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The service charge is not a tip or gratuity, and is an added fee controlled by the restaurant that helps subsidize the staff wages so that management doesn’t have to while still seeming to have reasonable prices on the menu. Also, management takes a cut as it subsidizes their wages too.
Edit: I get why this upsets some people, but the downvote button is not a disagree button. I merely restated the restaurant’s explanation in plain language. I’m not agreeing with it…
If you charge me for service, I’m not paying extra for service.
Call it what it is - a junk fee so they can make their prices look lower than they are. I wouldn’t go to this restaurant a second time.
By tradition, the service charge is supposed to be paid to the staff. Therefore, it’s not customary to tip when you’re assessed a service charge, although many restaurants choose to ask for a tip anyway.
If you work in a restaurant that charges a service charge but pockets it… you’re being robbed.
Unfortunately, this isn’t true anymore. At least in PA.
34 Pa. Code 231.114. Service charges.
§ 231.114 b
The notice required by subsection (a) must state that the administrative charge is for administration of the banquet, special function or package deal and does not include a tip to be distributed to the employees who provided service to the guests.
Heck, I wouldn’t even pay this restaurant the first time. I’m out. You ain’t making me pay extra after the fact.
The cost of food in American restaurants includes service charger. It just not itemized. Waiters do have salaries, so it comes from somewhere.
That’s my point. This restaurant is try to bait and switch their customers by giving a misleading food price and adding a service charge. It is like a cell phone company adding garbage fees.
As for my initial comment - if you add a percentage for service, that ends my obligation to tip.
Ah! I see. You were talking exclusively about not coming back into US restaurant, not restaurant in general anywhere in the world. It was not clear for me.
The problem is, this is still decietful. If this is an issue then the correct move would be to make every item on the menu 18% more expensive as a base. Because now, they still get to say “oh well our prices are still low come eat here and get “X item” for “Y price” but that’s not true anymore because of the service charge. It’s just a way to keep menu items lower in price but increase the price at the end.
Sounds like it does much the same thing as tipping then, right? But then the receipt says you should pay the service charge and a tip on top 🤔
I’m not American so maybe someone can explain this to me, haha…
It doesn’t make sense to any sane person. But basically:
The restaurant feels that costs have increased and in order to remain profitable they must raise prices. Instead of raising prices on the menu, take the canoli as an example, from $11 to $13, they decided to add it after the calculation.
This means the customer may go out with an idea of what they would like to spend (maybe it’s a special treat for them) orders based on the menu, figures tip and tax… Expects to be out for $100… But surprise! You owe a fucking service charge.
Now-- I’m not into this particular restaurant’s finances. Let’s be generous and assume they need to charge more to break even. This is the shady (and should be illegal) way to do this. They should instead raise prices and be honest with the customer what they feel they need to charge.
Except you’re wrong. It is a tip because the tip is the service charge. The tip specifically is “we pay them less than minimum wage and your tip covered the rest of their service cost”. A tip AND a service charge, especially a service charge not levied because there were X+ people at the table, is double dipping on the tip. Both fees are for the same thing. Either increase prices or increase the tip(or pay your workers fairly and don’t expect me to subsidized the rest with these secret fees). Make them upfront and honest. This isn’t. This is a perfect invitation to say “you already charged me for the service, so no tip is needed, because that’s what it is for”.
Except you’re wrong. Service charges are not considered tips under FLSA rules within the US. Many states and local jurisdictions have special rules for tipped wages, how they’re taxed and those taxes are collected, and service charges are not included in that definition.
https://www.dov.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa
Nice reading comprehension. The TIP is a service charge. You got that backwards buddy. So a service charge and a tip is service charge x2. Or you’re admitting that a tip is only for “above and beyond thanks”, in which case it’s not mandatory and this is again a scam.
You might want to read it again
Service Charges: A compulsory charge for service, for example, 15 percent of the bill, is not considered a tip under the FLSA. Sums distributed to employees from service charges are not tips, but may be used to satisfy the employer’s minimum wage and overtime pay obligations under the FLSA.
A place implementing a service charge cannot classify it as a tip, even if it’s 100% passed onto the employee… a mandatory charge is not a tip, even if the restaurant encourages you to treat it that way. Certain states and jurisdictions tax tips differently than regular wages, and service charges are wages, not tips.
