What is Auto-Grat?

Auto-grat is a short name for automatic gratuity. It's a tip that gets added to the bill automatically, so the guest doesn't have to decide. Most restaurants only use it for bigger tables, usually parties of six or more, and it's typically between 18% and 20%.

In the restaurant industry, large groups need more attention from one server, and they're also the tables most likely to stiff you. Split checks, separate orders, and two hours of refills, then a tip that doesn't match the effort. So, for all the hard work done by the staff, an auto-grat protects your staff from that.

There are a few things to check before applying it. Put it on the menu and tell guests when they sit down, so nobody feels tricked at the end. Make sure it shows clearly on the check too. Most of the complaints come from surprise, not from the charge itself.

The tax side is a little tricky. The IRS can treat a mandatory charge as a service charge instead of a tip, which changes how it's reported and taxed. Ask your accountant how to handle it, and check your state's rules on how the money gets paid out.

Also, a bonus tip is to let guests know they can still add extra if the service was great. We bet that many will do so.