Detail-oriented Dallas diners might have noticed something peculiar at the bottom of some restaurant receipts lately: What’s this extra “service charge” fee?
It’s a tactic some restaurants use to collect a little more cash during a prolonged coronavirus pandemic, when food prices and labor costs are skyrocketing.
Service fees are often given to untipped kitchen workers, which in turn offers an incentive for cooks who wouldn’t ordinarily make more than an hourly wage. Restaurant operators can implement them however they want to — if they choose to at all. In Dallas, we’re seeing service fees of 3% to 10% added to the bill, not including the tip.
“We tried to withstand the pressure for as long as we could,” says Imran Sheikh, a Dallas restaurateur, talking about inflated food and labor costs. He also notes that his restaurants pay an additional 3% for anyone who uses a credit card. That isn’t a new cost, but it’s part of a heap of fees outside of his control.
His company, Milkshake Concepts, implemented a 3% service fee across all of its restaurants, both for dine-in and to-go. The fee might be more noticeable at a pricier restaurant like Harper’s, where a 16-ounce boneless rib-eye costs $75 and a service fee might be $6 on a $200 tab. But at happy hour at Harper’s, two half-price cocktails could mean a 50-cent fee.
Likewise, some diners might not even notice the 25-cent service charge at one of Sheikh’s other restaurants, Sky Rocket Burger, where a double cheeseburger costs $8.59.
The fee is not intended to replace a tip to a server or bartender. That’s important, says Emily Williams Knight, president and CEO of the Texas Restaurant Association: Diners are still asked to tip servers 20% (which is the industry standard) or more.
Japanese restaurant Matsui in Plano’s Mitsuwa Marketplace is another example of a restaurant adding 3% to to-go orders.
A 3% service fee is a standard number in Texas, Knight says. But she thinks the tactic is doing more harm than good. Consumers, like restaurant owners and workers, are living through a difficult pandemic.
“Why are we taxing them?” she asks.
Knight adds that consumers want to know where their money is going, and a vague percentage at the bottom of a receipt rarely achieves that.
She doesn’t dispute that restaurant workers deserve the extra money. She’s most recently seen an “incredible surge” on the prices of to-go packaging. And with to-go food increasing 20% across the United States, according to National Restaurant Association data between February 2020 and November 2021, Knight says restaurants are strapped to pay the difference in higher volumes of to-go packaging on top of higher prices.
So, how? The Texas Restaurant Association tells its constituents that one of the great benefits of QR codes is that restaurants can increase their prices, and often without a lot of attention, by changing it on their digital menus day by day. Knight cautions restaurant operators from making big jumps in prices, noting that consumers at every level of restaurant “need to still see value in the experience.”
For restaurants that do charge a fee, Knight says they have to be prepared to explain themselves when consumers are confused.
“You need to be upfront and transparent,” she says.
Some Dallas restaurants will also refund the service fee, but customers would have to ask.
The highest service fee we’ve seen in Dallas is 10% at Oishii, a sushi restaurant with two locations in Dallas and one in Plano. For customers who buy $100 of sushi — then drive to the restaurant to pick it up — they’d owe an extra $10.
Oishii director of operations Bryan Dobbins says the fee goes to all in-house staff who handle takeout orders. It’s for to-go orders only.
“This is one of many things we are doing to keep qualified people,” he says via email.
