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.

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.

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7 Responses

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  1. 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

  2. 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

  3. 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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