Service fees are additional charges that some restaurants add to customers’ bills for various reasons, such as covering the costs of takeout packaging, paying higher wages to staff, or complying with new regulations. They are different from tips, which are voluntary and usually go to the server.
Service fees became more common during the pandemic, as restaurants relied on takeout orders and faced many challenges, such as rising food prices, labor shortages, and reduced capacity. Some restaurants also adopted service fees to prepare for Initiative 82, which went into effect in July and raised the minimum wage for tipped workers in D.C.
How do customers react to service fees?
Many customers are unhappy and confused about service fees, especially when they are not clearly disclosed before they place their orders. Some customers feel that service fees are deceptive, unfair, or excessive, and that they should have the option to tip as they please.
Some customers have shared their receipts on social media and neighborhood blogs, showing service fees ranging from 3.5% to 20%, depending on the restaurant and whether the order is dine-in or takeout. For example, one customer posted a receipt from Pete’s Apizza, where they were charged an “order processing fee” ($0.99), a “to-go package fee” (3.5%), and a “to-go hospitality fee” (10%) on an order of XL pizzas.
How do restaurant owners justify service fees?
Restaurant owners say that service fees are necessary to cover their increased expenses and to pay their staff fairly. They argue that service fees are more transparent and equitable than tips, which can vary widely and create disparities among workers.
Some restaurant owners also say that service fees help them avoid raising their menu prices, which could deter customers from ordering their food. They claim that service fees are a better way to distribute the revenue among all the employees, not just the servers.
Some restaurant owners also say that they are willing to refund or waive the service fees if customers complain or request it. They say that they are trying to educate their customers about the reasons and benefits of service fees.
How does the law regulate service fees?
According to D.C. law, service fees are legal, but they must be prominently, clearly, and accurately disclosed before customers place their orders. Restaurants must also state the reason for the fee and the amount. Service fees can be disclosed verbally or in writing, such as on the menu or on a sign.
D.C. Attorney General Brian Schwalb sent a letter to all D.C. restaurants in March, reminding them of their legal obligations regarding service fees. He said that his office received an increase in customer complaints about service fees that were not properly disclosed or explained.
The letter warned that restaurants that violate the law may face fines of up to $5,000 for first-time offenders and $10,000 for repeat offenders. Customers who spot offenders can report them to the AG’s office.
What are some examples of D.C. pizzerias with service fees?
Here are some of the D.C. pizzerias that charge service fees, according to a Reddit thread that tracks them:
- Pizzeria Paradiso: 20% for dine-in and 12% for takeout
- Sonny’s: 20% for both dine-in and takeout
- Boogy & Peel: 18% for dine-in and 12% for takeout
- Pete’s Apizza: 10% for takeout plus $0.99 order processing fee and 3.5% to-go package fee
- 2Amys: No service fee but higher menu prices.