A tip is money paid directly to the worker providing the service. The restaurant can’t keep any part of it. They are not taxed on it, either as sales tax or income tax. That money is only counted as income to the worker.
This service fee was subject to sales tax. It will also be subject to income tax by the restaurant. The restaurant gets to keep as much of it as they want.
“Mandatory gratuities” are tips that the restaurant obligates the customer pay to the waitstaff. Where these are charged, you are not allowed to stiff the waitstaff. The restaurant cannot keep any part of that gratuity.
Tips/gratuities and service fees are not the same thing at all.
I’m not talking the law, I’m talking what the tip actually is in practice. It’s the service charge. You’re paying for the server to serve you. The tip isn’t for the food. It for the server serving. Just because you’ve been conned and guilted into accepting this as normal doesn’t make it right. And just because it’s taxed doesn’t mean it’s still not extra income to the resturaunt. Would it be ok if I mugged you but paid taxes on the money and gave it a cutesy name?
that helps subsidize the staff wages
Allegedly
But If that’s the reality, I feel no need to add a tip.
subsidize the staff wages so that management doesn’t have to
Yeah that’s a pretty shit reason to levy this fee unsuspectingly.
In Australia this would be illegal drip pricing. JUST INCLUDE EVERYTHING IN THE PRICE OF THE FOOD! Is it so hard?
Absolutely wild you also don’t add tax in the price in the US.
Is it too much to ask to just be told the price upfront on the menu?
The downvote button is a lazy disagree button, but people is also dumb.
Paying for servers based off of the price of the food just doesn’t make sense to me. If I order a super expensive caviar and super expensive bottle of wine the staff would be paid more than another server with large party that only orders inexpensive drinks. The second server would be paid less for doing more work.
I think they should just be paid a decent wage for doing their job well despite what the customer decided to order.
On a side note if the server has to do something like prepare a salad table side or flambé a dessert they should get a bonus for doing that.
I worked as a server at olive garden many years ago. They famously had their soup, salad, and breadsticks deal for like $6 something. People would run us ragged getting more of each thing. And we’d be lucky to get a $1 or 2 because the price was so low, but it was vastly more work than regular food.
It’s not going to the server, not unless the city has a minimum wage, or something. But any thing over that is 100% going to managment’s coffers.
ALL cities in all states have a minimum wage for all workers. By federal law
Yes. But some cities (or states, even,) specify another-higher minimum.
Since you want to be pedantic… most cities don’t have a minimum wage established; deferring instead to federal or state law.
This has been happening in Florida for a few years now. Restaurant owners went to court so they could keep the service charge. In the beginning I thought it was just a mandatory tip to stop people from stiffing the waiter. Nope they actually expect you to pay 18% plus another 20% for the waiter. Ridiculous. We don’t go out to eat much anymore on principle.
It’s cuz they’re too chicken shit to actually raise the menu price. So they can blame the government or the workers instead of taking responsibility for paying their staff shit wages forever
Yes, Greed., as always. I suspect many industries will completely or partially close in the coming years as the population is just too broke.
“no one wants to work anymore” says restaurant owner who won’t pay a living wage even after jacking up service fees.
Yeah if I hear a word about my decision to include the service fees in the tip, that’s the last time the restaurant will see my business.
18% service charge and then still ask for tips? Fuck all of this, this is a scam and refuse to pay this shit.
This is probably a hotel or resort. $4 cookie and $6 oj are the giveaways .
$11 cannoli etc.
Why have a service fee at all then?
Just raise the prices and use the extra income to pay the employees better if that’s really your intention.
People won’t get upset about the tip on top of it if you don’t already have a “service charge” sectioned off in the receipt.
It’s so that they can deceitfully advertise prices which are lower than the real price.
I believe this is totally illegal in the EU (because they’re obligated to list prices and all charges, fully, upfront and that even includes taxes) but I guess that in the US there are States were it’s either not illegal or has never been challenge in court.
