WTAJ — With inflation showing no sign of stopping, the restaurant and service industries are also taking a hit, which in turn means they are charging us more with service fees.
What are services fees?
According to Investopedia, you are charged a service fee as a way for the seller to collect payment for a service or product. These are different from tips and many companies, including restaurants, banks, and hotels, include them at checkout.
There are different types of service fees; however, when talking about restaurant-related service fees, these are often labeled as hospitality, according to Investopedia. These fees are usually a percentage of the total bill as a replacement for tips.
A good way to think of it is tips are for the server or the person that directly did a service for you like housekeeping. Service fees are for restaurants and there is no guarantee that collected service fees are going to a specific person like a tip would.
How is this affecting me?
15% of restaurants are charging customers a service fee, according to a recent study by the National Restaurant Association. So, not only are you paying more, but you don’t know who is benefiting from the extra money you are paying.
The study, which was obtained by Restaurant Business Online, states that nearly 15% of restaurants are relying on these surcharges with 13% of fast-food places participating in service fees. Sit-down establishments are even higher at 17%.
This could mean that the $4.99 value menu combo you get from your favorite fast-food restaurant is actually $7 to $9 after these service fees get added.
How can you spot these fees?
Service fees are pretty common to spot on your receipt whether you opt for the paper one or an electronic version. Before paying at a restaurant or ordering through an app, make sure to check the receipt and see what additional things you may be charged with. Common items other than service fees include tax, which is 6% statewide in Pennsylvania, and shipping or delivery fees.
In the photo below, using the online third-party delivery service DoorDash, you can see the service fee and what the company says they are using it for. While a company like DoorDash calculates service fees as a percentage of what you order, other restaurants may opt to just have a flat fee of a few dollars.
Will service fees go away?
Currently, signs point to service fees being here to stay, at least until 2024. In the Natural Restaurant Associations’ findings, 81% of service fee users plan to keep them around for at least a year. During the COVID-19 pandemic, restaurants across the country struggled and some may still be feeling the effects.
Even with the return of in-house dining, restaurants have bills to pay and because of inflation, they are higher. This in turn keeps customers having to pay even more for their favorite meals. So, next time before you choose takeout, don’t be surprised when your check is higher than usual, and don’t be afraid to ask the restaurant what the fee goes towards.