Restaurant service fees don’t always check out

The rise of “service fees” has diners scrambling to figure out what the heck they’re paying for.

You might’ve noticed something you didn’t order on your last dinner bill: a “service fee.”

Not to be confused with a tip, the service fee ranges from 3% to 20% of the bill, and it’s becoming increasingly common around the country, per Vox.

But what exactly the fee represents…

… isn’t always clear. The fee can indicate a range of things, including:

  • A mandatory tip that goes directly to the server
  • Pay for back-of-house employees like chefs and dishwashers
  • Funds to cover workers’ minimum hourly wage
  • Money for a restaurant’s credit card fees or owners

The fees also vary widely by state. In California, the fees go to the restaurants; in New York, they go to the service staff; and in Florida, they can be used for whatever the restaurant wants (feels right).

The tab keeps growing

In September, Americans spent ~$87B on dining out, up 11.4% YoY, while the price of food at full-service restaurants was up 8.8% YoY.

  • Google searches for “service fee” and “service charge” have hit an all-time high with customers scrambling to make sense of their checks.

The worst part? With all the confusion, the fee can cause diners to tip less, mistakenly thinking the money is going directly to their server.

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