Inaccurate guest checks represent lost revenue. And the frequency of check errors is higher than many restaurateurs might think

Carvell, Steven

Kelly, Thomas J.

English

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Checking the Checks: A Survey of Guest-Check Accuracy

School of Hotel Administration, Cornell University

Cornell University School of Hotel Administration 
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Articles and Chapters School of Hotel Administration Collection 
11-1987 
Checking the Checks: A Survey of Guest-Check Accuracy 
Thomas J. Kelly 
Cornell University 
Steven Carvell 
Cornell University, sac20@cornell.edu 
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Checking the Checks: A Survey of Guest-Check Accuracy 
Abstract 
Inaccurate guest checks represent lost revenue. And the frequency of check errors is higher than many 
restaurateurs might think. 
Keywords 
restaurant, guest checks, check error, revenue 
Disciplines 
Hospitality Administration and Management 
Comments 
Required Publisher Statement 
© Cornell University. Reprinted with permission. All rights reserved. 
This article or chapter is available at The Scholarly Commons: https://scholarship.sha.cornell.edu/articles/160 
62 THE CORNELL H.R.A. QUARTERLY 
Checking the Checks: 
A Survey of 
Guest-Check Accuracy 
Inaccurate guest checks represent lost revenue. And the frequency of check errors is higher 
than many restaurateurs might think 
by Thomas J. Kelly 
and Steven Carvell 
CHECK PLEASE! 
As a restaurant operator who is 
also a consumer, have you ever ex-
perienced difficulty with this pro-
cess? Perhaps you had to wait too 
long to receive it, or pay for it. Per-
haps you could not read it, or if you 
could read it, you did not under-
stand it. Most important, have you 
ever found the check to be wrong? 
Why? By how much? In whose fa-
vor? How did you resolve it? 
As members of the hospitality in-
dustry we should be very con-
cerned about these issues. Our 
guests are confronted with them 
each day. The check transaction 
can play a substantial role in shap-
ing the guests' view of the dining 
experience, especially if there is an 
error. 
The guest check is also the criti-
cal transaction for ensuring reve-
nues in a restaurant. Most working 
people would become very upset if 
they discovered their paychecks 
were short every so often. The 
guest check is the "paycheck" for 
restaurateurs. We have found that 
these checks are frequently inac-
curate. 
Even a small percentage of error 
could involve a great deal of money 
industry wide. The National Res-
taurant Association estimates the 
commercial sector of the food-ser-
vice industry will have sales in ex-
cess of $174 billion in 1987. Most of 
this money is received one transac-
tion at a time through a guest 
check. In addition to their revenue 
function, accurate guest checks are 
important in ensuring guest satis-
faction. Inappropriate charges are 
certain to make customers angry. 
Having been on the receiving 
end of inaccurate checks, we de-
cided to examine the general accu-
racy of restaurant guest checks. 
This article reports on our study. 
A Wide Net 
To conduct our survey, we asked 
faculty and students from ten hos-
pitality schools to record the accu-
racy of checks when they ate out. 
The sample includes 288 different 
restaurants located in 138 cities in 
36 U.S. states, the U.S. Virgin Is-
lands, and two Canadian provinces. 
All told, the survey recorded 377 
transactions. Although the sample 
does not perfectly mirror the in-
dustry's composition, it contains a 
A former restaurateur, Thomas J. 
Kelly is an associate professor at the 
Cornell School of Hotel Administra-
tion, where Steven Carvell is an assis-
tant professor specializing in finance. 
The authors appreciate the assistance of 
Thalia Kallas and Brian Parmelee in 
preparing this article. 
NOVEMBER 1987 63 
Just over 13 percent of the 
sampled guest checks were 
inaccurate. Seven out of ten of 
these were undercharges. 
sufficient cross section of each seg-
ment (fast food, family, luxury) to 
allow us to make reasonable gener-
alizations. We also interviewed 234 
industry representatives at the May 
1986 National Restaurant Associa-
tion Show in Chicago to determine 
their perceptions of check accuracy. 
Sources of Error 
The most benign source of discrep-
ancy is arithmetic errors. We say 
this factor is benign only because 
errors of addition can go either 
way. The check total is as likely to 
be too small as too large. On aver-
age, we would expect a zero net er-
ror from this source. 
A second source of error is mis-
pricing. We found this to be a rare 
problem, especially in restaurants 
with electronic cash registers 
(ECRs). 
The major source of error, we 
discovered, was an incorrect listing 
of the items ordered—both errors 
of omission and commission. An 
error of omission occurs when an 
item is served, but is left off the 
check, resulting in an undercharge. 
Errors of commission occur 
when an unordered item is listed 
on the check, resulting in an over-
charge. We think this is an unlikely 
source of error, since it would gen-
erally require an active intent on 
the part of the servers to over-
charge. 
If we assume a "wash" from 
mathematical mistakes, little mis-
pricing, and few improper addi-
tions to the check, the major source 
of problems will be from omis-
sions—and that means more erro-
neous checks would involve under-
charges than overcharges. 
Our NRA-show respondents 
generally disagreed with this logic. 
Some 78 percent of these restaura-
