Marcel Goldman is suing The Cheesecake Factory over its billing practices, Buzzfeed reports.
When diners request a split bill at the restaurant chain, the “suggested gratuity” figures printed on each customer’s bill are calculated based on the total amount of the collective bill, rather than on an individual diner’s share.
Goldman says she paid a “suggested 20% tip” of $15.40, though her individual bill was $38.50. In other words, she paid 40% gratuity on her share of the check.
Goldman sent a letter to The Cheesecake Factory’s headquarters in Calabasas, CA, but the company did not reimburse her.
The restaurant chain told Buzzfeed: “All gratuity amounts listed on our guest checks are suggestions only. Guests are free to tip as they please.”
The lawsuit argues that the restaurant should not require customers, many of whom are in various stages of food and/or alcohol-induced intoxication by the time their checks arrive, to employ their mental math skills (or lack thereof).
“Why are we left to our own devices to do arithmetic acrobatics when the suggested gratuity represented is not true? The mathematic calculation is misleading. It must end. It needs to change,” said Goldman’s lawyer, Julian Hammond, per Buzzfeed.
The suit is seeking class-action status; Hammond claims the restaurant chain has employed the practice at more than 200 locations over the past four years.
This is not the first time The Cheesecake Factory has taken flack over its “suggested gratuity” figures. Some patrons have taken issue with the chain’s practice of calculating “suggested gratuity” on the post-tax rather than the pre-tax total (customarily, people tip on the pre-tax amount).
One Yelp! reviewer posted a response he received in defense of the practice from a customer service representative, Buzzfeed points out.
The representative allegedly said the decision to suggest gratuity based on the post-tax total was “a decision by our company executives,” and that the practice is employed across all the chain’s locations nationwide. The spokesman added that the company “did review different restaurants in the high casual dining segment and found that…some were calculating pre-tax and some, post-tax.”
If customers are frustrated by the chain’s gratuity suggestions, they are not angry enough to put down their forks or even close their wallets. The company’s revenue has increased every year since 2012, according to 2016’s annual report. From 2012-2016, revenue jumped a combined $467 million (25.8%). From 2015 to 2016, the figure was up $175 million (8.3%) to just under $2.3 billion.
Net income per share rose $0.95 (just over 50%) from 2012-2016, and $0.46 (19.4%) from 2015-2016.
The company has continuously opened more and more locations as well. 208 Cheesecake Factory locations were open nationwide at the end of fiscal 2016—31 more than were operational at the close of fiscal 2012. The chain added 8 locations from fiscal 2015 to fiscal 2016.
The Cheesecake Factory’s stock, however, currently sits at a yearlong low of $44.91/share. It has fallen more than 33% since May 3. Shares dipped by almost 1% after news of the lawsuit broke Friday morning, but has since modulated toward its Thursday closing price of $44.94.
Maybe The Cheesecake Factory would be wise to include a statement on the bill explaining how they calculate suggested gratuity. Then again, the same patrons who fail to notice that they have paid an inadvertently large tip would likely fail to notice the explanation.
Customers should be expected to understand how much they are tipping. At the same time, a diner should be able to assume that a restaurant’s “suggested gratuity” is reasonable.
Featured image via Wikimedia Commons