Random Thoughts – Randocity!

Rant Time: Pizza Hut “Service Fee”?

Posted in botch, business, california, food by commorancy on April 3, 2019

If you’re wondering what Pizza Hut’s “Service Fee” is, you’re not alone. I was wondering this myself on my last visit to Pizza Hut. Let’s Explore.

Update for November 2020

The Pizza Hut that was formerly across from the United States Post Office in Cupertino is now closed. I drove by there last night. I do not know when it closed, but it is no longer open. I supposed either COVID or this “Service Fee” business ran them out of business. I’m not sad one bit. If a business can’t operate in a fair and equitable manner, then they deserve closure.

Service Fee

Apparently, some restaurants have found it hard to continue to do business in California. To that end, some of these restaurants have tried various tactics to raise their prices without raising their prices. I know, it doesn’t make sense to me either. But, there it is.

In that goal, some restaurants have instituted add-on fees to the bill in the form of new line items. For example, The Counter (a hamburger chain) has opted to add an “optional” service fee to the bill. This fee is to counter the higher wage costs they must pay and allow their prices to remain competitive with other chains. Except, it doesn’t keep the food costs competitive.

Pizza Hut appears to have grasped onto this slippery-slope approach with its “Service Fee” on the bill.

Confused

Even the staff taking orders don’t really know what this fee is, who is collecting it or even how to properly describe it. However, they do call it out when they are reading back the total cost of the bill.

When I placed my order, the waitperson misrepresented that it was a state of California fee… meaning, that the state of California was collecting this fee through this restaurant. As far as I know, the only mandated California fee is state sales tax. Yet, I’ve ordered from other restaurants and have paid no such “Service Fees” in addition to state mandated taxes.

No, this cashier was not only confused, she had no idea what it was even for and was clearly not trained to answer the question.

Money Collected versus what?

While I can’t speak specifically to the legality of this “fee”, it doesn’t seem all that legal to me, particularly if the cashier misrepresents the fee. As far as I know, businesses adding line items and collecting fees must provide some kind of product or service for that fee. Otherwise, it’s fraud. I can clearly tell you that my takeout order arrived bagged without plates, utensils or condiments. If that fee was to cover the takeout portion, they clearly didn’t offer any setup for my food. I also ordered pasta, which requires the use of a utensil.

It’s clear, this “Service Fee” is a price gouge attempt by Pizza Hut to rake in more money, but provide nothing in return.

High Percentage

Here’s the kicker on my bill. The “Service Fee” was actually higher than state sales tax. State tax on my order was $2.08 and Pizza Hut’s “Service Fee” was $2.10 (exactly 10% of the $20.98 subtotal).

Then, she presented me with a credit card receipt that prompted for a tip. I gave $1. That $2.10 mandated service fee covered for the rest of that tip. I usually give up to 10% on takeout, but that was already given via their “Service Fee”. In fact, Pizza Hut really swindled me out of a nearly 15% tip on a takeout order.

Last Visit

Ultimately, this will be the last time I do business with Pizza Hut in California. Not only are they now swindling customers out of fees they don’t deserve, the Pizza sauce just wasn’t tasty. I simply won’t go back to this restaurant only to get swindled for low quality Pizza.

↩︎

14 Responses

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  1. Raymond Cole said, on October 6, 2020 at 6:17 pm

    Your “service fee” is a rip off to the community that supports your establishment…… there should be lawsuit pending against Pizza Hut for price gouging.

    Liked by 1 person

  2. Lyle Brakob said, on October 4, 2020 at 7:10 pm

    I agree it is a slick way of making $’s—they advertised a price where we’ve gone off and on for years and much to our surprise when picked it up there was a Service Fee added-darn near as much as the state tax! Now looking at the receipt note it says “SVC fee partially offsets the rising costs in CA”!!! Sad way to do business…
    We will now get pizza elsewhere & will tell them so!

    Liked by 1 person

  3. teofilo vega said, on September 13, 2020 at 6:47 pm

    Completely agree !
    It was the my last time at pizza hut

    Like

  4. Mari B said, on August 29, 2020 at 3:37 pm

    Yes, I did a double take when I tried to order on the pizza hut app. Recently, they integrated a tip feature (nothing wrong with that), but the service fee seems fishy. I’m okay with paying the fee as long as they’re transparent about what it is being used for. They say it’s to offset higher California costs. Couldn’t they elaborate? Why is there no question mark beside that statement with additional information? If they could build in a tip option so quickly, they can build that in, too.

    Liked by 1 person

    • commorancy said, on August 29, 2020 at 9:55 pm

      Based on what I’ve seen of the extra 10% that they’re charging, the money is not going to the workers, to their benefits or to offering better service, restaurant or food quality. It doesn’t even go into making the order better. Instead, it seems that the money is going straight into the franchisee owner’s pocket(s). It’s a way for the owner of the franchise to make extra bank off of Pizza Hut’s formerly good name. Unfortunately, these scams only degrade Pizza Hut’s name and brand. I’m surprised Pizza Hut hasn’t called this franchisee out over this money-making scam. Like me, if you’re not happy with this situation, I’d suggest visiting pizzahut.com and voicing your displeasure to their corporate office. Only with enough consumer complaints might Pizza Hut talk to this franchisee owner about the use of this scam.

