How is the service charge defined at a Restaurant?

A service charge is a set percentage or flat fee that the restaurant automatically adds to your bill. It's a fixed fee imposed by the establishment, not something you elect to give.

It may resemble a gratuity or tip, but they are not the same. You decide how much to tip based on your experience; it is entirely voluntary. On the other hand, once applied, a service charge is required and is typically prominently mentioned on your receipt.

It is frequently displayed as a distinct line item just above tax or close to the subtotal. As part of their pricing structure, some restaurants provide it for big gatherings, special occasions, or even every table.

Is Adding a Service Charge Legal?

Adding a service charge is acceptable in the USA as long as it is made known to the visitor before they consent to the service.

State regulations differ, but the federal government does not prohibit service fees.

In certain states, you have to describe how the charge is used.

Fines, refunds, and negative publicity may result from not reporting it up front.

Transparency shields you against legal issues in addition to being a matter of ethics. The average amount spent on each restaurant visit increased by 12.5% in 2025, although eating out remained popular.

In fact, the proportion of people who eat out at least once a week increased from 39% to 42%. This means that higher costs haven't deterred customers.