If Restaurant Adds 20% Mandatory Service Fee To Check, Would You Add Another 20% Tip?

[PamMo]

I haven't had this happen to me yet, so I hope it's not going to become the new norm. I tip at least 20% for good service, but paying an extra 40% on top of the food bill seems a bit much. I feel sorry for the servers who try to explain this to customers.​

​

From the Moneyist at MarketWatch https://www.marketwatch.com/story/i...-tip-is-this-normal-11649682590?siteid=yhoof2​

​

Dear Moneyist,​

I went to brunch last weekend and, when the server handed us the bill, she said a 20% service fee was added to cover her benefits and health insurance, but that it was not a tip. ​

​

I am absolutely supportive of paying restaurant and waitstaff a living wage and they deserve to have benefits. But I wish that the restaurant would have just baked it into their prices. ​

​

No one would have flinched if our meal was just $3 more, but the way it was broken out was just weird and struck us the wrong way. It put everyone in a weird position, especially the server, who had to explain that to us.​

Is this a trend in restaurants now?​

Baffled Customer​

​

Dear Baffled,

More restaurants are charging service fee, but they are doing so in lieu of tips. While other restaurants are adding a low service fee — often up to 10% of the bill — to pay for what they say are higher health costs. However, adding 20% to the bill risks robbing servers of their tips — if customers are expected to tip on top of that...​

 

[pedro47]

No. No.

 

[Luanne]

No. If gratuity is included I wouldn't add more, unless what they added was less than 20% or if the service was truly exceptional I would add more. But 20% for a service fee seems really high. I've had a couple of restaurants tell us they had a $2 to $3 fee for Covid, but nothing as much as 20%. I would hate to stiff the server, but tipping another 20% on top of a 20% service fee is sort of ridiculous. I wouldn't be going back to that restaurant.

 

[ScoopKona]

Most servers make $2.33 per hour. If tips don't get them above the areas minimum wage, the employer is supposed to make up the difference. In practice, this never happens.

I tip 20% even for average service. Because most problems with a table happen in the back, or because of staffing issues -- especially now.

I've always been of the opinion, "If you can't afford to tip, you can't afford to eat out."

Maybe some day we'll jettison our bizarre system. But the National Restaurant Assc. throws a lot of money at Congress to keep the status quo. So I don't see that happening anytime soon.

 

[PamMo]

I'm with you Luanne, I wouldn't go back, especially if I only learned about the service fee when getting the bill!

 

[wackymother]

That's very odd, though, isn't it? We've been seeing restaurants adding a fee (between 2 and 5 percent) for using a credit card. And of course some restaurants charge a number like 20 percent for large groups--although with a big group, we usually do add more because big groups are a pain for the server.

But to have a 20 percent add-on AND have the wait staff have to do this elaborate explanation that it's for their benefits and health care but not for their tip...well, honestly, it sounds like something is getting lost in translation somewhere. Or like the wait staff is fishing for a larger tip. Or like the owner is trying to make a statement, although I'm not sure what the statement is.

 

[ScoopKona]

Or like the owner is trying to make a statement, although I'm not sure what the statement is.

It's just like resorts that add "service fees" or airlines that nickle and dime everything that happens after "buying a ticket."

The average person is going to go with the cheapest option -- restaurants, hotel rooms, airline tickets, etc. Just how it is. So anything that keeps the posted price down and lets them upsell until they get what they wanted is the winning strategy. There aren't enough people out there to say "a service fee buried in the fine print? I'm leaving!" to make companies change their ways.

 

[PamMo]

Maybe the restaurant owner was thinking that airlines and resorts can add fees, why not me?

 

[Luanne]

Most servers make $2.33 per hour. If tips don't get them above the areas minimum wage, the employer is supposed to make up the difference. In practice, this never happens.

I tip 20% even for average service. Because most problems with a table happen in the back, or because of staffing issues -- especially now.

I've always been of the opinion, "If you can't afford to tip, you can't afford to eat out."

Maybe some day we'll jettison our bizarre system. But the National Restaurant Assc. throws a lot of money at Congress to keep the status quo. So I don't see that happening anytime soon.

I agree about tipping. But in this case it was a 20% "service" fee and it sounds like patrons are expected to tip on top of that, if they want the wait staff to see any of that money.

 

[ScoopKona]

Maybe the restaurant owner was thinking that airlines and resorts can add fees, why not me?

