu of sending you a 4-page breakdown of every single item they are charging you for, the result is the service charge line on your invoice. Typically, this percentage ranges between 18-26%.
You can ask your caterer to explain the service charge inclusions if you are interested. Know that it is an industry standard, and is regulated by law in most states.
Legally, service charges are only calculated on food, beverage, entertainment, or porterage. Essentially, for a venue, that means everything related to the production of your event. At Imperia, service charge is NOT calculated on Florals, the Venue Rental Base Fee, or Itemized Labor. It is definitely not calculated on the sales tax.
Production Costs
An event service charge from most catering companies and venues can go toward the cost of the following:
Serving Items
This includes things like chafers & fuel to keep the food hot, gloves, utensils, other disposables, replacing broken glassware and dishes, and more.
Large Equipment & Vehicles
Large cooking equipment, warmers/ovens and refrigeration units keep your food at the appropriate temperature. This equipment requires purchasing and maintenance. Additionally, our vans need gas and routine oil changes/maintenance. The service charge contributes to these costs, ensuring that we can afford to properly execute your event. No one wants to eat a wilted salad or an ice-cold entrée.
Behind the Scenes Employees & Staff
Before your event, if you are off-site, staff prep and load the vans with all the rentals and equipment needed to execute your event. This could be chairs, tables, beverages, food, and more. If on-site, staff are working on food and event prep as early and 1 week ahead. This includes multitudes of food and bar prep, dishwashing, room setup, cleaning and more. It takes 6-24 hours of pre-production before we can even kick off your event. This also includes rehearsals, planning meetings, emails and calls, and everything planned ahead of time with you to ensure your event is a success.
Before you, your family, co-workers or your wedding planner see us, there have been at least 6 people already involved in the making of your event. Once the event is over, our staff resets the room, takes out the trash, packs up any takeaway items for you to bring home, and sends the dishes, silverware, and glassware to the dishwasher area and it starts all over again the next day. Our staff members receive a wage just like any other job. The service charge contributes towards these pre- and post-event production costs.
Event Staff During the Event
Finally, we come to the actual event staff. These include servers, dishwashers, bartenders, banquet captains, cooks, and sometimes additional event planners. Even if you are charged a line item for those staff, that line item may be only covering part of their wage, not the true cost of the employee (such as additional wages or benefits).
It’s Not a Tip
WA State Law mandates that all employers who utilize a blanket service charge instead of itemized detail must disclose the percent of the charge that is payable directly to the employee or employees “including but not limited to servers, bussers, banquet attendants, banquet captains, bartenders, barbacks, and porters.” This amount is considered a wage, and not a tip, and will be taxable as such for the employer. The remainder of that percent, if any, goes toward the other expenses noted above.
The percentage of the service charge that Imperia provides to service staff directly is noted in our menus and proposals/contracts.
At Imperia, we are proud to pay our employees and staff a fair, living wage. That means we guarantee a wage to our staff that is far above the WA State and City of Seattle minimum wage in order to help support the exorbitant cost of living in Seattle. We do this so that employees and staff are not dependent on variable tips for survival. In most cases, the service charge covers only a portion of those wages.
For more information about what Low/Very Low/Extremely Low Income Levels are for the Seattle metro area, visit this HUD.gov Income Limit Detail. Select the year, then the button labelled “Click here for <year> IL Documentation. In the next screen, select Washington State and King County.
Conclusion
So, there you have it, the mysterious service charge line in your quote or invoice explained. All caterers understand that you likely don’t host events or work with caterers every day. No matter what the case, there is a lot that goes on behind the scenes of your event. Every caterer, restaurant or hospitality provider may do things slightly differently, so it never hurts to ask them about all they include in their catering quote.