A few months ago we decided to implement a 5% surcharge and the response has run the gamut. I recognize this is not a one size fits all approach and I too am a bit conflicted by it.
Having owned a Seattle restaurant for ten years now, things have drastically changed, especially post pandemic. Cost of goods have increased in some categories 6-20%, personnel costs have gone up 20%, credit card fees have increased annually, and data is showing that dining out nationwide is down 11%.
It's not all the pandemic's fault. Our industry has been vulnerable for decades. As a general rule, one third of a restaurant's revenue is allocated to inventory (like food & beverage), another third is to labor expenses, and the final third to cover things like rent, utilities, etc. Once all expenses are paid, if we're lucky, restaurants are typically left with a 2-6% in net profit. That does not take into account maintenance fees or bank loans.
Our industry has always struggled with charging the true cost to justify all of the above. There's no great way to make the math work, no matter what business model is implemented and we've always stood by our employees. I've also been observant with other industries imposing similar fees: pizza delivery, concert tickets, electrician, car/oil changes, ATM fees, Uber/Lyft, and DoorDash. It's starting to be more commonplace.
Some guests have asked us to simply “raise the prices” and sadly that model is also flawed because we’re getting the same percentage of credit card and transaction fees taken out, but now, the credit card companies are getting more because we raised our prices. In order to cover the costs associated we’d have to raise our prices by at least 10% or more vs. the 5% surcharge. Not to mention the guest is likely tipping on that increase as well. We always want to deliver on a ratio of quality:value and feel the best bang for your wallet is the least expensive approach.
Please know that I and every restaurant owner I know are honest and hard working! We care about the money you spend with us in order to take care of our teams and supported vendors we employ.
