image by Mi Belle Photography
To answer a client's question, I was trying to find a formal description of the 18-22% service charge that venues and caterers add onto proposals and man were there some inaccurate answers out there in Googleland. (*cough* Yahoo Answers *cough*)
This is going to blow some minds when I say this, but bear with me: the service charge is NOT in any way shape or form a gratuity! Again, the service charge is not a gratuity. Nor is it part of mandatory state taxes.
The service charge is a fee (usually 18-22% around the Los Angeles area) that is added by the venue or independent catering company to act as an operating cost for things such as insurance, advertising, admin staff, trucks maintenance, fuel to get to events, cocktail napkins, and various sundries.
To get an even better answer for this question, I asked two of my favorite caterers to give me their answer to the question "what is the service charge?".
Nathaniel "Nace" Neubauer, the Owner/Operator of Contemporary Catering, specializes in "off-site" catering (meaning: they don't have a specific venue that they work at, they can cater anytime, anywhere). I asked Nace what this service charge is, and this is what he said:
"We get asked all the time what our “service charge” is. Some caterers call it “coordination-administration”, some call it “event production fee.” We now call it event production fee. The event production fee is not a gratuity for staff. It covers all of the back end costs that go into the event aside from the food itself. We do not charge for tastings, walk-throughs, meetings, CAD diagrams, insurance certificates, etc. This fee offsets all of these costs to insure our clients aren’t worrying about asking for help in these areas, as many of our clients have had, or heard of others’ experience in which they are billed for these things. We like to insure that the planning process is as easy as possible with nothing to worry about once you have us on board. As far as actual gratuities go, we pay our staff very well! Our staff’s motto is that gratuities are “never necessary, never expected, and always appreciated.”
Melissa Allen, fabulous Catering Director of the gorgeous historic Ebell of Los Angeles, an all-inclusive venue (meaning, they provide everything but the linens) answered my question with:
"The service charge helps cover the costs of doing business: office staff, utilities, office supplies, day to day operations, etc. So while a catering contract may show a break down of the event elements and their costs, the service charge helps cover the cost of the hours needed to prep and plan the event."
So a tip for those of you planning a wedding and getting quotes: ask for the all inclusive amount that includes venue rental, food & beverage, labor, staff, tax, and service charge. Many times a venue will leave out the tax and service charge in order to hook you in to booking with them. When the bill comes to you, it's 30% higher than you were originally budgeting for. OUCH.