What is a "service charge" in the restaurant industry?

In the restaurant industry, a "service charge" refers to a mandatory fee that is added to the bill for service. This charge is typically applied to cover the cost of service provided by the staff and ensures that the employees are compensated for their work. It is particularly common in settings where large parties are served, helping to standardize the service for groups and manage staff workloads effectively.

Unlike voluntary tips, which are discretionary and based on the customer’s satisfaction, a service charge is predetermined and automatically included in the final bill. This creates transparency for the restaurant’s operations and helps ensure fair wages for the service staff, regardless of the customers' tipping practices.

Other concepts related to service charges, like discounts for large parties or fees for premium menu items, do not align with the definition of what a service charge specifically entails. By understanding that a service charge is a mandatory addition to the bill, one can grasp its purpose in the overall dining experience and operational management of a restaurant.