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What is a service charge? Find out about hotel restaurant service charges

One of the important surcharges for restaurant and hotel staff is the service charge. This is also the fee customers often ask when paying bills in restaurants and hotels. So what is the service charge? What is the difference between Tip and Service charge? How to calculate service charge for hotel restaurant staff? What units are allowed to charge the service charge?

What is a service charge?

What is a service charge? Service charge is the term for the amount of service charges that customers must pay when using the service at restaurants and hotels. Service charge with VAT is one of the most common surcharges in this service industry.

In addition to the definition of service fees, service charges can also be interpreted as bonuses that customers give to business units and service providers when their services are of good, making customers satisfied.

Service charge is a fee within the law, allowed by law. The service charge is recorded, printed on the payment invoice and subject to value added tax (VAT).

Service charge là gì?
What is a service charge?

How much is the charge for service charges to customers?

Service charge that customers normally pay is 5% of the total price of the services that guests have used. On the menu, each restaurant’s menu clearly states whether the price includes service charge and VAT. 

People use the symbol “++” to show the application of service charges and VAT. Accordingly, if a dish is priced at $ 500 ++, in addition to USD 500, when paying, customers will have to pay an additional 10% of tax and 5% service charge.

See more:

What is food cost? Method of calculating food cost in restaurants and hotels

Units are allowed to charge service fees

Not all business units are allowed to collect service charges. Service charge is only applied to the following units:

  • Business rental service units ( hotel , resort , bnb …)
  • Businesses of F&B services ( restaurants , bars , cafes, …)
  • Unit for renting transport vehicles and transportation staff
  • Business facilities of spa, massage, sauna, …
  • Business travel agency, tour guide, entertainment services, …

However, not all units that are allowed to charge service charges. There are many small restaurants and business units free of charge for customers. However, the quality of services in these locations may not be as good as those where other service charges are collected.

Service charge cho nhân viên nhà hàng, khách sạn
Service charge for restaurant and hotel staff

What do hotels – restaurants use Service charge for?

5% service charge that customers pay for each bill is a significant amount for hotels and restaurants. So, how is this service fee used by restaurants and hotels?

Service charge for restaurant and hotel staff

At least 50% of the total amount of money is used to pay employees working in restaurants and hotels. This is considered an important income component for employees working in restaurants and hotels. In restaurants, hotels with good business situation, the service charge that employees receive may be more than their basic salary.

Service charge is used to reward employees

At competitive hotels, a part of the service charge is extracted to reward individuals and departments that perform well, receiving compliments from customers. Hot rewards for employees are also taken from here.

The effect of service charge: improving professional skills for employees

Every month, every year, a part of service charge will be used as the cost of training sessions, professional skills training courses for employees.

Besides, service charge is also used to improve working conditions for hotel restaurant staff. These include: equipment for mattress, divan, extra bed for mid-shift staff; pay monthly festivals; …

Sự khác nhau giữa tips và service charge là gì?
What is the difference between tips and service charges?

Are service charges and tips different? 

Currently, when paying bills in restaurants and hotels, there are a lot of people wondering about the service fee added in the bill. Because they mistakenly charge the service with extra tips and bonuses for employees. So what are tips? What is the difference between service charge and tips?

What are tips?

Tips are direct bonuses for customers for service personnel. This is considered to be a direct reward for customers who serve them when they feel satisfied.

For tips, employees can receive tips or share them with colleagues who work the same day. Because to be able to serve customers in the best way, the effort of the whole team is needed.

See more:

What is a tip? Why we need to tip for hotel restaurant staff

The difference between service charge and money tips

These are the extra money, which is the income outside the salary of restaurant and hotel employees. However, based on 2 definitions “What is the tip” and “What is the service charge”, can you find the difference between Tips and service charge:

  • Service charge is a extra charge that customers must pay on the bill. Service fee is 5% of the price of the service that guests used.
  • Tips are not mandatory payment fees such as service charges. This is a voluntary bonus of customers.
  • With service charge, the restaurant will use it to divide the employees monthly and serve the purpose to increase the skills and life of the employees.
  • Money tips, employees are tips will be entitled to all or just to share the same shift. It is not collected by the hotel and distributed.

In many parts of the world, besides payment service charge, customers still actively tips for their service staff. However, in Vietnam, Tips culture is not too popular. Employees are mostly tips received from foreign guests. Moreover, in some restaurants, hotels also have different rules when handling money tips.

Calculation of service charge for hotel and restaurant staff

How to charge service charges for employees varies between hotel restaurants. Calculation will be the total service charge divided by the total number of official employees. Regardless of the rank, position, number of service charges received by the hotel restaurant staff are the same.

However, some hotels have a way of calculating service charge uneven for employees. That is based on job position, working age, … to divide. This way of sharing helps to increase positive for employees and maintain long-term staff. Even some restaurants, the hotel also features service charge for parttime employees employees of casual restaurants and hotels. Of course, these people will be paid less than the official.

In accordance with the law, hotels and restaurants may not retain more than 50% of the service charge amount. However, when applied, extracting how many % service charges for employees at each hotel has different rules. There are hotels with the lowest level according to regulations (50%); There are hotels that give employees a higher level of service charge (60-80%).

Conclusion

Service charge is an important part of income for restaurant and hotel staff. However, this is not a fixed income. Because the service charge is high or low depending on the business situation of the restaurant or hotel. The more people use the services and products of the hotel restaurant; The higher the revenue of a hotel restaurant is, the higher the service charge rate is allocated to employees. Therefore, the sharing and division of service charges for employees is very helpful for the enthusiastic stimulation of employees.

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