At a restaurant in San Francisco, the service charge is so astronomical that a hamburger that costs $26 on the menu ends up costing $41.
But the Black Cat is far from unique in the city. And restaurants there seem to be coming up with increasingly creative fare to add, the San Francisco Chronicle defeated.
The charges include “the cost of doing business,” which most guests assume is included in the main price.
At the Black Cat, a jazz bar and lounge in the Tenderloin, bosses add a 20 percent service charge “to ensure a living wage” and a 10 percent “SF safety and benefits fee” to the bill — on top of the 8.63 percent sales tax.
Clearly, the service charge is not a tip. If we add the customary 20 percent tip, the restaurant’s $26 burger, served without extras like fries, comes to $41.24.
Black Cat, a bar in San Francisco’s Tenderloin neighborhood, charges a 20 percent service fee
Cost and a 20 percent tip bring the restaurant’s burger price from $26 to $41.24
A breakdown of charges included on a restaurant bill will become mandatory starting in July 2025, following a recent change in California law.
The service charge is set by the restaurant itself and usually ranges from five to thirty percent of the bill.
According to the government, service charges are often intended to ‘enable fairer salaries for staff and fund more benefits’. the California Restaurant Association.
According to The Black Cat, ‘the service fee is used to ensure a living wage for all our employees.’
Another San Francisco restaurant, 3rd Cousin in Bernel Heights, charges customers a 20 percent service charge and “a 7 percent fee for SF mandates and a fee for doing business in SF.”
Additional fees — on top of tips — were first introduced in San Francisco in 2008, when the city passed a law requiring companies to support health care for their employees.
The range of benefits, including sick leave and parental leave, has since been expanded and linked to these costs.
Other restaurants also charge such extra fees, including Tiya, which charges a 25 percent service charge, and Pawn Shop, which charges an additional 10 percent.
Some customers have labeled the service charges as “manipulative” and “misleading.”
The increase in surcharges is not unique to California. According to the National Restaurant Association, 15 percent of all restaurants add a surcharge to their customers’ bills.
According to CNBC, the fees could be used not only for employee benefits, but also to cover rising restaurant costs caused by inflation or even tap water costs.
According to Hudson Riehle of the National Restaurant Association, a restaurant’s pretax profit is typically about 5 percent of sales.
“It’s a very small margin anyway,” Riehle told CNBC, making it difficult for such companies to absorb or pass on price increases.