Can Texas restaurants legally charge service fees? Here’s what the law says
You sit down for dinner, order your food and expect to pay the prices listed on the menu.
Then the bill arrives and there’s an extra charge labeled “service fee” or “automatic gratuity” added before you pay.
Depending on the restaurant, the charge could be a flat fee or a percentage added to the total bill.
But can restaurants in Texas legally require customers to pay those fees?
Here’s what to know.
Can restaurants in Texas legally charge service fees or automatic gratuities?
Yes, but restaurants must clearly list those charges before customers order, especially if the cost is separate from menu prices.
According to the Texas Deceptive Trade Practices Act, businesses cannot withhold information that could affect a customer’s decision to buy a product or service.
For example, some restaurants add automatic gratuities for large groups, while others use service fees to help cover employee benefits or operating expenses.
“Hidden fees can violate the Texas DTPA when a business fails to disclose mandatory charges that a consumer would reasonably expect to be included in the advertised price, or when fees are added in a manner designed to deceive,” Texas attorneys at Woodlands Law firm wrote. “Undisclosed fees that materially increase the cost of a transaction may constitute a deceptive act.”
Customers who question a fee may want to ask where it was listed before paying the bill.
Are service fees the same thing as tips?
A service fee and a tip may look similar on a receipt, but they’re not necessarily treated the same way.
According to the Internal Revenue Service, mandatory charges added by a business, including automatic gratuities or service charges, are considered separate from voluntary tips because customers do not decide the amount or whether to pay it.
That distinction can matter for customers because a charge labeled “service fee” may not automatically go to servers unless the restaurant specifically says it does.
Customers who want to know where the money is going may want to ask the restaurant how the fee is used, especially if the bill doesn’t explain it.
Why are some restaurants adding service fees?
According to the National Restaurant Association, average menu prices increased about 31% between February 2020 and April 2025 as restaurants worked to keep up with higher costs.
The report said many operators continue to face pressure from food, labor and other operating expenses.
Food and labor costs were the two largest expense categories for restaurants in 2025, with each accounting for about one third of sales, according to the association.
Other expenses, including utilities, supplies and credit card processing fees, represented nearly another third of sales.
The cost pressures have forced many restaurants to look for ways to balance expenses while keeping menu prices competitive.