I had a service charge like that added in Rome once. It is most likely illegal, but Rome is a pretty lawless place as it is where everybody tries to scam you all the time, so I didn’t bother spending time arguing it and getting all worked up about a couple of euros during my holiday, just avoided the place thereafter. I know that’s probably what they’re counting on …
Oh yes, the “coperto” or cover charge. Restaurants that are worth going to will tell you upfront about whether they charge you that and how much. Tourist traps will just put a small sign somewhere on the premises that informs you of their ass-pull fee.
I went to a small café in Venice and had a cup of coffee for 4€. They charged me a fixed 14€ coperto.
Coperto is perfectly legal and the norm everywhere. It would be clearly mentioned on the menu, typically at the bottom of every page and it is around a couple bucks per person. It’s for the bread and bread sticks you get on the table, water and electricity to wash cutlery and plates you use, and to pay for serving stuff and rent. Why not included in the price of that pizza you might ask? Because I might order that pizza to take away and not use all of the above.
Some touristy places take advantage of it, doesn’t make sense for a coffee in Venice (though I’m not surprised). A couple of bucks that op was charged at a restaurant in Rome on the other hand, 100% expected everywhere in Italy.
Source, am from there.
So that shit is actually legal in Italy?
In that case I was totaly wrong on my belief on it not being legal in the EU.
I just read about coperto here, and I don’t think that was it. I’m pretty sure it said “Servizio” on the bill, and it was a percentage on top of the price of what we ordered.
Oh yeah, I live in Portugal and here too foreign tourists are natural targets for scammy shit. It’s not too much but there are certainly bad actors who will take advantage of people who don’t speak the local language and don’t know their rights.
However I suspect it’s a lot worse when some kinds of scams are actually legal.
In my country (in the EU) usually if a service charge is added on top of the order, it’s because that particular place doesn’t accept tips.
That would be illegal in the EU country where I live (Belgium). Here the rule is that the advertised price must always include any mandatory charges, like VAT and service charges, so that advertised price = price the consumer would have to pay.
Source: https://economie.fgov.be/nl/themas/verkoop/prijsbeleid/prijsaanduiding
Translation:
Price indication
Companies offering goods or services must indicate the price in writing in a legible, visible and unambiguous manner.
The price is the total price to be paid by the consumer, including VAT and all other taxes or services that the consumer is obliged to pay extra. These prices are stated at least in euros.
That would be illegal in the EU country where I live (Belgium).
Further evidence that America isn’t a legal country.
I the s legal most places in the US, some big cities like New York City have outlawed it.
Just raise the prices
They’re already selling lemonade for $6. The sky is clearly the limit.
Possibly illegal, depending on your local laws.
If it is legal, contact your congressman (local, state, national) because it sure as hell needs to be illegal.
Very unlikely. There’s a statement at the bottom that explains what the fee is. There’s a QR code at the top for more information, which OP cut off.
I doubt they went through the effort of updating their POS system, providing links to info on the receipt, and chose not to post a sign or put a note on the menu. Everywhere I have been with a service fee like this posts it, which would negate any legal issue.
Caveat emptor.
It’s illegal if the fact that a service fee would be added wasn’t shared before ordering (on the menu / by the waiter /…)
Possibly. Local laws vary heavily, and could limit hidden fees like these. If the franchise is in one of these places, but the parent chain is not, it could easily be implemented despite being illegal. It’s a similar case if the local operator didn’t have the required notices in the required way, since it would be done separately. Not necessarily out of malice, but a ton of places simply do not run a tight ship. The receipt is absolutely not the place these notices are required; that’s just a convenience.
It’s also possible that the POS has a bunch of options that can easily be set by management without involving lawyers. A required tip (often for large groups, but not always) is an easy use case for this. So are the various messages, including the tipping scale, or adding a promotional QR code (e.g. scan the code to fill out a survey and get $5 off your next visit)
In any event, I stand behind my advice- check if it’s illegal, and push to make it illegal.
So you carefully included every possible level of US government, but still forgot about the entire rest of the world.
First, many places have a local, state, and national government. Particularly the ones that use dollars and expect an additional tip, as shown on the receipt.
Stop trying to be offended at everything.
My country, which has dollars and expects tips, doesn’t. And this read like it was addressing unexpected fees at restaurants in general.
