Are NJ restaurants automatically adding tips to checks?

🔴 Are NJ restaurants practicing automatic tipping?

🔴Some people may confuse a tip for a surcharge fee

🔴Despite higher menu prices, consumers are still leaving healthy tips

Do you want a gratuity added to your restaurant check?

In New York City, more and more restaurants are reportedly adding automatic tips to bills, not just for large parties, but for any group size, even solo diners. Is that the case with New Jersey restaurants too?

“Not that I’ve seen or heard,” said Dana Lancellotti, president and CEO of the New Jersey Restaurant and Hospitality Association.

She said people may be confusing a fee that appears on their check for a tip when it’s actually a surcharge fee.

Tips and gratuities are not typically added to bills for smaller parties, but it is a common practice for large parties, banquets, and weddings.

“That is in response to the huge surcharge fees that have been put on the restaurants and so many other businesses because of the credit card surcharge fees,” Lancellotti said.

But there are laws behind this that restaurants must follow. They are not allowed to pass along a fee that’s higher than what they’re being charged from the credit card companies.

With restaurants still trying to reel from product costs, delivery charges, and inflation, the surcharge fee with the credit card companies has been passed along, in some cases, to the customers, but only if it’s within the parameters that are legal.

Restaurants must alert customers about this surcharge fee. “They have to notify the customer prior to the point of purchase that they’re going to be getting this surcharge fee,” Lancellotti said.

Tipping Fatigue

“We all hear it- inflation is incredibly high right now and that doesn’t just impact your bill at the grocery store. Our restauranteurs are facing food costs higher than some of them have ever seen before and this comes on the heels of the financial devastation from the pandemic shutdown, and guest capacity limits,” Lancellotti said.

The restaurant industry is strained. They are facing staffing issues, higher costs of food and products, and in some cases, the future value of their liquor license investment.
“The profit margin is very slim for this industry. A lot of restaurants only make 6% up to 109% of profit margin, and that’s typically the way it is,” she said.

So, when all these things come up like more expensive food products, supply chain costs, and staffing issues, and then to be hit with surcharge fees by the credit companies on top of that, there’s a lot of shifting and maneuvering that they have to do to keep the places running.

Lancellotti said that could mean more expensive menu prices.

But despite all these obstacles, she said she’s happy to report that tipping from customers at New Jersey restaurants remains alive and well.

She said she was delighted to hear from her restaurant members that they’ve been seeing between 15% and 20% in tipping.

“I think people who are 20% tippers are still 20% tippers. I think people have a certain respect for the work that the restaurant servers do, and the others who benefit from the tips. I think that people have pretty much kept those habits,” Lancellotti said.

She has, however, seen less traffic into restaurants this year because financial situations remain dire for many people. There has been a lot of take-out, which adds to the cost for restaurants. When people use third-party delivery services, there’s not only a fee for the customer but also for the restaurant for the deliveries.

Customers are free to tip whatever they choose at restaurants. “We certainly support restaurant operators making the decision on how they want to manage gratuity in their own business. However, we do not believe adding automatic tips, especially for smaller parties, is common practice, at least in New Jersey,” Lancellotti said.

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