Restaurant Surcharges: How Much Is Too Much?

There has been much recent discussion over the merits of the current tipping system in our country, with many looking to abolish the system altogether, calling for restaurants to start implementing fair wages. Yet regardless of one's sentiments over the fairness of the current tipping system, over the last few months an even more hot button topic has taken center debate -- restaurant surcharges.  

Unlike tipping, a surcharge is a fee affixed to every diner's bill to cover a variety of restaurant costs such as the serving of water, employee healthcare, or even to make up for wage inequity amongst staff. Not every surcharge is implemented equally, however, with some restaurants implementing these surcharges in lieu of tipping while with other restaurants, they are in addition. Yet regardless of how they are implemented, many diners feel these surcharges are invasive and resent being forced to pay for something that many feel the restaurants are solely responsible for.      

A Growing Imposition

At restaurants where these surcharges are implemented to cover employees' healthcare costs, such as the national chain Patxi's Chicago Pizza, operators cite the recent legislation requiring all businesses with more than 50 employees provide their staff with health insurance as the justification for these fees. At Los Angeles' Alimento, a surcharge is affixed to every bill for water, with the proceeds donated to the Silver Lake Reservoirs Conservancy.   

Restaurants have historically some of the lowest profit margins in any industry. Coupled with other recent business related costs such as rising minimum wages, pricing issues, and availability of ingredients, it's no wonder many restaurants have been feeling the increased burden.  

"A Voluntary 3% Charge Will Be Added to Each Check"  | Yelp, Grace K

"A Voluntary 3% Charge Will Be Added to Each Check"  | Yelp, Grace K

Furthermore, those looking to provide health insurance to their staff may find it unsustainable to do so without some outside help. Restaurateur Bill Chait, who is behind some of Los Angeles' top dining establishments, has implemented these surcharges at several of his establishments and has found that overall, diners are generally fine with the additional fee. As he explained in a recent Los Angeles Times article, he finds it very strange that anyone who is affluent enough to afford a $75 cote de boeuf would complain over such a minuscule fee that would allow the person who prepared the meal to receive a modest healthcare plan.  

Yet not everyone is convinced, and many customers have reported feeling unfairly imposed upon by a number of these types of surcharges. One of the main criticisms surrounding these fees are the fact they are seemingly mandatory. While the majority of these surcharges are claimed to be voluntary, with a note included on menus stating that customers may choose to opt out, their very automatic inclusion is designed as a way to make asking for their removal a very uncomfortable situation.  

Furthermore, there is the additional argument that no other industry asks their customers to pay for their employees' healthcare, so why should restaurants be allowed to ask this of their patrons? Perhaps if individual establishments would simply factor this rising cost into their food prices, diners would feel more at ease about these surcharges.  

And finally, perhaps worst of all, many of these surcharges have come under fire lately after a number of San Francisco based restaurants were discovered to have been keeping  these healthcare fees for themselves.  

A More Equitable Solution

While many restaurants are affixing surcharges to cover their own costs, thereby asking their diners to carry part of this burden, others are now seeking a more equitable solution.  

Adding on a service charge to diners' bills in lieu of a tip, several restaurants have started using surcharges as a way to address the issue of wage inequity in their own establishments. A very real issue that many in the service industry have attempted to address, restaurant wage inequity still continues in most establishments where back of the house employees make far less than those in the front of the house.  

However, under this type of surcharge, a set fee or a percentage of the total bill is affixed to diners' checks and the funds from this charge are then evenly divided and spread equally amongst the staff.  

One of Bill Chait's newest LA restaurants, Catch and Release, is a leader in implementing this type of service charge, charging a flat 20% service charge to every bill. Responding to the issue of wage inequity, they include the following quote on the matter from Chef Alice Waters at the bottom of every menu:

"At our restaurant, the quality of the food and the skill and taste of the cooks are at least as central to our success as the quality of the service. Unfortunately, traditional tipping has created great disparities in earning between the serving staff and the cooking and support staff." 

Will restaurant surcharges replace the traditional tipping system? It is yet to be seen. But regardless of whether a consensus will ever be reached regarding the validity and fairness of these surcharges, the simple fact remains that they are slowly appearing at more and more restaurants and therefore will continue to impact diners as well as their choices of where to patronize.