But its not always that simple.
One pop in of extra fee thats becoming common in the hospitality world is a service charge.
The recent popularity of service charges can be directly linked to COVID.
First, its important to remember that service charges are nothing new for restaurants.
But the big and recent rise in service charges happened for one clear reason: the COVID pandemic.
Kish pointed out that inflation has been tough on everyone, particularly in restaurants.
The ability to pass on a tangible cost to the consumer has saved many restaurants.
Littrell agreed and emphasized that service charges arent instituted with a greed-based goal of gouging the restaurants clientele.
Service charges cover a wide range of operational costs and employee benefits.
So, what might a service charge be used to fund?
The specifics can differ from restaurant to restaurant, and the allocation is ultimately up to each individual establishment.
While a restaurants service charge should be clearly understood, that isnt always the case.
By adding this fee, restaurants can pay their staff better and maintain or upgrade their equipment.
This helps create a better dining experience and a happier, more motivated team.
Service charges dont necessarily replace gratuities.
Service charges are categorized differently by the IRS.
It must be reported as a non-tip wage, Patterson said.
Unless the service charge is explicitly listed as an auto-gratuity, its likely not a replacement for a tip.
Its OK to ask what the service charge is used for, Edwards added.
Some restaurants charge service fees instead of raising prices to stay competitive.
Restaurants are afraid if their pricing is a few dollars more, the diner will go elsewhere.
I also understand the pressure on restaurants to charge more.
They need to find a way to remain profitable and sustain the business.
If they cant raise prices, they raise other fees.
