Service charges: sneaky and unfair

We’re back dining, and how we are enjoying it, whether indoors or out. When settling up, many are mindful of hospitality staff, out of work for months, and want to be generous. But diners should also be aware of – and even beware of – service charges, which are not always what you think.

Some restaurants, from casual (particularly some high-profile chains) to fine dining, levy a service charge on top of the cost of food or drinks. It’s an opaque practice, with little to recommend it, in our experience.

Patrons – of restaurants, and hotels too – presume it’s a sort of obligatory tip that goes to staff on top of wages. And maybe it does, in some cases. But who knows?

Management often say service charges are distributed among all staff. But in some cases we know, “distributed among all staff” means to part-pay their contracted wages, not on top of wages, as customers might presume.

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It seems to us downright unfair, and deceptive, using a “tip” to pay normal hotel and restaurant business costs, and ultimately increase the bottom line. If service charges go towards contracted or guaranteed pay, staff get the same wages whether customers pay service charges or not, and effectively menu prices are disguised, and are in fact 10-12.5 per cent higher than stated. Sneaky.

Rotten aftertaste

The rotten aftertaste: if we’re paying a service charge, we’re unlikely to tip again, so staff lose out.

But look down the small print: service charges are usually discretionary or optional – so you can ask for it to be taken off the bill, and make sure to leave an actual tip instead. Waiters of our acquaintance would much prefer that. If it’s not optional – well, make your decision before booking about whether you want to pay a hefty, invisible surcharge on top of stated prices.

Staff generally appreciate customers asking (out of supervisor earshot): how are tips distributed, do you get card tips, are service charges distributed on top of wages, or used to part-pay them? Then act accordingly.