The Difference Between a ‘Service Charge’ and a ‘Tip’

Restaurants are feeling the pressure from the economy to make ends meet. As a result, some have been adding various service charges. However, they are not the same as a tip.

Colorado Restaurant Association and Foundation communication director Denise Mickelsen said, “Any non-discretionary charge added to a restaurant or bar customer’s bill, regardless of what it’s called, is a service charge.”

Often, these service charges are added to help provide a more liveable wage to restaurant/bar staff or cover insurance charges and do not count as a “tip.”

Tips, meanwhile, are described as “non-compulsory gifts given from patrons directly to employees,” according to Mickelsen.

Furthermore, if a tip or gratuity is automatically added to a bill, it will be listed as such on the tab.

How much do you typically tip your server when out at a restaurant or bar? Do you think tips should automatically be added to the price of menu items?