A digital receipt from the Italian restaurant, Gloria, recently went viral due to the presence of an unfamiliar charge. When a diner at the Shoreditch restaurant went to pay using their app, they discovered that this restaurant not only charged them a 13.5% service charge, but also charged them an additional “checkout fee” of £2.99.
In the end, the total cost of their meal jumped from £193.50 to £222.64, a full £29.14 more – leaving them feeling very uncomfortable.
After the image of the bill was posted on social media a large amount of commenters voiced their consternation. Subsequently, many visitors to the Shoreditch restaurant also left negative reviews online.
So, what exactly is a “checkout fee” and, furthermore, does the restaurant have the right to charge such fees?
What is a checkout fee?
Gloria Restaurant is an Italian restaurant owned by The Big Mamma Group. It is very popular in London, and customers often need to book a month in advance to get a seat.
The co-founders of The Big Mamma Group also launched the mobile phone app, Sunday. Customers can log into the app by scanning the QR code and pay on the platform. They can use Sunday to calculate expenses, split the bill with friends, and pay in just 10 seconds, saving time for both dinners and waiting staff.
However, if a customer uses the mobile app to pay, a checkout fee will apply. These are very uncommon for restaurants, but are more commonly found when purchasing tickets for events such as concerts.
Alternatively, customers at Gloria can go out of their way to ask the waiter to pay by card using the card machine or with cash to avoid the “checkout fee.”
Various restaurants charge different “hidden fees”
In fact, this is not the first time that restaurants have been exposed to charging “hidden fees”. Many restaurants charge customers extra in various forms, sometimes adding up to 20%.
Some time ago, the Chinese Dim Sum restaurant, Ping Pong, was exposed as charging a 15% “brand management fee” to help maintain the brand experience. Ping Pong said the charge would enable it to increase wages to at least £12.44 an hour, allowing staff to have a stable income.
In addition, pubs owned by the Scotsman Group, which owns a number of bars and pubs across Scotland, charge customers an automatic fee of 2%.
In recent years, many restaurants began charging customers an automatic service charge, a now common industry practice. Most of these “discretionary service charges” add 12.5% to a customer’s bill after the meal.
However, service charges are now appearing on everything from beer to takeaway coffee, and the fees are higher than before. Some fear the UK is sleepwalking into US tipping culture, where tips average around 20%.
Can restaurants legally charge this type of fee?
The UK preciously implemented a blanket ban on all operators charging surcharges to any consumer using a credit or debit card or any other form of electronic payment. This applies to both in-store and online payments.
The law stresses that the new rules apply to any British company selling products to British consumers. These transactions include buying flight or concert tickets, or using cards to pay bills in small shops, restaurants, takeaways, etc. Investors are assured that there won’t be any unpleasant surprises and that consumers won’t be penalized for wanting to pay in a specific way.
However, a “Service Charge” in a restaurant is something that exists legally. Despite this, it should not be mandatory, and consumers have the right to refuse to pay this fee. If the customer feels that the service is not worth the price, they can propose a reduction in the fee and a new bill.
However, returning to the example of the Sunday app mentioned in this article, the checkout fee does not belong to the category of a payment surcharge, nor does it belong to the “service charges” category.
Best practise to advise customers of fees in advance
According to the law, Gloria cannot charge a surcharge because customers choose to pay by card. Therefore, what consumers need to figure out is whether this “checkout fee” is charged by the restaurant, or whether it is charged by a third-party company (the mobile app company the restaurant cooperates with). For example, many restaurants cooperate with takeaway companies such as Deliveroo and Just Eat. When you place an order on these platforms, the platform directly charges some service fees.
However, no matter what, restaurant consumption is in principle a contractual relationship, and the establishment of any contractual relationship should be based on both parties knowing what the terms are. Therefore, restaurants are obliged to inform customers in advance that if they use the mobile platform to pay, the platform will charge an additional fee, and it is ultimately the customer’s choice.
To take a step back, when running a business, brand image is very important. Restaurant owners should consider many factors before charging additional fees. Even if they are charged legally, if there is no communication with customers or the fees charged are not reasonable, it can easily give customers a bad impression. After the checkout fee for this Italian restaurant was exposed, many people made negative comments and shared the story on social media, leading to a detrimental impact on its reputation. This can be detrimental in the long run.
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