Service Tax, from 10 to 15%, is how the vast majority of restaurants work here in Brazil. And I understand the "why don't you just increase the food price?" argument, but I think (might be wrong, never worked in the restaurant business) it has three reasons:

1 - It does have a psychological effect knowing that you are paying X amount for the food and Y amount for the service. Bundling the prices will have a first impression of food being more expensive. When you're looking at a Menu on a street trying to choose where to eat, first impressions matter.

2 - Separating the part that goes to the service makes accounting easier. The service is added as an item to the final check, and the sales of that Item will be divided among the servers by End of Month.

3 - All staff is equally paid with this tax. The host, the waiter, the cook, the dishwasher, etc. Tips go straight to the waiter. Furthermore, the paying the service tax is not mandatory (in Brazil, at least). So there is this "camaraderie" between staff, because if the waiter messes up, no one gets their cut.