The economics of restaurants always makes for lively discussion at parties. Well, maybe not — but customers who fashion themselves armchair restaurant owners do enjoy debating the topic on the Internet. So, naturally, a group of angry restaurant customers has organized via Reddit to create a Google Sheet of Chicago restaurants that utilize service fees.
Diners in LA have compiled a list of their own, in which contributors speculate about where the money is going and if it’s legal to tack these fees on at the end of receipts. The Chicago spreadsheet itself is a growing mess of more than 100 restaurants with tallying fees between 2.5 percent and 25 percent. There’s a note about the 25 percent outlier, which is charged by Daisies in Logan Square: “Daisies does not make their 25 percent surcharge obvious. If my father wasn’t a receipt analyzer, the rest of us, after having enjoyed lots of wine, may have very easily added standard gratuity. Shameful. Delicious, but shameful.”
Despite the Redditor’s claim, Daisies is fairly upfront: it uses a pop-up window that greets customers as soon as they log onto its website and fills the screen while explaining the fee is issued for “equitable pay and benefits” and the tipping isn’t expected. The explanation is also written on their menus.
The sheet also doesn’t distinguish between fees assessed for credit card transactions or money that (allegedly) would go toward employee health insurance. Independent restaurants and groups like Lettuce Entertain You Enterprises aren’t separated either. Lettuce has been a target for diners angry about service fees as Chicago’s largest restaurant company added the fee to offset costs associated with the pandemic. As Illinois restored indoor dining, the 3 percent fee has remained.
The backlash on service fees is creeping up in conversations across the country, reflecting that many customers are feeling the pinch of post-pandemic price inflation. While service fees existed before 2020, many restaurants began deploying them regularly during the pandemic arguing, often with polite fine print on a menu, that they needed the fee to offset costs due to inflation or that they were passing the fees to workers in the forms of health care or higher wages. The Great Resignation hit restaurants hard with much of the workforce shrinking and taking jobs outside of the hospitality industry. Offering better pay and benefits — sometimes funded by these fees — was seen as an approach to recruiting and retaining restaurant employees. Figuring out how to make restaurants more career-friendly has been a puzzle for many.
Diners who oppose the fees bemoan a lack of price transparency and the spreadsheet channels a sentiment expressed in a May Tribune editorial sounding the alarm on service against restaurants trying to take advantage of diners. Tribune reporter Jake Sheridan tweeted the database out earlier this week to the delight of the diners who contributed to the Google Sheet. The city allows these fees as long as they’re disclosed prior to purchase and they aren’t disguised as a tax.
Restaurant owners, like chef Rick Bayless, have used service fees to get away from tipping, which has a sexist and racist history. But not everyone employs the same model and it’s hard to decipher why the fees exist and how they are applied from restaurant to restaurant. Fueling the fire, many restaurant owners avoid talking on the record about service fees or stand behind the explanations found on menus that remind diners that the fees can be removed upon request. They worry their explanations won’t resonate as they get shouted down by critics who just want them to bake the costs of any benefits into menu prices.
Raising menu prices is also a fraught subject for restaurant operators., The owners of Thattu, an Indian restaurant in Avondale, told Eater in March that they opted to raise their prices instead of a service fee due to mounting concern over extra charges. They ended up charging around $15 for their fried chicken sandwich. However, this approach also comes with the risk that the average customer won’t care about ingredients and go to a fast-food chain, overlooking that Thattu’s workers are paid higher wages with the plan to eventually offer health benefits.
Fees are a particularly thorny issue right now for restaurant owners who are waiting on policy changes from the city’s new mayor, Brandon Johnson, and progressives in Chicago’s city council. One of Johnson’s campaign promises was to abolish the $9.40 per hour tipped minimum wage that applies to servers and bartenders. This would mandate restaurants to to pay them at least $15.80 per hour for businesses with 21 or more employees or $15 per hour for smaller businesses. If the city goes ahead and abolishes the tipped minimum wage, critics argue that Chicagoans may see even more service fees, which would make for a heftier spreadsheet.
However, advocates, including groups like One Fair Wage, have stuck to their narrative that working in the restaurant industry has been more difficult during the pandemic and that wages need to be increased. However, not everyone is sold on the no-tipping model. Not that increased wages mean that tipping would need to end.