Tipping on 20 percent service charge

posted 2 years ago in The Lounge
Post # 2
6258 posts
Bee Keeper
  • Wedding: August 2013 - The Liberty House

That service charge should have already included the tip.

Post # 4
4875 posts
Honey bee

View original reply
MeiFrancis :  not necessarily. It usually specifies whether gratuity is included in the service charge or not. A service charge is not intended to be mandatory gratuity and in the US the IRS defines them differently. A tip can only be something that is optional and left to the customer to determine the amount. A service charge is mandatory with a non-negotiable amount from the vendor.

For catering and restaurants the service charge is intended to pay for the extra assistance that is required when you have large parties and is usually split between the entire restaurant crew. The wait staff usually do not see that amount directly in their pocket as a gratuity. That may be different in other countries where service charge is synonymous with gratuity.

To answer the actual question, I was always taught to tip on the subtotal before taxes and fees.

Post # 8
3621 posts
Sugar bee

I call and ask if the service charge goes to the server or to the house. If it’s to the house, I do not tip on the service charge – only the bill subtotal before tax.

Post # 9
9355 posts
Buzzing Beekeeper

View original reply
lauralaura123 :  I have never heard of a 20% service charge that wasn’t considered a gratuity. I wouldn’t have tipped anything extra unless it was absolutely incredible service and even then I would likely just round up the bill rather than do a percentage. 

Post # 10
841 posts
Busy bee

I’ve also never heard of a 20% service charge that wasn’t a tip. I wouldn’t tip on top of a 20% service charge.

Post # 11
982 posts
Busy bee
  • Wedding: City, State

View original reply
lauralaura123 :  in your case, I would have paid for my share+tax+20% service charge. I may round up the number so it’s easier for the group.

I have always thought service charge is a way for the workers to be guaranteed a certain amount of tips. 

Who told you it’s not considered a tip? If that’s the case, I will need to eat out even less often.

Post # 13
1669 posts
Bumble bee
  • Wedding: June 2021 - Glacier National Park-Montana

Why do you eat at this shady restaurant?  Service fee plus tip is insane. 

Post # 14
3828 posts
Honey bee
  • Wedding: April 2017 - City, State

I’m honestly surprised the server had to audacity to tell guests HOW to tip. That’s insanely inappropriate. I wouldn’t go back to eat there if that’s how they’re trained.

If the service charge didn’t cover a tip, which I also think is weird considering the size of the charge, the only appropriate thing he could say was that gratuity was not included in the charge.

Post # 15
2173 posts
Buzzing bee

I just encountered this in Seattle at a restaurant where the service fee (18%) was added so their prices wouldn’t go up after a minimum wage law change. The receipt and the server made it clear that it was not gratuity.

In that case, I’d tip on the total before the service fee or tax. 

In general, I think this is happening more places as a way to keep prices seemingly low while maintaining profit margins. I don’t love it but I’ve heard of it being done in my city as well at restaurants and smaller retail stores as a “cost of living” fee.

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