They already do -- soda and alcohol. The wine list especially. But people have gotten wise to that. They may not explicitly say "There is no way I'm paying $70 for a bottle of Freixnet which costs $14 at the supermarket." But restaurateurs are seeing their profits from alcohol plummet.

Hence, fees. They can't raise menu prices unless they ALL do it. Otherwise their market will go to whoever still does the bait-and-switch.

 

[wackymother]

It's just like resorts that add "service fees" or airlines that nickle and dime everything that happens after "buying a ticket."

The average person is going to go with the cheapest option -- restaurants, hotel rooms, airline tickets, etc. Just how it is. So anything that keeps the posted price down and lets them upsell until they get what they wanted is the winning strategy. There aren't enough people out there to say "a service fee buried in the fine print? I'm leaving!" to make companies change their ways.

It's funny you say that. We went to a new fancy pizza place near us a few months ago. We ordered our (expensive for pizza) personal pizzas, and they were excellent. Really good.

I went up to pay the bill. The clerk typed up our bill on her screen, then turned the iPad to me to sign for my credit card. I added a tip, and I was thinking the bill seemed a bit high, but I took my receipt and we left. Then, looking at the paper receipt (the clerk asked if I wanted it), I saw that there was a $3 charge for using a credit card! She had never mentioned it, and it didn't say that anywhere--I was so annoyed that I went back to look for a sign or a note on the menu. Nothing! This is on, like, a $25 check.

Now it's months later and my husband refuses to go back because HE'S so annoyed about the $3 charge.

 

[ScoopKona]

I predict that the only way we'll see meaningful change in the restaurant industry is if the nickling and diming becomes so bad that people stop eating out. (Yeah, that'll be the day. Most people not only don't cook, they can't. I've never lived anywhere which has so many people who literally brag about their inability to cook a meal.)

When the market dries up, and restaurants are forced to complete for the small sliver of the market which still dines out, then we'll start seeing "fair wages for employees, fair menu prices, fair alcohol prices" and similar. Because as it stands, the only substantive difference between eating out and a timeshare presentation is the bill at the end.

 

[Luanne]

It's funny you say that. We went to a new fancy pizza place near us a few months ago. We ordered our (expensive for pizza) personal pizzas, and they were excellent. Really good.

I went up to pay the bill. The clerk typed up our bill on her screen, then turned the iPad to me to sign for my credit card. I added a tip, and I was thinking the bill seemed a bit high, but I took my receipt and we left. Then, looking at the paper receipt (the clerk asked if I wanted it), I saw that there was a $3 charge for using a credit card! She had never mentioned it, and it didn't say that anywhere--I was so annoyed that I went back to look for a sign or a note on the menu. Nothing! This is on, like, a $25 check.

Now it's months later and my husband refuses to go back because HE'S so annoyed about the $3 charge.

The places where we've had a $3 fee for Covid, it was on the menu and also in one case the waitress also told us about it.

 

[wackymother]

The places where we've had a $3 fee for Covid, it was on the menu and also in one case the waitress also told us about it.

Yes, everywhere else they've let us know. This place--nothing. Just on the bill, and not visible until it was too late.

 

[mentalbreak]

We had a similar explanation at the adults-only upcharge dining experience on a recent Disney cruise. Our server explained it as the automatic 18% went to the restaurant, and anything additional we added would go to her. We added a full gratuity on top of that, but not sure what we would have done at a regular dining out experience at home.

 

[jackio]

Last year, when we were traveling, I saw a charge on a take out receipt for health care for the workers. I believe it was in Los Angeles. It was an add on item on the bill. I wasn't told about it before hand. It was a small amount - nowhere near 20 percent.

This 20% service charge sounds like something the restaurant made up. I would not go back if I had to pay that and then tip the server on top of it.

 

[bogey21]

I just got back from lunch at Taco Belle. No tip inside but outside I "tipped" a homeless veteran $5. IMO money well spent...

George

 

[mdurette]

Yikes, I would have still tipped the server, but like others said it would cause me not to go back. It also makes me think I should really look at bills in restaurants before I pay as there may be some fees I just never noticed. Bad habit of mine, not to even look to see if correct.

The whole idea of tipping was on my mind tonight as I sent my daughter to the salon for a hair appointment. This salon now only takes cash tips (which annoys me) and I have no idea how much her service will be. Could be $100, could be $200. I sent her with a $30 cash and gift cards.

