Restaurants are adding service fees up to 22%, and they don't plan on stopping soon

quote:

---

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.

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.”

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

“Even if the service was bad, we have to pay the service charge,” said Shaniah Alexander, a flight attendant who lives in Romulus, Mich. 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, the chef Benchawan Jabthong Painter.

---