Restaurant surcharges & service charges: threat or menace?

Cutting to the chase, we pay in cash at favored restaurants so that principals can record it as they choose. And we leave a tip for our waiter in cash. It would be lovely to include back of house but we can only control what we can control.

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That’s fair! And I didn’t mean to suggest you don’t support child labor laws or anything. This issue is one of my parochial concerns, so prob too extreme an example.

Guess I see these service charges as a legal way to garnish tips, done surreptitiously under the guise of foh/boh house equity. In an ideal world they would be regulated somewhat like tips but go to employees not owners. And as @robert showed, these things often get gamed by those with power.

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Having worked for a couple well known restaurant groups, I can say that if it’s not explicit then the house is probably taking advantage as much as legally possible. One place I worked specifically changed the wording of their policy from service charges providing health insurance to something more vague. They were careful to set aside the money just for health insurance, but found that they weren’t spending enough of it so they changed the wording to just keep all of the charge. In a sense it was raising the prices by a few percentage points without increasing the numbers on the menu.
Most restaurants continue to pay staff as little as they can. Though, I will say that lately, wages have gone up quite a bit and most places split gratuities between Front and Back of House due to worker shortages. The break in service during the pandemic put a lot more power in the hands of workers.

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No worries. I liked our discussion. It was civil, lol. And you could very well be right. :thinking:

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this thread is exactly why we need to move away from service fees and just raise prices.

and to the comment regarding rent as a factor of gross receipts, whoever wrote the contract that didn’t define service charges as gross receipts is a terrible lawyer.

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Service charges should NOT be counted as gross receipts if they’re 100% distributed to staff a la tips, as e.g. Daytrip does.

Many restaurant leases were drawn up when service charges were virtually unheard of in the US. Landlords may be thinking about changing that now that it’s becoming more common, but on the other hand thanks to Covid the market’s not in their favor.

These landlords need to get with some entertainment lawyers or something because they’re leaving money on the table. this is contract accounting 101.

I think Jon and Vinny just want more money…how are they virtually the only restaurant that does this with (very small) portions, few front of house/waiters, small space and still charge it? It doesn’t add up at all.

Many higher end San Francisco restaurants have a service charge.

I go to a restaurant because I really like the food. Good service is a plus. In my reasoning, service charges just add to menu prices. You either think the cost is worth it or not. I’d rather pay service charge at a place with excellent food than none at a mediocre place, given same menu prices…

Well, I think MOST people go restaurants primarily because they like the food, but there may be other reasons to go, or to not go.

There’s a place in my city that, by all accounts, serves up great food, but also has their establishment bedecked with political signage and slogans. The signage has no bearing on if the food is good, but as I’ve said before on this board, if a business goes out of their way to advertise their personal, political, religious, whatever beliefs in conjunction with their business, it’s pretty clear they WANT their customers to take that information into account when choosing to patronize it. So I do, and as I find their politics pretty repulsive, choose not to patronize them.

The same goes for places that treat their workers especially well, or especially poorly, or that do, or do not, try and give back to the community they’re located in. Or that add a service charge claiming to go solely toward staff and do, or do not, keep that promise. Any of those issues is as valid as any other for choosing where you want to spend your money.

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I totally agree that political or religious proselytizing has no place in a restaurant, or one that I would patronize. And that I would like to patronize places that treat their staff well and support the community, but those are not reasons for me to go to that restaurant if their food isn’t stellar. I would rather donate to relevant causes than sit through an ordinary meal.

14 posts were split to a new topic: Credit card processing fees

I loved Snail Bar, and think we tipped/no service charge (?) can’t remember my friend paid, haven’t been to Slug yet

https://www.reddit.com/r/OaklandFood/comments/ww3deh/worker_calls_out_snail_bar_for_pocketing_service/

originally a SF Chron article, removed paywall

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how much do people tip at these places??

Santa Monica requires service charges to be distributed pretty much like tips:

An Employer shall distribute all Service Charges in their entirety to the Employee(s) who performed services for the customers from whom the Service Charges are collected.

https://library.qcode.us/lib/santa_monica_ca/pub/municipal_code/item/article_4-chapter_4_62-4_62_040

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My restaurant charges customers service charges. Will I need to change my current process?

Yes, most likely, per SMMC Section 4.62.040. The law requires service charge proceeds to be distributed to employees generally contributing to the customers’ service (including back of house staff). Service charge proceeds cannot be distributed to employees whose primary roles are managerial or supervisory. Employers are also required to disclose in writing their plan for service charge distribution and report to employees the amount of service charges collected. The business cannot deduct credit card processing fees or costs from the employee’s distribution.

The law also addresses transparency concerns for the customer: employers must clearly disclose all service charges to customers before they make a purchase or selection.

Lastly, the employer cannot automatically include any optional charge in a bill. If the charge is optional, a customer must write it in.

Berkeley, Emeryville, and Oakland reportedly have similar laws.

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Service is provided by the server, so assume that the service charge is for their “service”
I the restaurant charges service charge of 18% I consider to be the tip. If the service was exceptional I will leave $20-40 for the server in cash. If I do not have cash on hand (rarely so), such is life…
As is somehow ‘health fee’ is now my responsibility. What’s next? Restaurant’s fire insurance fee, restaurant workers children school tuition fee, etc.

Unless there’s a local ordinance specifying what restaurants must do with them, you can’t assume anything about service charges beyond what, if anything, the restaurant discloses.

The health surcharges started in response to local governments imposing health care requirements. Just raising prices wouls increase gross receipts, which restaurant leases often give landlords a percentage of.

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What are people’s thoughts about credit-card charges?

One place in Morro Bay charges a 2.99% surcharge for using a credit card (listed on the menu). What made me upset was that the bill I received already had the surcharge added, even prior to me pulling out my credit card. Tacking on a credit-card surcharge is already a bit iffy (I think we might’ve discuss this b/f), to my understanding, and I found it particularly off-putting that it was added automatically to the bill w/o any comment.

My bank is located 4 miles away; I assume I would be charged a fee to use the ATM at the other “outside” banks that are closer to where we’re staying.

My partner ate at the place a few days ago on his own and paid cash. Not sure if they removed the surcharge when he paid cash (he didn’t check).

What’s the problem w/ a take-out tip line?

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