Hopefully the hostess and back of the house was tipped out with that 40%. It's also likely that 40% went into the owner's pocket though because that's totally legal! Since it was a non-negotiable service fee the DOL doesn't consider it gratuity (as gratuity is strictly optional) so they don't have to pass it on to their staff. I've seen this happen plenty of times, usually in the catering business, though not to the extent of 40%, usually around 5-10%.