The restaurant service charge isn’t going anywhere

A waiter at a cocktail party in New York, April 24, 2023. The service charge at the bottom of the check confuses diners and even employees, but more restaurant owners are relying on the added-on fees to help make a tough business work. (Photos: NY Times)
Here’s a familiar restaurant scene: Dinner is over, the plates have been cleared, and the server discreetly drops the bill on the table.

But there’s something less familiar at the bottom of the check — a service charge, tacked on with little explanation.اضافة اعلان

Questions immediately swirl. Is this a tip? Does it go to the wait staff? If not, should I leave more money? Is it rude if I ask my server any of this?

“You shouldn’t have to ask,” said Chloe Lynn Oxley, a project manager in Washington, D.C., who dines out frequently and — like many diners — is often bewildered by the fees. “It should be very clear what the service charge is, and what it is for.”

Where does the money go?
One thing is clear: The charges are meant to help shore up a restaurant industry that has long run on slim profit margins and now faces a host of challenges, including inflation, labor shortages and an expectation — or mandate, in rising minimum wages — that workers get better wages and benefits.

To deal with all of this, an increasing number of restaurants across the country, from fast-food chains to fine-dining destinations, have in recent years added service charges of up to 22 percent, and sometimes more.

For restaurateurs, these service charges offer some flexibility. Gratuities are tightly regulated by law and can be distributed only to tipped workers. A service charge belongs to the employer, who can choose how to spend it, said Brian Pollock, an employment lawyer in Miami.

Despite that difference, many diners still conflate service charges with tips, he said. “It is a fundamental misunderstanding that nobody clarifies.”

From restaurant to restaurant, the charges are imposed in such a variety of ways — the amount added to the check, how the restaurant spends it, how all of that is communicated to diners and staff — that many customers and employees are frustrated.

The service charge at the bottom of the check confuses diners and even employees, but more restaurant owners are relying on the added-on fees to help make a tough business work. 

The confusion often begins with the word “service,” which leads some diners to associate the charge with the quality of their experience.

But what does ‘service’ actually mean?
“Even if the service was bad, we have to pay the service charge,” said Shaniah Alexander, a flight attendant who lives in Romulus, Michigan. She questioned why it isn’t included in the pricing of dishes.

Many restaurant owners view the service charge with ambivalence, as a necessary but imperfect fix for an industry that looks increasingly unsustainable.

“If we didn’t have the service charge, we might be out of business in a couple weeks,” said Graham Painter, who last year added a 22 percent charge at Street to Kitchen, a Thai restaurant in Houston that he runs with his wife, chef Benchawan Jabthong Painter.

The couple found themselves in a bind. They wanted to pay their workers more, but believed that customers wouldn’t accept higher menu prices, even as food costs rise.

They didn’t want to continue depending on tipping, which they think is unreliable and inequitable, as nontipped workers are prohibited by law to share in the money.

Tip is still recommended
But even after adding the service charge, which the staff explains to any guest who asks, the restaurant still encourages guests to tip.

“Restaurants have unrealistically priced food items, and in the history of restaurants, the labor are the people who have shouldered those unrealistic costs,” Graham Painter said. The service charge is a solution, he said, and additional tipping “gets these servers closer to that livable wage.”

Service charges are not new. But they became more common as the pandemic harrowed restaurant budgets and made people both inside and outside the industry acutely aware of the hardships of the work. Diners tipped more generously, and some restaurants imposed “COVID surcharges” and other fees.

Even at restaurants that have long charged service fees, like the famed Chicago bar the Aviary, some employees struggle to understand how the money meaningfully affects their wages.

“A service fee is not bad on paper,” said Kamila Bikbulatova, who was a runner and server at the Aviary from 2019 to 2020. But she said her manager never told her how the restaurant’s 20 percent service charge, which has been in place since 2010, was used. She said she also never made more than $16.50 an hour, including tips.

“I don’t think service fees can be successful unless employees are the ones that have control over their own money,” Bikbulatova said.

A spokesperson for the Aviary said its service charge is treated simply as revenue, and can be used to pay employees and for any other costs of doing business. He said staff members are told the differences between the tipping and service-charge models and have access to an FAQ page about the charge.

When Hollis Silverman opened the Duck & the Peach, a California- and New England-inspired restaurant in Washington, D.C., in late 2020, she saw the service charge as an opportunity to bring transparency to her business.

The 22 percent the restaurant adds to every check goes directly toward wages — which range from about $18 to $45 an hour, Silverman said. Guests are not expected to leave a tip, but if they do, it is distributed among the hourly staff based on time worked. (Less than 10% of diners leave a tip, she said.)

All of this is communicated to customers at various points: on the restaurant’s website, on menus and by each server. Employees receive a detailed breakdown of their wage sources every other week. Silverman said she also pays half of the health care costs for full-time employees.

“This is the best we can do with what we have until someone wants to change federal labor laws,” she said.

Why not avoid tipping and service charges altogether?
The question still stands, why not avoid tipping and service charges altogether to raise menu prices? Several owners offered the same answer: People don’t want to pay more for food.

There would have to be a broader shift in how Americans perceive dining out for customers to accept higher prices, said Evan Leichtling, the owner of Off Alley, a Seattle restaurant with a 20 percent service charge. “Going out to a restaurant is a luxury,” he said. “It is not meant to be something you do every day.”

The unwillingness to pay more intensifies at restaurants serving non-Western food, said Christina Nguyen, the chef and a co-owner of Hai Hai, a Southeast Asian restaurant in Minneapolis with a 20% service charge. “With our style of food, there is sadly a ceiling there,” she said.

Nguyen said the service charge has gone over well with her employees, who make between $18 and $42 an hour. She gave them the option to switch back to a tip model, and they voted to keep the 20% service charge.

While some diners across the country said they liked the ability to judge the service themselves through tips, others said they preferred a service charge because of the message it sends.

“It tells me that they actually care about their employees and they care about their well-being,” said Justin Karr, a financial analyst in Denver.

And while many restaurants established service charges in response to the uncertainty of the current moment, most owners said they plan to keep them for the foreseeable future.

Read more Lifestyle
Jordan News