Definition & Meaning of "service charge"

What is a "service charge"?

A service charge is an extra fee added to a customer's bill in certain places like restaurants or hotels to cover the cost of service by staff. Unlike a tip, which one can choose to give or not, a service charge is something the place automatically adds. The amount can change and might be a percentage of the total bill or a set amount for each person. The purpose of a service charge is to help the establishment pay for things like paying staff, training them, and other costs.