Mr. B, a Korean American, visited an Italian restaurant in Pasadena and saw a charge on his credit card bill. There was already a 3% charge for employee benefits. Feeling overwhelmed, he reduced the tip from 18% to 15%. He ended up paying 18% of the total bill, including the service charge and tip.
Customers suffering from tip fatigue are becoming increasingly frustrated with additional fees in restaurants.
Restaurants are adding anywhere from 3% to 18% in the form of service charges, employee benefits, living wages, and employee healthcare fees. Reddit, Instagram, Yelp, and other social media outlets are filled with posts about these unfair service charges.
A restaurant receipt posted on Reddit shows a 3.5% living wage and a $39 service charge, with tipping options ranging from 15% to as high as 25%.
The post quickly generated numerous online comments. People questioned the legality of hidden fees that restaurants do not list on their menus or disclose before ordering, but charge after the meal, as well as the transparency of where the service charge goes.
Restaurants began implementing service charges in 2020 as the COVID-19 pandemic shut down dine-in services and led to plummeting sales. Despite the pandemic being over, some restaurants still continue to charge a service fee, which has attracted criticism for the additional fees they impose.
According to the Los Angeles Times on June 29, Jon and Vinny’s, a restaurant in Fairfax, added an 18% service charge to its customers. As customers felt burdened by the service charge, they reduced the amount of tips they left for employees, resulting in employees suing the restaurant.
Meanwhile, the number of restaurants adding service charges to the cost of a meal increased by over 36% last year. A recent study by the National Restaurant Association (NRA) found that 15% of restaurants now require a service charge from customers. Experts suggest that a growing number of restaurant owners view service charges as an alternative to tipping.
Employers find service charges beneficial as they can decide how to use the money instead of splitting it with employees. It is also not illegal, and since the service charge is part of the bill, customers cannot refuse to pay.
“The service charge should be listed on the menu as part of the food price or disclosed to the customer before ordering,” said Daniel S.H. Lee, a commercial lawyer. “It is advisable to check the list of possible additional fees before paying at a restaurant or ordering through an app.”
BY EUNYOUNG LEE [support@koreadaily.com]
