Tip vs. Service Charge

This post is for all of those customers out there who think that they are taking care of their waiter when they see that a service charge has been added to the bill.  There is a trend currently of restaurants adding service charges to the check. 

The restaurants generallly are being up-front about it, no surprises for the guest, however there is something these consumers should understand when they willingly enter into this proposition:  Service charges belong to the house and the house can distribute them to whomever they deem fit to receive them.

They are taking a cut

I can pretty much guarantee you that although they are giving the servers most of the money, they are taking their share for ‘administrative’ costs.  They are also deciding how much they are going to give to the kitchen (not that I have a problem with that), how much the busser is going to get, how much the dishwasher is going to get….the point being that the service charge does not belong to the server, it belongs to the owner.

Now, if the charge that is added is called gratiuty or tip, that is a different matter altogether.  Gratuities do belong to the server, and by law have to be given in their entiriety (minus taxes in some cases) to the server who was given the tip.

To sum this up, service charges belong to the house, tips and gratuities belong to the server.  Make sure you know which one you are doing when you find out that a service charge is added to your bill, and then maybe slip your waiter a little something extra and separate.  That is of course if they did a good job…


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