Monday, May 16, 2011

Tip Included . . . Not

If you lucky enough to afford field level seating at Yankee Stadium, you don't have to fetch your food and drink, but instead can have it delivered directly to you. You'll pay an additional twenty percent service fee for the convenience and any "additional gratuity" you deem necessary. Funny thing about this involuntary service fee is that your server doesn't get the full twenty percent. Instead, servers receive about five percent of their gross sales, but would presumably receive the full amount of any additional gratuity. Servers, however, are not permitted to explain the fee to customers, so it's highly unlikely they receive any additional gratuity from people that think they just tipped twenty percent. This is what a new class action lawsuit against Legendary Hospitality alleges.

I understand that Legendary Hospitality (co-owned by New York Yankees, the Dallas Cowboys, and Goldman Sachs) is a business trying to maximize profits, but obviously they're taking advantage of their customers and their servers in this case. I am fine with them charging more for the convenience of getting your food delivered directly to you, i.e. having a different price list for the items. Instead of their being a different price list though, there is a disclaimer on the cup holders stating, "A 20% service charge will be added to all listed prices. Any additional gratuity is at your discretion." This suggests to the customer that the items are priced the same and that they're tipping their server when they pay the fee. In reality, the items are actually twenty percent more expensive and they're not tipping their server.

Here is my problem with this arrangement. If people knew they were paying twenty percent more and not tipping their server, they would realize they would have to pay a thirty percent premium on their order (assuming they tip at least ten percent) to tip decent. If I knew that, I would probably go get what I wanted myself rather than pay twenty percent more and not tip, or pay thirty percent more to tip decent. Not everybody would go this route, but I think it would be enough people to make the concessions significantly less profitable over the course of a season.

I believe that the people running the concessions at Legendary know this, so they reasoned that if they suggest that this mark up is actually a gratuity, people would be okay with paying the mark up. By not letting the customer know that this is not a gratuity, Legendary is taking advantage of people's good nature (wanting to tip the servers) and the servers by depriving them of money that customers intend to be their tip. I'm okay with charging more, but be honest about it. That way people can decide for themselves whether it's worth the cost.

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