What Is A Service Fee When Going Out To Eat?

MINNEAPOLIS (WCCO) -- If you've been out to eat lately, you may have seen a 15 to 20% charge added to your bill -- a service fee, which is not to be confused for a tip.

WCCO's morning anchor and food reporter Jason DeRusha got to the bottom of this confusion.

The truth is, the price of a cheeseburger rarely includes all the costs of running a restaurant.

So owners jack up prices on drinks to subsidize, and we tip servers to help pay them. A lot of people think it's not a great system.

Now we're seeing restaurants adding service fees. Some 15 or 18%, but mostly 20% added onto your bill. But this is not a tip.

Because Minnesota law requires tips to go directly to the person who took care of you -- the server.

So where does this money go?

It goes to the restaurant owners, to use however they like.

Hai Hai, Surly Brewing, Mill Valley Kitchen and Rock Elm Tavern all say they're using the money to give servers, line cooks and dishwashers a raise in hourly pay.

Broders' says they start people at $16 per hour and have a revenue sharing pool.

Estelle in St. Paul is using their service charge for commissions. Servers get a cut of their sales and line cooks get a cut of the total food sales.

That does mean servers in some cases may make less than they did before.

So should I tip?

Most places are taking the tip line off of your bill, so the only way you could tip is to slip some cash to the server.

Some are leaving the line on, it's your choice, but shouldn't feel obligated to still tip 20% on top of a 20% charge.

Of course, all of this could change. Restaurants aren't charging fees to rip you off. They say they're trying to figure out the best way to stay in business while taking care of their people.

In case you don't want to dine in, you can still support your local restaurant by ordering curbside pickup.

We have a list of places offering pickup here.