Stop pretending Americans don’t do this constantly. Everyone who’s not American is very familiar with it, and honestly it’s understandable with how big and self-contained that country is. I might not even have commented if it wasn’t for the remarkable thoroughness short of that detail.
I presume you’re in Canada. Aside from calling them provinces, and possibly having a different name for your legislative representatives, are you saying you DON’T have a local, state, and national government where my advice would be relevant?
No, you’re advice was great. I just found the phrasing weird enough to point out. Sorry if it came across as angry.
The rest of the world doesn’t exist, it’s just a scam made up by the passport cartel to fleece you of your money every few years.
Can confirm, I’m just standing in a blank white space. It’s weird I get wifi.
Do a search for the Tianamen Square massacre. You’ll at least know if you’re Chinese white space or non Chinese white space
Oh no, it’s turning black. Chairman forgive me!
Let’s see… dollar sign? Well that cuts out a lot of the world. Written in English, so that leaves about 3 countries. Australia doesn’t have a tipping culture the same way we do in North America so that leaves either Canada or the US, in which case you can replace state with province and cover your bases.
Percentages on the tip are lower than US tip amounts. So I would guess not US, though this would obviously happen in the states.
Do other countries itemize tax separately? I thought the US was alone on that.
Also, 9.5% is in line with sales tax in a few US states, as is calling it tax instead of VAT (or similar)
Idunno. don’t remember what they do in Canada.
Good catch, I didn’t even notice the percentages. I did look at the date but of course the meal was purchased on the one day this month where that’s not helpful
Don’t forget New Zealand. They do tip down under, but it sounds like they don’t recommend tips the same way.
Yeah, sure, the jist applies everywhere. OP could have saved words just saying “representitives”. That’s the part that was interesting, and now people are big butthurt I pointed it out.
I mentioned all 3 because people (at least around me) tend to forget the first 2, despite those being much easier to make these types of changes.
Looks at a picture of a receipt that is almost certainly from the US:
What about the rest of the world?!
It looks exactly like a receipt that could be here, too. As has been repeatedly pointed out to me, there’s only 2 to 4 countries this could apply to, but you’ll excuse me for expecting the same thing as always was happening.
I would simply not go to that restaurant anymore and very plainly let them know why. This is greed and I will not reward it.
Much like when I place a to go order and go pick up the order and the POS (point of sale not piece of shit if you’re wondering) system pops up that tip screen. You didn’t do anything worthy of a tip so I will not be tipping you. Now if for example when I get there they apply some discount I wasn’t aware of that makes my bill cheaper, I’ll tip for that. Throw in some extra cheese sauce, tip. Anything above and beyond, tip. Just ring me up and hand me my food, yeah no tip.
It’s this (the service charge) or they raise prices across the menu. Some people prefer this, some people prefer the added cost baked in.
Personally I think the service charge is a little deceptive because you are hit with an unexpected expense at the end of your meal. Even if they’re very up front about the charge most people won’t be automatically calculating the 18% extra on whatever they’re spending, they’re just going to look at the price on the menu.
Some people prefer this
Citation needed.
I think those people own restaurants
They have raise prices across the menu, by 18% to be more specific.
Segregating the price increase as “service fee” is only so that they can deceitfully advertise their prices a lower than they really are, a form of Consumer Fraud (I believe this one is a form of Bait & Switch)
You realize that giving you 5% off so you will tip 15% is still greed though right? The greed is always there, it’s just your perception of how it’s delivered. We expect a little foreplay with our greed.
I didn’t say I was giving them 15%. I give 18% for full service. But a buck or two for something like this.
Oh boy, the unlawfulness of USA. This would be clearly illegal in EU, as misleading pricing.
Even if stated there’s an 18% extra fee, I’m pretty sure it would be illegal to state prices exclusively without it.
I would simply refuse to pay that fee if it was here, and report them to authorities.Basically, they just raised their prices by 18% and blamed it on the greedy, useless employees. I don’t know why businesses bother selflessly “creating jobs” if they are so much trouble. Shouldn’t those be the first things to cut to make their business more efficient under capitalism? Stop doing charity work and run the business yourself.
Are restaurants just poorly managed, or is there another reason why they can’t pay their employees a living wage when their markup is like 400-1000%?