      Like

  5. Jackie said, on August 14, 2020 at 8:34 pm

    Yes this will be my last time ordering Pizza Hut as well they are charging me 10% to order on the phone and pick pick up my pizza ? What is this service charge all about ? They charge me to place my order with them WOW they are lucky with all pizza competition out there I am bring my business to them. .
    If I am getting some kind of service out off this I would not mind paying of course but it’s the principal of this price gouging and taking advantage of consumers .
    Pizza Hut has been around for years but with this kind of integrity charging for customer service I think Pizza Hut will be losing lots of customers .

    Like

    • commorancy said, on August 15, 2020 at 4:31 am

      Hi Jackie, and thanks for your comment.

      Unfortunately, many of these Pizza Hut locations are franchise owned. Apparently, the Pizza Hut corporation doesn’t restrict franchisees from instituting ludicrous charges like this, thus damaging the Pizza Hut brand. I’d suggest visiting Pizza Hut’s corporate website and doubly voicing your complaint there as well.

      With enough complaints to the corporate office, Pizza Hut may choose to change its franchise restrictions on additional fees and surcharges franchisees can impose upon Pizza Hut customers. Every time a franchisee plays a new game with customers, it damages the brand and reputation of the franchise holder… which is the reason why corporations place heavy restrictions on franchisees.

      Like

  6. Amanda H Davies said, on March 7, 2020 at 8:26 pm

    They aren’t the only ones. Chains like Denny’s, Norms and other restaurants seem to be adding the fee as well to “offset cost”
    Can we do this? Inflation is 3%+ so we should get an additional automatic wage increase to pay for the added cost of living in CA.

    Like

    • commorancy said, on March 8, 2020 at 10:06 am

      Hi Amanda,

      Thanks for your comment. These restaurants are playing with fire. Their biggest problems might turn out to be legal. Collecting money as a “service fee” type of surcharge without providing something in return isn’t exactly legal in retail. It may even be considered fraud.

      These businesses are pushing the boundaries because they can, not because it’s legal. Vote with your wallet and tell them, “No!”

      Let me point out this article: https://oag.ca.gov/consumers/general/credit-cards-surcharges

      While this article is specific to credit card “fees” applied by merchants, this may be extended to any type of surcharge described as follows:

      … if a merchant charges a credit or debit card surcharge or offers a cash discount, but does not fully disclose this to customers prior to their committing themselves to the goods or services, or if the merchant does not clearly explain its policies regarding debit and credit cards, the merchant may be violating California law.

      Any type of undisclosed surcharge may be considered a “credit or debit card surcharge”. In California, if a merchant doesn’t disclose the surcharges during the purchase, the business may be violating California law. This may also apply to other states. You’d have to read those other states’ laws to determine.

      Unfortunately, a federal court has ruled the California law regarding surcharges unenforceable. Therefore, the CA Attorney General cannot enforce that specific surcharge law. However, it appears that California can enforce other laws when merchants include surcharges without disclosing that information to the consumer.

      Like

  7. Frank Willis said, on February 22, 2020 at 6:06 pm

    This service fee was news to me. The cashier who took my order was a manager & made no mention of a service fee. As condiments were offered at an extra dollar a piece, I felt the greed before I discover the extra service fee for which I got nothing in return. This pizza was for my 63rd birthday, I have been a life long pizza hut customer, but never again!

    Like

    • commorancy said, on February 22, 2020 at 6:24 pm

      Hi Frank,

      Thanks for commenting. That’s the problem with managers. For them it’s, “Do as I say, not as I do.” I guess she felt exempt from being required to make that statement as cashier.

      Like

  8. Bill said, on December 13, 2019 at 1:27 pm

    And if this made up fee wasn’t bad enough I was informed today if I wanted condiments dry pepper and cheese had to pay extra no longer included for free just spent $49.98 for 2 pizzas damn! service fee and sales tax extra $6.00 onto order so done with them

    Liked by 1 person

    • commorancy said, on December 18, 2019 at 4:22 am

      Hi Bill,

      They didn’t try to charge me extra for condiments at the time I visited. With that franchise owner’s greed, though, that change is no surprise. Definitely yet another reason not to visit this restaurant chain.

      Like

      • John said, on December 22, 2019 at 6:29 pm

        I work for the chain. This “service fee” is a disservice to us the employee’s. In no way do we receive any of the fee. Goes straight to the company. Also delivery fee is high, past $5 now.
        Drivers only see about a dollar of that, depends on gas prices. Put it this way, 4 years ago the delivery fee was 3.50 and we got about 85 cents and no service fee. Now it’s 5.25 plus service fee and only 1 dollar. Really hurts people don’t tip often as before. We do have utensils just ask for them. Also all the pizza chains are owned by one company atleast the ones in California.

        Liked by 1 person


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