May Newsletter

We have all been there when dining out. The bill arrives, and you pay quickly, not reading the details of the check. Sign the obligatory 20% tip and run out the door. When you get home, you pull the crumpled receipt from your pocket, examine it a bit closer, and realize the restaurant included a 20% service charge on the check but still offered a tip line, implying you should tip, which you did. Rage, anger, and frustration flood your system. Last time I checked, all these feelings and emotions were the complete antithesis of hospitality.
 

In 2015, Danny Meyer, a hospitality legend based out of New York, famously began implementing “Hospitality Included” at his restaurants, trying to show an all-inclusive price and eliminate the notion of tipping. Citing the ability to pay fair wages for all with this system and treat hospitality employees similarly to those in other industries, this became a hot topic. The practice had been in place for decades regarding group dining. The classic, “parties of 6 or more will automatically be charged a 20% service fee”, is a standard phrase on all fine dining menus and universally accepted by guests booking group dinners. So why not migrate this concept to all diners?
 

Many restaurants across major metropolitan regions and all throughout the U.S. began adopting this system, testing the waters. Here in San Francisco, a few notable restaurants were highlighted as pioneers of this practice. Zuni Café and Monsieur Benjamin began implementing a mandatory 20% service charge to pay their employees higher wages. At the same time, Trou Normand famously inflated their prices to include service and removed their tip line, ultimately scaring away guests with sticker shock up front vs. at the end of the meal. It was a struggle for restaurants to find a nuanced way to communicate their intentions and goals and for consumers to adapt to something new when paying the bill.
 

As time has passed, COVID has come and somewhat gone. Many restaurants have simply put a 20% service fee on all checks, essentially “eliminating” the concept of tipping. For many guests, this can be polarizing. Some love the convenience and ease of use at the end of the meal. Some feel slighted as they can’t judge the service and pay accordingly. For many employers, this is a way to guarantee staff a certain income level or even afford to switch to the ‘higher wages and benefits for all’ model.
 

For me, post-covid, we adopted the 20% service charge added to all checks at our prix-fixe-only concepts. This was an intentional decision not to adopt a blanket policy across all restaurants. We knew that by doing this within these concepts, we could pay very high hourly wages, nearly double what some restaurants set out to do in 2015. We knew we could provide a paid vacation for all employees under this practice, something most restaurants will never be able to afford. At the same time, we knew this would cost the restaurant and guests extra money. Per California tax code, any mandatory service charge is taxable. Thus, the guest is paying tax on their meal, and now their 20% service fee, whereas in the past, the optional gratuity was tax-free. The restaurant would be forced to pay inflated Worker’s Compensation policy premiums. Despite the push across the U.S. to improve and create equitable working conditions for hospitality workers, paying a high wage penalizes the restaurant. In contrast, tip income for serves is excluded from workers’ compensation premium calculations.
 

When implementing this policy, my one and only die-hard rule that could never change is: If you are going to include a 20% service charge, you CANNOT even offer a tip line. The ability to tip must be removed. When guests inquire, it should be communicated nothing additional is needed. Our staff is well taken care of. We appreciate you wanting to leave more, but no thanks. Your return visit is the biggest tip we can get. This is hospitality included. This is the fundamental principle Danny Meyer was trying to encourage others to follow before it was fashionable and widely accepted.  
 

Often, I dine out in San Francisco and across the U.S. and come across this concept of the mandatory 20% service charge for everyone. It doesn’t bother me at all. I trust that if a restaurant is willing to include a service fee of this nature, its ownership and management team will stand behind the service they provide. Unfortunately, at the end of the meal, when I received my check, 99& of the time, service was included. Not only is it not indicated clearly on the check or verbally communicated by the service staff, but the restaurant has the audacity to provide a tip line on top of it. My blood begins to boil, and I have the same conversation over and over with my dining companions. Do they expect us to tip 40% by hiding that they already took 20? Is the housekeeping the money and not distributing it to the staff fairly, hoping the guests supplement their earnings? Was my service even worth 20%? Do I ever want to come back here again?
 

The next time you go out and you get your bill, look closely to see if 20% service was added. Then look at your signature slip and see if they have a tip line. Remember this definition:

 

HOS•PI•TAL•I•TY [HOS-PI-TAL-I-TEE] -noun, plural -ties 

1. The friendly reception and treatment of guests or strangers. 

2. The quality or disposition of receiving and treating guests and strangers in a warm, friendly, generous way.

 

So, did you receive exceptional hospitality? Or deceitful service? 

 

Next time you dine, pay attention to your check.