Restaurants have notoriously thin margins. I’m not defending this bill, and there are definitely awful practices out there, but it ain’t easy. Even a $34 dollar steak only kind of covers all the ancillary costs that make it happen.
The biggest issue with the crunch we have going on is that food (prepared or otherwise) should be way more expensive, and that shouldn’t be an issue because most people should be making way more money. All of those should/shouldn’ts got way out of whack over the course of decades, and the circus only continued because people found crappy ways to keep it going.
It’s a lot of industries. Construction is a great example. The developers make money. The material vendors make money. The builders make money. The sub contractors who actually put the parts together get haggled on invoices and take the lower amount because they have payroll to make and equipment loans to pay. Loans that are happily given out because the equipment can be easily repossessed.
It’s a very good thing everything is correcting, but it’s going to be an ugly process as workers get their due and pass the burden on to the small business owners.
Sounds like sit down restaurant menus should reflect the actual costs including waitstaff then like any fast food place is able to do.
Wait staff with tips get more than fast food restaurant employees though
That’s a great argument for the manager/owner to do a shit job
Restaurants have notoriously thin margins.
Help me understand.
Assuming restaurants have the same overhead as any other business: rent, staff, insurance, maybe equipment (manufacturing, etc.), what else?
They don’t have expenses like vehicles, tariffs on imported goods, the cost to fly staff out for conferences, tech costs, and so on.
The only difference is the product they bring in, and the product they put out.
As a consumer, who doesn’t get the benefit of industry discounts or high-volume prices, making food is really inexpensive.
When I see a restaurant, for example, selling pasta with marinara sauce for $15-20 a plate, I’m curious to know why they have to beg to cover costs. You can make the same dish for a family of four for under $3, and save $100 you’d spend getting the same dish at a restaurant.
So, again, if the cost of ingredients allows for such a significant markup, well beyond what most other businesses are able to get away with, why are restaurants having to charge “service fees” on top of tips?
So I’m stretching it a bit because at the end of the day this really does apply to more than restaurants, but the other commenter had it right.
Things like rent, insurance, etc go into the cost for well above the plate. So the ingredients are one thing, but you have to make up the cost of rent, paying the staff when there’s low customer volume, all the insane amount of costs that go into running a business. That server has to make up for the cost of printing menus and delivering them by mail.
None of this is the servers fault, who should get a fair wage, but it all adds up in a way that makes it hard for the owner. In fact, the person who sold them the grills, refrigerators, and all the other equipment, knows exactly and empirically how hard it is and sets their prices accordingly.
And it’s not like that company’s delivery drivers, techs, and fabrication workers also don’t deserve a wage. Or the Tyson folks that are plucking the chicken delivered.
The issue is, at the end of the day, those companies probably should be less profitable. But instead of accepting that, we put all of the companies that make all the stuff that run that restaurant into bigger companies that are now part of mutual funds, and they sell it out knowing they can grab it back if it goes under.
So you might be able to get away with making a few plates and some money, but trying turning it into something that will let you pay your rent and put your kids into a school. “Bob’s Burgers” is pretty true to life.
This is how to tell someone you haven’t checked grocery prices lately without actually telling them you haven’t checked grocery prices lately. A box of mediocre pasta alone is going to cost you $1.75. A jar of Preggo will run you another 2.50. So 4.25 for an I hate life spaghetti and marinara meal.
The sauce they make probably doesn’t come out of a jar of reconstituted tomato paste and dried seasonings either.
If you buy decent ingredients you are looking at $3 for the pasta and $9 for the sauce. Or $12 for an “ok for a home cook” spaghetti meal with no protein.
Restaurant serving sizes (for better or worse) are usually 2x+ larger than you would serve at home. Rent isn’t free for the restaurant either. Or labor. Or utilities. Or equipment. Etc. General rule of thumb is that a restaurant needs to charge 3x raw food costs to cover expenses.
So your I hate life pasta would need to be priced at $6.50 and your ok for home but not something I would be happy with getting at a restaurant pasta would need to be priced at $18.
This is how to tell someone you haven’t checked grocery prices lately without actually telling them you haven’t checked grocery prices lately.
I’m going to assume you don’t cook at home.
