More restaurants adding service fees on checks

Those controversial service fees added to the end of restaurant checks aren’t going away anytime soon.Restaurant transactions with service fees more than doubled in the last two years, now reaching 3.7%, according to a , a popular point-of-sales system used by restaurants and cafes.That’s much less than the National Restaurant Association’s estimate that 15% of all restaurants used the fees in 2023.“Margins are slimmer than ever for restaurants, and sellers have needed to find ways to offset higher costs,” Ming-Tai Huh, head of restaurants at Square, said in the report. that more restaurants were adding fees to checks instead of raising menu prices.A report by Square shows that restaurant service fees are increasing.SquareRestaurant owners said they need the fees to cover rising food and labor costs as well as credit card transaction fees without scaring away customers with higher menu prices. Some restaurant owners said they used the fees instead of tips, which they want the industry to move away from.But critics said service fees are a sneaky way of raising the bill. Many customers are unaware of the fees until they closely inspect their checks.Last year, upset customers created a on the website Reddit to record which Chicago restaurants add the fees. Most Chicago restaurants on the list charge about 3%, but some charge 20% in place of tips.Service fees are different from tips, which must legally be given in full to employees. Restaurant owners can legally do whatever they want with service fees, though some advertise the fees as supplementing employee health care or other costs.A receipt show’s Moe’s Cantina’s 3% surcharge. A sign by the restaurant’s front door (right) alerts customers to the service fee. David Struett/Sun-Times fileSome restaurants add the service fee by default but say customers can ask for the restaurant to remove it, putting customers in a potentially awkward position.Some municipalities have considered banning service fees to keep prices transparent. New York City has for service fees and bans “mandatory gratuity” and “living wage fees.”California recently passed a law targeting “junk fees” that was expected to also ban restaurant service fees. But, after restaurant industry resistance, Gov. Gavin Newsom signed another law in July that .The Federal Trade Commission has been investigating potential rules against a host of junk fees and is considering a ban on restaurant service fees. The potential rules are .