Glossary · Definition
Service charge vs tip
A service charge is a mandatory fee added to the bill (typically 15-20%) that goes to the restaurant or business. A tip is voluntary and intended for the server. They’re NOT the same; service-charged restaurants may or may not pass any of it to staff.
Definition
A service charge is a mandatory fee added to the bill (typically 15-20%) that goes to the restaurant or business. A tip is voluntary and intended for the server. They’re NOT the same; service-charged restaurants may or may not pass any of it to staff.
What it means
US: service charges are mandatory bill additions; under most state laws, the restaurant decides whether to share with staff. Tips are voluntary and typically go directly to the server (after credit-card processing fees and possible “tip pooling” with bussers/runners). UK and Europe: “service charge” (Italian coperto, French service compris) is more often regulated to go to staff but practices vary. Auto-gratuities for large parties (party of 6+) are technically service charges, not tips, even though they look like tips. Customers should always read the bill — auto-gratuities + suggested tip lines on the receipt can produce double-tipping.
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Why it matters
Tipping a service-charged bill on top of the charge is double-tipping for the same work. Conversely, in regions where service is NOT charged, no tip means the server may not be paid adequately. The fix: read the bill carefully. If you see “service charge,” “gratuity,” “auto-gratuity,” “coperto,” or “service compris,” the tip-equivalent is included. Add small extra ($5-10 in cash) for excellent service if you want, but the standard 18-22% is already paid.
Example
$120 dinner bill with $24 (20%) auto-gratuity for party of 6 = $144 total. Adding another 20% tip = $24 more = $168 total. The auto-gratuity is your tip; additional gratuity is double-paying. If service was excellent, $5-10 cash directly to server is a good way to add without double-paying.
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Frequently asked questions
Should I tip on a service-charged bill?
Generally no — you’ve already paid. Add small extra cash for exceptional service, or nothing for standard service.
Where does service charge go?
Varies by jurisdiction and restaurant. US: typically to the restaurant; some pass through to staff. UK: increasingly required to pass through (2024 Tipping Act). Always ask if you’re curious.
What about auto-gratuity for large parties?
Standard for parties of 6+. Treated as service charge (mandatory) but typically passed through to server. No need to tip on top.
Related terms
- DefinitionUS tipping normsStandard US tipping in 2025: 18-22% at sit-down restaurants, $1-2/drink at bars, 15-20% for taxis/rideshare, $1-2/bag for hotel porters, $2-5/night for housekeeping, 15-20% for delivery (never under $5). The historical 15% standard has crept up to 20%+ over the past decade.
- DefinitionTipping around the worldTipping norms vary dramatically: US is the highest-tipping country (18-22% standard); Japan, Korea, China consider tipping unnecessary or even insulting; most of Europe runs 5-10% if service charge isn’t already included. International travelers should research before going.