What is a service charge?

A service charge refers to an additional fee that is added to a bill, typically within the hospitality and catering industry, to cover the costs associated with the service provided to customers. This charge is often a percentage of the total bill and is intended to compensate staff for their efforts in delivering quality service. Service charges can also help establishments manage labor costs and ensure that employees are fairly compensated beyond tips.

In contrast, a discount is a reduction applied to the total bill, which does not correlate with any added service fee. A tax is a mandatory charge imposed by the government, distinct from service fees in that it goes to the state rather than to the service personnel. Lastly, while facilities may have usage fees—like those for private rooms or equipment—these are not traditionally categorized as service charges, which specifically pertain to the service aspect of the dining experience.