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Dear Restaurant Guru,
We love eating out, and we’ve continued to do it safely to support local restaurants. But I’ve noticed that some restaurants have added a service charge to the bill, and I have mixed feelings about this. I know restaurants are struggling, but so are we—my husband and I aren’t making half the money we made last year. Even still, we are trying to support our favorite places, but it’s getting more expensive—and I just read that some restaurants want to keep the service charges when things are fully open again. Why should I have to pay it once they are back to 100% capacity?
Sincerely,
Not a penny pincher
Dear Not a Penny Pincher,
I hear your concern because this is an issue that needs to be addressed. First off, thank you—from all of us in the industry—for your support. Second, let’s clarify the service charge: It’s usually an extra 10% over the typical gratuity, raising your entire bill about 30%. Lastly, let it be known that these service charges are not for the cost of food, rather, for the cost of the dining experience. Perhaps the price of going out to a restaurant is far more expensive than we once thought?
2020 brought along myriad woes for the restaurant industry (complete closures, damages to buildings, the exposure of multiple sexual harassment offenses, and the complete restructuring of the business model in a post-pandemic world).
Running a restaurant has always been a tough way to earn a buck. To give perspective, industries like banking, software and even the liquor business are 2 to 3 times more profitable. With current limitations to the number of guests a restaurant can safely serve, the industry is, well… you can insert
your favorite curse word here: __.
I have worked in the industry for over 25 years as a GM, server, bartender, line cook and definitely a dishwasher. I’ve done all the jobs. Heck, I even co-created the North Carolina Food & Beverage Podcast (shameless plug), which has provided me a conversation with nearly everybody that makes up this beautiful-but-broken industry. All these jobs are essential to make the business run. But not all of them get compensated enough. The purpose of a proper service charge is to help even out the pay structure for all of these positions.
“I hope that service charges will become the norm as we go forward. But the only real way for it to catch on is if more restaurants implement this concept.”
It comes down to paying our restaurant workers a fair wage, and there simply is not enough revenue generated by food and drink alone. Perhaps we can consider a service charge an entertainment expense or luxury tax? Whatever you want to call it, there is a third part of the equation that’s being underfunded, and that’s for the people that make it happen. I hope that service charges will become the norm as we go forward. But the only real way for it to catch on is if more restaurants implement this concept. Otherwise, those who are trying to pay their staff responsibly will be perceived as expensive—as opposed to the standard.
If you want to avoid this, get takeout and leave a 10 to 15% tip. But if you’re planning something special or simply want a night out, be prepared for the time of your life. But also, be prepared to pay for it.
— Max Trujillo
Host of the NC F&B Podcast
ncfbpodcast.com
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Most restaurants call automatic gratuity a service charge. So, in more situations that is just another name for a tip. (There’s a legal distinction, but that’s not something the customer should worry about).
Last restaurant my family and I went to tacked on a 22% service charge. So after we waited 45 minutes for our group to get a seat. We ordered our drinks. Tea and Soda. No alcohol. We waited an additional 30 minutes for our drinks. Once we finally got our food we never saw the waitress for drink refills. The reason we were told by her was she was alone and did not have any help. We if I’m getting charged a 22% Service charge on top of expected to leave a tip because it’s suposed to be a dinning experience. I think they should remove the service charge and let me just give it all to the server as she was not getting any help from the establishment. That was collecting extra fees for nothing.
I went into an IPHO Thai restaurant today and order a lunch special. The menu stated fried rice with vegetables with a choice of protein, priced at $13.99. I ordered the fried rice with the shrimp, an iced tea ($2.99) and a bowl of dumpling soup ($7.50). I enjoyed the food. The soup was a little salty and rice could of had more seasoning but overall it wasn’t bad. When I received the tab at the end of the meal, it totaled $33.43. The restaurant charged me $2.00 for the shrimp, of which I thought was included in the menu of “fired rice with a choice protein.” There was an 8.25% tax 0f $2.18 and a gratuity attached at 18% which totaled $4.77. I noticed on the tab that “We charge 3% for card payments” was on the tab. I said to myself, another charge. The initial tab totaled $33.43. I gave the waiter my card and when he returned the bill was now $34.36. The gratuity went from $4.77 to $4.91 and there was an option on the tab to leave a tip. I asked the waiter what is the tip line for? He said, it is for the tip. I said, Sir I thought that is what the gratuity is for. He walked away. I paid the bill but made note on the bill of the extra charges. I had to remind the waiter to bring me another glass of tea and there were only 4 other people in the restaurant. It’s not that I could not afford the tab, but it is becoming very apparent that many of these restaurants will charge you whatever they think they can get away with. It was at this same restaurant last year where I went in to pick up a take out order and a $6.79 “upcharge” was on the tab. When I asked the man behind the counter what was that charge for, he could not tell me. I told him to keep the food. I wasn’t paying the upcharge, taxes and a tip. I left the restaurant.
When I read the answer to this question from someone proclaiming knowledge in the food services industry it should make me laugh it it weren’t so sad. What are they paying you for your comment? It displays again that we as a society are getting dumber by the day. If the cost of food items plus the cost of running a food services business is not included in the price for meals and charged via multiple sketchy fees it is simply dishonest. Trying to justify this and that opaque fee is ridiculous. A restaurant owner ought to design their prices for the food and meals they serve so that their economic model works and their P&L delivers to what they need. Everything else is intransparent, deceptive, dishonest and plainly WRONG. As far as tips … look back 30-40 years ago and how waiters were tipped. That made sense! So here is the Rule: Do not tip if ordering standing up or driving up in a car. Period. Tip is for good service provided in a sit-down restaurant by a skilled and caring server and that is it. It is almost comical how people complain about inflation but then easily accept these deceptive methods. Companies in the last three years since COVID have figured out that customers are much easier to fleece than they ever thought because customers seem to not care to be diligent about their money or are simply too stupid to understand. I can make this point easily by looking through the published P&Ls of many companies. Profits rose in huge disproportion to costs and revenue. This is an epidemic in our country much larger than COVID ever was. People find it much easier to levy stupid claims against the government or political parties to show their anger at inflation when they themselves carry a very large part of the responsibility for it. Of course this will not get better anytime soon because people are getting dumber at an alarming rate. Welcome to “Murica!