Anyway, my thought went to how come tipping is based off of cost of service? Take wait staff in a restaurant for example.
If my husband I go out for:
breakfast: bill may be $20 and 20% is $4
Lunch: bill may be $40 and 20% is $8
Dinner: bill may be $100 and 20% is $20

In all three scenarios, the server did the same task. Take my order, deliver my food and check on me occasionally to see if I need anything else.

I will also add I tend to overtip, so I'm not trying to be cheap here. It was just a thought I had. Why tip on cost of bill?

 

[Luanne]

Yikes, I would have still tipped the server, but like others said it would cause me not to go back. It also makes me think I should really look at bills in restaurants before I pay as there may be some fees I just never noticed. Bad habit of mine, not to even look to see if correct.

The whole idea of tipping was on my mind tonight as I sent my daughter to the salon for a hair appointment. This salon now only takes cash tips (which annoys me) and I have no idea how much her service will be. Could be $100, could be $200. I sent her with a $30 cash and gift cards.

Anyway, my thought went to how come tipping is based off of cost of service? Take wait staff in a restaurant for example.
If my husband I go out for:
breakfast: bill may be $20 and 20% is $4
Lunch: bill may be $40 and 20% is $8
Dinner: bill may be $100 and 20% is $20

In all three scenarios, the server did the same task. Take my order, deliver my food and check on me occasionally to see if I need anything else.

I will also add I tend to overtip, so I'm not trying to be cheap here. It was just a thought I had. Why tip on cost of bill?

I pretty much always tip people for service (nails, waxing) in cash even if I put the service on my credit card.

 

[mdurette]

We had a similar explanation at the adults-only upcharge dining experience on a recent Disney cruise. Our server explained it as the automatic 18% went to the restaurant, and anything additional we added would go to her. We added a full gratuity on top of that, but not sure what we would have done at a regular dining out experience at home.

Interesting, again my point....I need to start looking at bills! We were just on one a couple of weeks ago, went to Palo and it cost $171 in the end. There was no explanation of tips, all I know is I thought to myself I could have had "included" food in the dining room and it would have been less!

 

[pedro47]

It's funny you say that. We went to a new fancy pizza place near us a few months ago. We ordered our (expensive for pizza) personal pizzas, and they were excellent. Really good.

I went up to pay the bill. The clerk typed up our bill on her screen, then turned the iPad to me to sign for my credit card. I added a tip, and I was thinking the bill seemed a bit high, but I took my receipt and we left. Then, looking at the paper receipt (the clerk asked if I wanted it), I saw that there was a $3 charge for using a credit card! She had never mentioned it, and it didn't say that anywhere--I was so annoyed that I went back to look for a sign or a note on the menu. Nothing! This is on, like, a $25 check.

Now it's months later and my husband refuses to go back because HE'S so annoyed about the $3 charge.

I am in total agreement with your spouse. This business will not earn my patronage anymore. A $3.00 for usage of a CC is over the top.IMHO.

 

[mdurette]

I pretty much always tip people for service (nails, waxing) in cash even if I put the service on my credit card.

I end up having to also because of "cash tips" policy, but it bugs the heck out of me. If I were to be honest, this is the reason why. I pay taxes on every penny I earn from my job and to me, cash anything means the potential of avoiding taxes.

 

[wackymother]

I am in total agreement with your spouse. This business will not earn my patronage anymore. A $3.00 for usage of a CC is over the top.IMHO.

I know he's right, and I feel the same way, and I'm still aggravated--but damn, that pizza was good. OTOH, it was lunch and it was crazy expensive for our area. We can get amazing lunch specials around here for $12 or $15. This was just a little pizza for lunch for the same amount. PLUS $3 for using a credit card.

 

[Luanne]

I end up having to also because of "cash tips" policy, but it bugs the heck out of me. If I were to be honest, this is the reason why. I pay taxes on every penny I earn from my job and to me, cash anything means the potential of avoiding taxes.

I don't do it because of a cash tips policy, but because I think the money gets into the hands of whoever did the service faster. I could be wrong about that. I pay the person I go to for manicures totally in cash because it's her own business and when she first started up she didn't have the ability to do credit cards.

 

[dannybaker]

No. I would refuse to pay the 20 percent if I was not aware of it before.