6 ms·

Serious question: why add a "service charge" instead of just adjusting the price of dishes accordingly?

• th0br0 11y ago
  Psychology. If you adjust the prices, people will maybe perceive the dishes as being too expensive. However, if you keep the prices low and add a "hidden" (as in people need to calculate themselves before ordering) service charge, as soon as the service charge is accepted in general, you'll be profiting more off it than otherwise.
• jackreichert 11y ago
  Amen. In Italy and France (probably elsewhere as well), you maybe tip a percent or two if you really think it's deserved; albeit, tourists are ruining that to some extent. But fair salaries are baked (or cooked) into the prices on the menu and it's considered a respectable long-term career to be in the food industry. I'm not for worshiping everything Europe does, but this is the way it should work.
  • geon 11y ago
    Here in Sweden tipping is virtually nonexistent. I have never tipped in my life.
    • dagw 11y ago
      Funny. I'm also in Sweden and most people I know tend to either leave the small change on the bar or round up to the nearest reasonable round number when paying by card.
    • cbhl 11y ago
      Not to be confused with "Swedish rounding" (http://en.wikipedia.org/wiki/Swedish_rounding http://en.wikipedia.org/wiki/Swedish_rounding) which is the result of low denomination coins being taken out of circulation.
    • yesbabyyes 11y ago
      I live in Sweden and I usually tip between 4-10% (dinner in real restaurants with table service). Nothing if it's bad, or during lunch. At a bar, I'll probably just leave the change or I might tip up to 10% if I had a really good time.
• Frozenlock 11y ago
  Somewhat serious answer: Because in the US they don't like to give you real prices. They give you an artificially low price and then expect you, under social pressure, to give a little more through tip or service charge.
  • deathandtaxes 11y ago
    Ditto for sales tax. In some countries, sales tax is expected or required to be included in the listed price. This makes cash transactions significantly simpler.
    • nickff 11y ago
      It also makes raising sales taxes more opaque, and reduces the political accountability (and cost) for doing it.
      • netrus 11y ago
        In Germany sales tax changed once in the past 20 years. Everyone noticed it.
        • Zikes 11y ago
          In the US it's set at the state and city levels. It varies so widely from city to city that unless you're a resident you'd never notice a change. The changes are frequent, too. Since they're so localized, they're often heavily involved in local politics. Recently my city was very divided over a half-cent tax hike to build a better high school.
        • maxerickson 11y ago
          In Michigan, the sales tax rate is specified in the state constitution and can only be changed by holding a statewide vote. The rate last changed in 1994 and 1963 (1963/1964 was when the modern constitution was put in place). A proposal to increase it failed this month, with no votes from 80% of people that bothered to vote (~20% turnout). It would be interesting to see a survey of what it takes to change the rate in various states.
• sp332 11y ago
  I think that is the argument the article makes, although you don't get to it until the last paragraph: It's the responsibility of business owners to keep their kitchen talent out of the cold. In other words, just pay workers what they are worth and don't pretend it's a tip or anything extra. It might indirectly make dishes more expensive.
• rlease 11y ago
  Service charges can be adequately split between all employees, whereas an increase to the price of a dish will typically just result in a larger tip to the server that is not split to other parts of the restaurant. Tipping in general relies on a lot of "good actors," between customers determining what they really want to pay for a meal to servers correctly reporting what they receive and tipping out accordingly. A better model is to tell you directly what you're going to pay, and you shouldn't feel compelled to pay any more than that amount.
  • titanomachy 11y ago
    Uber makes a big deal of this, drivers have always protested when I offer a tip. Taxi drivers, on the other hand, occasionally make noise if I just pay the amount on the meter.
    • fsniper 11y ago
      So you have to tip taxi drivers in US?
      • titanomachy 11y ago
        Canada. You don't have to, but it often seems to be expected. EDIT: if you fail to tip a driver, it's unlikely that there will be consequences for you. Failing to tip at a restaurant you frequent could affect your service in the future.
        • fsniper 11y ago
          Well, It's twisted in my opinion. I get a service, but I can't know exactly how much it costs pre-service, and the outcome would be based on "how both parties feels after". If I don't feel the service is good, I pay less. But this means, I will not be able to get better service ever again. Tipping should be a reward, an incentive. I'm not the employer. Waiter/waitress is not on my payroll, I should not be the one thinking about their take home pay.
• rjett 11y ago
  I suspect the reason business owners don't opt for a service charge in lieu of gratuity for front of house employees is due to payroll taxes. "Adjusting prices accordingly" vs adding a service charge would, in most cases, screw the employee and reward the business owner, who might give a slightly higher wage to his employees, but would be tempted to pocket the difference as profit. Under the current system, so much gratuity is left unreported/underreported due to cash tipping. Business owners have no incentive to keep track of employee tips paid in cash; otherwise, they would be required to pay payroll taxes on the tips going into their employees' pockets. This is changing, as more and more transactions are conducted via credit instead of cash, so tracking is easier. Under a service charge model, everything would have to be tracked and reported, resulting in a higher tax burden to the business owner. In the food service industry where profit margins are thin and reputations can be shattered overnight, it's tough to find a comfortable space between tax law, ethical employment practices, and keeping your business afloat.
  • analyst74 11y ago
    Going into a fixed service charge model will force staff to pay more taxes, lowering their take home pay, which in turn forces businesses to either up their pay, or up the % of service charge. Ultimately, it means more taxes for the government, primarily from people who dine out a lot.
• spinlock 11y ago
  It makes you uncompetitive with restaurants who hide the true cost of the meal and service.