Are Restaurant Service Charges a Scam? Depends on How You Say It

Food critic Besha Rodell pens a strongly worded op-ed for LA Weekly that rails against the way some restaurants are going about the implementation of their ‘service included’ tip structure, calling it in some cases akin to a scam.

The self-described "complain-y post" tackles one of Rodell’s greater annoyances in dining at the moment, and also touches on a larger issue surrounding tipping in Los Angeles in general. The crux of her argument is thus: Many restaurants who have (often quietly) moved into a service included tip model do not verbally notify customers that a certain percentage of gratuity has already been included in their bill, thus leaving some diners to unwittingly tip above and beyond that percentage without their own knowledge.

Now, as Rodell notes, there are many benefits to a service included tip model, both for restaurants and customers who would no longer need to do the hazy math of tipping at the end of a night that may have also included a few too many drinks. But by maintaining a tip line on the final credit card receipt and not disclosing verbally the service charge percentage, some customers could end up tipping well above what they normally would — in the range of 40% or more, in some cases, without even realizing it.

Obviously, the onus of appropriately reading one’s bill falls ultimately on the consumer themselves, but in theory a service included model should help to streamline the process for all while evening out business issues like wage discrepancies among workers, health care, and more. But with the relative infancy of tipless dining in Los Angeles, Rodell says that not announcing the service charge isn’t fair.

Of course, struggles with tip lines, tipless dining, service charges, health care surcharges, and back of house tip lines are nothing entirely new to the restaurant industry as a whole. Los Angeles has been grappling with the best way to define tipping in a tough industry environment that currently sees rent prices skyrocketing and $15 minimum wage (with no tip credit) coming on fast beginning in 2020.

That means more and more restaurants, especially higher end options like Q Sushi, are reportedly turning towards a service included model that would at least in theory help effectively manage the money coming in across all parties involved. But with little official government oversight on service charges vs. tips, and many restaurants still wary of simply building personnel costs into the price of the food itself due to consumer sticker shock, there’s a lot of tenuousness to go around. Plus, move to strongly in one direction, and you might just end up with a lawsuit on your hands.

Rodell gives praise to places like Barcito in Downtown’s South Park neighborhood as a destination that has completely foregone the tip line, service charge or not. That means there is no place to add an additional few bucks for your server, who may or may not have disclosed the service charge to you during your meal. The result is a clearly defined transaction with no room for discomfort on either side. Both players know what they’re getting into all the way through. Now whether or not that becomes the model of the future still very much remains to be seen.

• Why "Service Included" Can Sometimes Feel Like a Scam [LAW]