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Why have a service fee at all then?
Just raise the prices and use the extra income to pay the employees better if that's really your intention.
People won't get upset about the tip on top of it if you don't already have a "service charge" sectioned off in the receipt.
It's so that they can deceitfully advertise prices which are lower than the real price.
I believe this is totally illegal in the EU (because they're obligated to list prices and all charges, fully, upfront and that even includes taxes) but I guess that in the US there are States were it's either not illegal or has never been challenge in court.
I had a service charge like that added in Rome once. It is most likely illegal, but Rome is a pretty lawless place as it is where everybody tries to scam you all the time, so I didn't bother spending time arguing it and getting all worked up about a couple of euros during my holiday, just avoided the place thereafter. I know that's probably what they're counting on ...
Oh yeah, I live in Portugal and here too foreign tourists are natural targets for scammy shit. It's not too much but there are certainly bad actors who will take advantage of people who don't speak the local language and don't know their rights.
However I suspect it's a lot worse when some kinds of scams are actually legal.
Oh yes, the "coperto" or cover charge. Restaurants that are worth going to will tell you upfront about whether they charge you that and how much. Tourist traps will just put a small sign somewhere on the premises that informs you of their ass-pull fee.
I went to a small café in Venice and had a cup of coffee for 4€. They charged me a fixed 14€ coperto.
Coperto is perfectly legal and the norm everywhere. It would be clearly mentioned on the menu, typically at the bottom of every page and it is around a couple bucks per person. It's for the bread and bread sticks you get on the table, water and electricity to wash cutlery and plates you use, and to pay for serving stuff and rent. Why not included in the price of that pizza you might ask? Because I might order that pizza to take away and not use all of the above.
Some touristy places take advantage of it, doesn't make sense for a coffee in Venice (though I'm not surprised). A couple of bucks that op was charged at a restaurant in Rome on the other hand, 100% expected everywhere in Italy.
Source, am from there.
So that shit is actually legal in Italy?
In that case I was totaly wrong on my belief on it not being legal in the EU.
I just read about coperto here, and I don't think that was it. I'm pretty sure it said "Servizio" on the bill, and it was a percentage on top of the price of what we ordered.
In my country (in the EU) usually if a service charge is added on top of the order, it's because that particular place doesn't accept tips.
That would be illegal in the EU country where I live (Belgium). Here the rule is that the advertised price must always include any mandatory charges, like VAT and service charges, so that advertised price = price the consumer would have to pay.
Source: https://economie.fgov.be/nl/themas/verkoop/prijsbeleid/prijsaanduiding
Translation:
Price indication
Companies offering goods or services must indicate the price in writing in a legible, visible and unambiguous manner.
The price is the total price to be paid by the consumer, including VAT and all other taxes or services that the consumer is obliged to pay extra. These prices are stated at least in euros.
That would be illegal in the EU country where I live (Belgium).
Further evidence that America isn't a legal country.
I the s legal most places in the US, some big cities like New York City have outlawed it.
Look at how the tips were calculated. They were based on a bill of $95.65, the price of the meal before the service fee.
This service fee allowed them to increase the price of the meal by 18% without increasing the calculated tip by 18%.
They are stiffing their employees.
Edit: A $100 check would have an expected, 15% tip of $15. A $118 check would have an expected 15% tip of $17.70. What they are doing lets them calculate a 15%, $15 tip on a $118 bill. They are "stealing" $2.70 worth of tips on every $100 worth of sales.
Alternative option: the service fee is the tip because there's no way I'm paying more than what's on that bill.
That just fucks over the waitstaff without harming the business at all.
Best option is to walk out as soon as you see notice of a service fee. It should be printed on the menu or a sign posted on entry.
Just raise the prices
They're already selling lemonade for $6. The sky is clearly the limit.