teurs expected the check errors to 
be in the house's favor. 
A $3.1-Billion Gap 
We found that slightly over one 
check in eight (13.26 percent) was 
inaccurate—50 out of our sample 
of 377. On 70 percent of these inac-
curate checks, the guest was under-
charged. The guests reacted differ-
ently when they discovered an 
undercharge than when they found 
an overcharge. When guests were 
overcharged, 91 percent of them 
brought it to the restaurateurs' at-
tention and paid the corrected 
lower amount. On the other hand, 
66 percent of those who were un-
dercharged quietly paid the incor-
rect lower amount. As a rule, then, 
overcharges were corrected, but 
the house had to eat a large per-
centage of undercharges. 
The average error (regardless of 
direction) was $5.21. On electroni-
cally reproduced checks we found a 
relatively small average overcharge 
of $1.29, but handwritten checks 
averaged a substantial $5.39 un-
dercharge. Handwritten checks 
were inaccurate 16 percent of the 
time; electronic checks, ten per-
cent. 
Of three restaurant categories 
(fast food, family, and luxury), 
family restaurants were the least 
accurate (17-percent error rate). 
We place much of the blame on the 
general dearth of ECRs in this seg-
ment. Only 29 percent of the family 
restaurants in our sample used 
electronic checks, while 72 percent 
of fast-food restaurants and 52 
percent of high-end restaurants 
used ECRs. 
Examining the relationship of 
error to the type of menu item, we 
found a subtle, disquieting prob-
lem. Although a restaurant might 
typically record a sales ratio of 75-
percent food to 25-percent bever-
age, just 57 percent of the errors 
were exclusively food-related, and 
37 percent were beverage related. 
This relatively higher proportion 
of inaccurate drink or bar tabs in-
64 THE CORNELL H.R.A. QUARTERLY 
dicates it is easier to circumvent a 
check-control system in the bever-
age area. Moreover, many bever-
ages are served at the end of the 
meal (often after the check is tabu-
lated) and may be overlooked. If 
your restaurant has a higher 
markup on beverages than food, as 
many do, your profit margin would 
suffer even more by the omission of 
the last-minute beverage order. 
Not surprisingly, check errors af-
fected tip levels. Overcharged cus-
tomers left an average tip of 4.7 
percent (across all restaurant 
types), but when they were under-
charged, customers left an average 
tip of 11.5 percent. When the check 
was accurate, by contrast, the aver-
age tip was 13.3 percent. 
Just over nine percent of all 
transactions we studied were un-
dercharges. If this percentage 
holds throughout the industry, res-
taurateurs, particularly those using 
handwritten checks, are losing a 
substantial portion of their poten-
tial revenues. According to the 
NRA/CREST data for check trans-
actions, the midscale restaurant 
segment records 159 million eat-
ing-out transactions in a two-week 
period. Applying the 17-percent er-
ror rate we found in family restau-
rants, we could infer that some 27 
million of these restaurants' checks 
were wrong. We calculated the net 
error for this group at $1.27 per 
check, so there is a possible reve-
nue loss of over $34 million for the 
two weeks or $885 million this year. 
Similar calculations for quick-ser-
vice and upscale restaurants yield a 
tally of some $3.1 billion lost to 
check errors—about 1.5 percent of 
the industry's 1986 revenues. 
Closing the Gap 
In this case, what you don't know 
can indeed hurt you. To find out 
whether you have a problem, start 
examining your guest checks to see 
if they have inaccuracies. You 
should be looking more for under-
charges from omitted items, than 
for overcharges or arithmetic er-
rors. Be especially observant for 
omissions in food items served di-
rectly by the waitstaff (e.g., appe-
tizers, desserts—especially from a 
dessert cart) and for beverage 
charges. Second rounds often fail 
to make it to the check. We gener-
ally found more problems with the 
checks for large or odd-size parties, 
so you might want to monitor these 
checks more diligently than those 
for parties of two or four. Also 
check to see whether your employ-
ees conveniently "overlook" an item 
rather than recalculating a check 
that has already been totalled. 
If at all possible, install an ECR 
that is consumer and user friendly. 
User friendliness is critical, because 
errors of omission are often made 
by staff members who are either 
afraid of the computer or think 
they do not have time to use it. 
Hence, a last-minute iced tea will 
often not be tallied. The system 
must be consumer friendly so that 
the check is legible and organized, 
and makes sense to the customer. 
The system also should not be so 
cumbersome that it delays service. 
Regardless of your system, train 
staff members to use it and insist 
that they include all items on the 
check. 
Motivate your staff members to 
make checks accurate. In doing so, 
you can point out that professional 
pride dictates that they should wish 
to present accurate checks. But you 
also can explain the findings about 
the customers' tipping behavior. 
In conclusion, we believe the res-
taurant industry has not acknowl-
edged the magnitude of the prob-
lem. We hope the results of our 
study will encourage more restau-
rant operators to devote greater at-
tention to the accuracy of their 
guest checks. • 
To find out whether you have 
a problem, start examining 
your guest checks for 
inaccuracies—especially 
omissions. 
NOVEMBER 1987 65 


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