Watch CBS News

Chez Panisse "Service Charge" Not What Many Customers Believe It To Be

BERKELEY (KPIX 5) -- Berkeley's Chez Panisse restaurant has been getting rave reviews since it first opened its doors more than 40 years ago. But not everyone's a fan of the way the restaurant does business.

The issue? A single line at the bottom of the restaurant's menu that says "Service Charge 17%." Interviews with more than a dozen people who'd recently dined at the restaurant indicated they believed the service charge is a tip. "I thought it went to the waiter," a diner told us after a meal with his daughter.

But it's not. Unlike a traditional tip or gratuity, or the service charges imposed at many other high-end restaurants, Chez Panisse's service charge money goes to back to the restaurant.

"It's intentionally deceptive," according to a former Chez Panisse employee, who doesn't want to be identified because he still works in the restaurant industry. The employee, who we'll call "Jim," says servers, bussers, and other so-called "front of the house" workers who traditionally get a share of a waiter's tips are getting short-changed. "On a nightly basis, you're making less than half of what you would elsewhere."

So, where does the money go? In an email to Consumerwatch, Chez Panisse said its service charge goes to a "general fund," which helps pay for a variety of benefits and higher-than-average wages for all staff, not just servers. The restaurant says bussers, typically the lowest-level job in a restaurant, start at $13 an hour. Servers average between $19 and $20 an hour.

Jim's concern? That diners are in the dark and servers and other front of the house staff aren't getting their due. "The problem is the lack of transparency," he says. In addition, Jim says he's seen hosts and managers give misleading explanations to diners who inquire about the service charge. "A lot of the long time employees will just say, 'yes, don't worry about it, No further tipping is necessary.'"

Added to the fact, that in many high-end restaurants, the "service charges" imposed on parties of six or more, do go directly to servers.

Consumerwatch producers dined undercover at the restaurant twice, and both times asked the host about the service charge. Both times the producers were told the "Money is in lieu of a tip." One time, the host went on to add to the explanation: "it goes to the house, we're all paid higher wages, healthcare and a lot of other benefits."

The second producer got this further explanation: "It actually goes to the house. There's no obligation beyond that 17% if that answers your question."

Jennifer Sherman of Chez Panisse says the restaurant's staff practices their explanations of the service charge, and strives to give accurate information.

Rob Black of the San Francisco Restaurant Association wouldn't comment on the situation at Chez Panisse, but says explaining the purpose of a service charge can be tricky. "How do you describe all that in one sentence on the menu?," Black said.

Jim's response? Rather than explain to diners what the service charge is -- why not tell them what it isn't? "All that needs to happen is one line on the menu describing in clear terms the 17% is not a gratuity."

Chez Panisse Response:

-Service compris was instituted at Chez Panisse in 1989. It was of paramount importance to Alice Waters and the board of directors that the whole staff be paid a living wage, from the waiters, to the kitchen, to the dishwashers, to the office, to the maintenance staff. They also felt that having supported health, vacation, and retirement benefits for the staff was an essential part of building a stable Chez Panisse community. The system that made that possible was the European style service compris- an automatic addition to the diner's check which would then go to wages and benefits for the entire staff. It is a philosophy that has served Chez Panisse well with many long term employees in all departments (some as many as 25-30 years), minimal turn over, and a healthy corporate culture for everyone.

-Yes, the 17% charge goes to our general fund and not directly to the waiter. This in turn goes to the following:

-Health insurance: CP provides comprehensive health, vision, and dental plans. We pay 75% of the employees premium

-Paid vacation for all employees

-sick pay for all employees

-401k plan and match

-Living wages to BOTH the front and back of the house. Our entire staff is paid significantly higher than industry standard.

-Large end of year bonus to all employees

-average 3% across the board raise budget every year

-We don't cut waiter shifts or hours even when business slows.

-Letting the customer know about service compris

-We indicate on the menu that we add a 17% charge to every bill

-The itemized bill presented to the customer shows the 17% charge and the summary bill has a line with a plus indicated so that the customer can add a gratuity if he/she wishes before he/she writes the total.

-We work with the waiters on a regular basis to help with language and explaining the service compris to customers. The specific
wording is: "Service compris is a 17% charge included on the bill which goes to pay wages and benefits to the front and back of the house. It is not a gratuity that goes directly to the service staff."

-Between the announcement on the menu, the gratuity line on the bill, and the explanation from the service staff, the customer is
well informed about our policy.

The system definitely is not for everyone: Waiters used to making lots of cash from tips have a more difficult time reconciling a lack of daily cash with their other benefits (health insurance, high hourly rate of pay, paid vacation, and stable employment.) Also not as easy to see but definitely there are the intangibles of working in a place where everyone is paid well and valued- there is almost no front versus back of house resentment about earnings. Overall the service compris policy works very well for the employees here at Chez Panisse and we are proud of creating and maintaining a healthy working environment where people feel well-cared for and stable in their employment.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.