Sydney diners fury at discretionary charges being added to their bill at top establishments

Bad taste? Diners at top restaurants are furious at “discretionary charges” being added to their bill, before they’ve made the choice to tip. So do you have to pay it? Take our poll.

An image shared widely across social media, originally from Reddit, of a $48 service charge, with the charge highlighted in the red oval. Picture: Supplied

Sydney’s top restaurants are under fire for adding “discretionary service charges” to their bills.

The service charge is a fee added to the bill at the restaurant’s discretion, not the customer’s and room for a tip, at the diner’s discretion, often also remains on the bill.

Sometimes the discretionary service fee is explained away as tip for the waiters. At other venues, no explanation is given.

The charge is added before the bill total is presented to diners. A space is also left for a tip. Picture: Supplied.

Newly-opened hotspot, Mitch Orr’s Kiln adds a 7 per cent service charge to the bill. Saint Peter in Paddington adds 10 per cent to go to their waiters.

Rockpool’s charge varies depending on the day of the week. These three restaurants all clearly state the charge on their website or menus.

Saint Peter restaurant in Paddington disclose they put a service charge on bills which goes to their waiters. Picture: Richard Dobson

The phenomenon was recently the subject of a Reddit thread complaining about a discretionary 10 per cent service charge added to a bill at CBD bar Kittyhawk.

The diner alleged the charge was added because of a group booking, however they claimed to only be dining in a party of five.

The post was flooded with comments with diners describing it as “cheeky” and “setting a dangerous trend.”

While many customers are used to surcharges on public holidays or for group books, the ambiguity of this charge is making customers irate.

Kiln at The Ace Hotel also adds a service fee.

The biggest question is: do you have to pay it?

A spokesperson for NSW Fair Trading said Australian Consumer Law “does not prohibit the addition of surcharges. However, if a surcharge is applied, the business must be upfront and clearly disclose to consumers what types of fees will apply, and when.”

“These words must be at least as prominent as the most prominent price on the menu. If the menu does not list prices, the information about the surcharge must be displayed in some other prominent way.”

Consumers can negotiate to have this service fee waived, but it remains the discretion of the restaurant. So yes, if the charge is stated, you pretty much have to fork out.

Restaurant and Catering Industry Association of Australia CEO, Belinda Clarke, believes “customers value transparency.”

“If you’re adding any surcharge or discretionary gratuity to the bill, be very clear on the website, on the menu and also on the bill to ensure the customer knows what is being added and where the money is going,” she says.

“You should only ever be tipping if you feel it’s deserved, you’ve had a great experience and want to demonstrate that back to the staff.”

‘IT’S NOT SHADY, IT’S FOR STAFF’

General manager of Haco omakase, Anthony Gunawan, says the five per cent discretionary service charge added at his restaurant goes to staff and the restaurant doesn’t profit. Gunawan says the restaurant isn’t being shady and diners are informed of the charge upon reserving and it’s also outlined on the receipt.

“Most of our customers tipped regardless, even before the set gratuity. This is a way to support the team. From a customer perspective, it is in our best interest to keep our staff taken care of and feel appreciated,” he says.

“Being short staffed is a problem in this industry. Keeping our team happy to deliver that service and assisting them with a tip helps with that.”

Managing director of Kittyhawk, Jared Merlino, agrees that service charges are a way to retain staff and says it only applies to groups of seven or more. He also disputes the complaining Redditor’s claim that it was a smaller table.

“We make sure that we do communicate it effectively. We do it through the booking platform as part of our terms and conditions, we put it on the website and we have it on all menus at the bottom of the footer,” he says.

“The service charge is purely for the staff. It does not go to the business in any way, shape or form.”

BIG TABLES DON’T TEND TO TIP

Merlino says the charge is there because larger tables don’t tend to tip, they’re more concerned with splitting the bill.

“In the current market where staffing is so difficult, one of first questions we get asked is how much can we expect to make in tips?,” he says.

“The charge is there to ensure the staff receives a tip but at the same time, it is discretionary. If the customer feels a staff member hasn’t warranted it, they can request for it to be removed.”