Restaurant surcharges & service charges: threat or menace?

In California, service charges get around the problem of tip distribution being regulated by the state. They might also be excluded from gross receipts, reducing payments to the landlord.

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Most of our deliveries now include a destination or fuel charge. Prices are going up everywhere, but it seems like everyone is just shifting to various fees and charges.

Aome delivery services bait and switch, tell you it’s free or costs 99 cents or whatever, then tack on extra charges just before you click to submit your order.

Restaurants get a lot of angry customers if undisclosed additional charges show up on the bill after the meal is ordered.

Your link is behind a paywall, but I think J&V restaurants are about as transparent as you’ll get.

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I guess the question is are they paying a living wage thanks to the new service charge? If so then that makes tipping less necessary? I dunno, I got a headache just dealing with the 4% charge (why not just do 5%?) at Bavel yesterday.

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“100% goes toward wages” could mean the restaurant is lowering its costs. Are any of the hourly wages higher than at similar restaurants without service charges? Are any lower? Not transparent at all.

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Best I could find.

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@matthewkang is this not news?

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That’s from the Reddit post, right?

2 different ones yes

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I’m not sure how restaurants are structured as businesses, but can they, as owners, also qualify as employees for whom this pool of money gets disbursed? S corps kinda finagle this by allowing owners to essentially employ themselves.

Unlike tips, rhere’s no regulation of service charges in California. The restaurant can do whatever they want with them.

Restaurants can and have gotten in trouble for stating that surcharges are for one thing (such as health insurance) and not using them for that stated purpose.

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Exactly this.
Many restaurants changed the wording of their service charges a few years ago for this reason.

Edited to add: Maybe the service charge talk should be in a separate thread?

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So long as Animal and the other Jon & Vinny restaurants aren’t transparent about what they do with the “service charge” money it’s relevant to this topic.

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My guess is they’re using the 18% to cover as much of a set wage as possible for everyone FOH & BOH. Rather than paying everyone hourly and FOH receiving tips on top of that.

So they’re basically using the service charge to cover as much of their labor costs as possible while paying people a few bucks above minimum wage.

So are they expecting that everybody pays the automatic 18% and than adds some additional 15% as tip ? - I understand the desire to have decent wages in the restaurant business but there is also a level of cost for the customer where people will avoid going to restaurants (which ultimately will lead to accelerate restaurant closures)

No. They expect would like you to take the 18% and then add another 22%

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So if we take the 12$ liver toast and do the extended math it’s 12+ (9%) sales tax 1.08+ (18%) service fee 2.16 + (22%) tip 2.64 = 17.88 actual cost. Does that sound correct?

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Paging @Nemroz

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