Bay Area restaurant called out for service fee in viral Reddit

A viral Reddit post that’s garnered more than 24,000 clicks has called out a Bay Area restaurant over its automatic service fee.

Earlier this month, a Reddit user shared a post to complain about Pho Ha Noi’s 18% service charge that is added to all party sizes, including single diners. Included in the post was a photo of the Reddit user’s receipt with a red circle around the surcharge memo at the bottom that reads, “For parties of 1 or larger, a 18% gratuity is applied automatically.”

“This restaurants has an automatic 18% service charge for parties of ONE or higher,” read the Sept. 13 post. “I’ve seen restaurants include gratuity when it’s a large party but never for parties of 1!”

The post had nearly 5,000 comments, with some Redditors chastising the Bay Area restaurant while others supported the policy. The post eventually caught the eye of Pho Ha Noi owner Helen Nguyen, who found it upsetting as a small business owner. She told SFGATE she didn’t think it was fair to single out Pho Ha Noi out, as many Bay Area businesses have already adopted service fees.

“We are not the first to do it,” Nguyen said. “Many restaurants applied a 20% or 25% service charge a long time ago. Nobody said anything … Why are people pointing to my restaurant?”

Last fall, Nguyen added the 18 percent service fee for all party sizes who dine in at her Palo Alto and Cupertino locations. The tips are distributed among 100 employees across her Bay Area locations and have helped support her minimum wage employees who often commute from San Jose to the Cupertino and Palo Alto locations. (Pho Ha Noi also has locations in San Jose, but those stores do not have service fees currently.)

Hiring staff has been a challenge as employees often request higher pay due to long commutes or insufficient tipping, Nguyen said. Without automatic tips, she fears staffers might quit to find a higher-paying job.

“Everyone works hard. I want to be fair to our workers,” she said.

Nguyen said she isn’t hiding anything and has been transparent about the fee since she added it last year. Customers were first informed about the surcharge with physical signs around her restaurant storefronts and later with memos shown on Pho Ha Noi menus and receipts. Servers likewise are trained to tell customers about the fees, according to Nguyen.

Another reason she justifies the surcharge is the quality she invests in her pho. Many bowls of pho at Pho Ha Noi cost about $16.50, yet the time it takes to create the dish is often overlooked, Nguyen said. Some broths take upward of 24 hours to cook, while some pho bowls might be topped with high-quality USDA Angus beef or a whole pound of beef short rib. She prefers to keep her prices low but it’s a challenge when customers don’t leave a tip.

“People assume pho is street food,” Nguyen said. “When they go to a Vietnamese restaurant, some of them don’t tip. Without tips, I cannot hire more workers.”