No restaurant worth eating at buys packaged pasta, or packaged bread/buns, or canned sauce.
Flour is cheap, like really cheap. If a restaurant is buying real ingredients, then they are spending pennies and charging tens of dollars.
Restaurant serving sizes (for better or worse) are usually 2x+ larger than you would serve at home.
I highly disagree. I’ve never left a restaurant “full”, even after spending enough to buy a months worth of real food ingredients.
Rent isn’t free for the restaurant either. Or labor. Or utilities. Or equipment. Etc. General rule of thumb is that a restaurant needs to charge 3x raw food costs to cover expenses.
This I agree with. Is rent, labor, equipment at a restaurant significantly more than other places of work? Paying min wage doesn’t exactly eat through your margins.
That whooshing sound, in case you were curious, was the point sailing right over your head.
Cheap sub contractors need so much constant control to make sure things are delivered on spec that it is almost like it costs more than to hire the more expensive company with a reputation for solid work
Saw exactly this when I was doing commissioning for a large municipality. No matter how tight the specs were, some of these knuckleheads would do it their own way and get mad when we forced them to do it right.
Some of them would just claim bankruptcy if the mistake was big enough.
Pro-tip, friends: don’t pick the lowest cost of construction bids, I guaran-fucking-tee it’ll cost you more than you saved. And, anyone who says they “meet code” is really saying they do the bare minimum required.
I worked at a pizza shop way back ages ago (early 2000’s), but I think the formula is generally the same. Food costs they would shoot for 33%, labor ended up being around 33%, the rest was overhead for the facility (rent, AC, etc) and profit.
I think that’s actually a pretty fair amount of profit in that. But that was almost 20 years ago. I feel like the formula is likely similar though.
So way late, but no that’s shifted a lot. This is anecdotal but does speak to a lot of industries: my understanding is that pizza shops now live or die by cheese prices.
Labor, while fluctuating, doesn’t move a ton month to month. Dairy can.
That’s like I said anecdotal, but broadly, real-estate, equipment purchase/finacince has all been so hyper optimized it squeezes the business owners out.
It doesn’t matter the market. PIZZAOVEN-XL will sell it to you, let you leverage payments against your home equity, grab it back and resell it. They can deal with the cash flow issue. They are “assembled in America”. They don’t care if you go out of business. They’ll do it again for the same person that moves into the same space trying to do the. Exact. Same. Thing.
And I’m not trying to draw a blanket statement across all industries. I’m just saying the wheels that make every industry move are smarter and literally longer lived than anyone starting out, and there’s a reason “John deer” and “John deer finance” are seperate companies.
I don’t return to restaurants that pull this bullshit. Raise your menu prices to provide a living wage or take a hit to your profits.
Or, you know maybe the owner could live without a 5th cottage possibly?? naaaaaaa
That would be the ‘take a hit to profits.’ Yeah, I don’t expect that either. What’s annoying is that it is always the very profitable douche bag restaurants that do this. Most restaurants struggle to make ends meat.
That’s literally what they did and you just posted this comment flipping shit because they had the audacity to tell you it was going to the workers.
$16.25 for a kids size pasta dish?
I feel like I have seen multiple receipts from this same place, likely posted by the same person, because I remember noting $16 Kids Shells on some other thread months ago.
Seems odd. They should really stop going.
The $5.00 glass of lemonade is ridiculous. Water and a small scoop of powdered flavoring/sweetener costs them about a quarter.
Completely fuck this shit.
Straight up fees like that should not be legal, if they even are in that location.
They should instead just add 18% to every menu item since it applies to everything anyways.
As it is right now advertising their cannoli for $11.00 is a straight up lie since it’s really $12.98. They simply don’t because they want to hide the actual cost and make their menu appear to be cheaper so you cant walk out until after you’ve ordered and eaten.
Also if got a bill with an 18% service charge I would definitely not tip, since tips are supposed to adjust for the low wages anyways.
These prices are crazy. Lemonade costs as much as a beer. Drip coffee for $5. One cookie for $4. Over $15 for a kid’s plate. Geeze.
Yesterday I bought some alcohol that was literally cheaper than the water they were selling.
My man never cheap out on the liquor
Meh. It was a good time. D&D is better with alcohol.
