Budget Busters 101: Look out for hidden charges!

The specific charges I want to discuss in this week’s post are the infamous “plus-plus” charges. Now, I know these are not really “hidden” in the sense of planners not knowing about them but, if you forget about them as you are planning your event’s food budget, they can quickly break the budget.

So what does “plus-plus” mean? Plus-plus refers to service charges and taxes. These fees are added on top of the base price for, say, the per person cost of that banquet you are planning to serve to your top sales people. Menus for catering typically list the base price with the plus-plus added on. It usually looks like this: $35++. When my wife and I were looking at catering for our wedding, she was amazed at how deceptive that little “++” could be. It seems so easy to just plug that $35/person into your budget and know how much your banquet would cost – but you would end up with the wrong number. This is one place where novice planners and those who do not usually handle catering often get into trouble.

Service charges vary by specific property, though the different hotels within a city or geographical area typically have similar rates. (20% is a common rate in larger cities such as San Francisco.) Remember, too, that service charges are taxable. Taxes are set by cities and states and are one of the few items that hotels really cannot negotiate away – after all, they still have to pay those taxes to the city or state whether they collect them from you or not (unless you are lucky enough to be tax exempt). There are many others areas they would prefer to negotiate on instead. And, if you cannot find the specific numbers, ask. You need to know them.

So, let’s look at our example banquet at $35 per person (base price) again. If you are feeding 100 people and have a budget of $4,000, it looks like you are OK. However, remember that the rate is actually $35++, so you have to take service charges and tax into account to know if you are really under budget. If we assume a 20% service charge and 10% in state and local taxes, then the total for your dinner is not $3,500 but would be, instead, $4,620 – a difference of over $1,000! That represents a huge amount to a group on a tight budget and even large events with much larger food budgets can get into trouble if the planner forgets to include tax and service charges in their budgeting.

Keeping an eye on your food budget can be tricky with any group but, if you remember to budget for the plus-plus, then at least you won’t find yourself tripped up by these “hidden charges”.

- Karl Baur, CMP, Project Director