$15 Minimum Wage Has Restaurants Adding Surcharge To Customers’ Bills

9 March 2017 Food National News

Via – Consumerist

Restaurants Adding Surcharge To Customers’ Bills Amid Rising Labor Costs

Restaurants are taking a cue from the cable industry: Rather than raise menu prices to cover the higher cost of paying wages, some eateries are tacking on “labor surcharges.”

The Wall Street Journal reports that some restaurants in states where the minimum wage has recently increases have chosen to pass on the rising cost of labor to customers by way of 3% to 4% surcharges on their bills.

So far the surcharges have turned up at chains and local restaurants in California, Arizona, Colorado, and New York, the WSJ reports, with reps for the California Restaurant Association calling the added fees the “new norm” for the industry.

Supporters of the surcharge contend that the surcharge makes better business sense than higher menu prices.

That’s because, when a customer sees the prices on menus increase they’re more likely to pick a non-expensive item, such as choosing a sandwich rather than an entrée.

“We want people to understand there is a cost,” David Cohn, the owner of 15 restaurants in San Diego, tells the WSJ of adding the surcharge rather than increasing prices. “How do we stay in business with margins shrinking and competition increasing?”

Restaurants using surcharges to raise prices because of economic changes is not exactly new. In 2012, we told you about the Denny’s franchisee who wanted to add a 5% “Obamacare surcharge.” Long before that, we brought you the story of the Texas restaurant that tacked on a 7.5% “inflation surcharge.”

A rep for the Golden Gate Restaurant Association tells the WSJ that the charges have helped employees as customers tip off the total bill, not just the cost of food.

But the surcharges aren’t always welcomed by customers. The WSJ reports that customers in San Diego filed formal complaints to the San Diego City Attorney’s Office earlier this year after restaurants failed to inform customers of the surcharge.

  • Right, because dishwasher lives matter.

  • skydove

    The left continues to reject the obvious downsides of a $15/h minimum wage. They trot out the same morality-based arguments, citing humanitarian concerns and “equal rights” that they’d used to justify laying killer taxes on U.S. corporations: “How can they get out of paying their ‘fair share’? What are they going to do, leave the country?” The question has answered itself, and the counterarguments, which also rely on morality, can do no more than point to a deplorable society that’s enabled impenitent greedheads to do bad shit.

    The people screaming for $15 somehow don’t see the great number of fast-food customers who don’t make any $15/h and have kids to feed. What good is it going to do bottom lines if customers order triple fries, giant sodas, and nothing with protein in it? So much for reductions in health care costs.

    Other than educating the entitlement-oriented $15-ers about the need to delay gratification until they’ve achieved the skills, work habits, &c to make them valuable to employers in capacities other than min-wage jobs, the only solution lies in education. I wish Betsy DeVos the very best, but not sure what she can do. Where, in the next 4 years, will she get competent teachers to replace today’s union robots, even if she’s able to defang the unions themselves?

  • Tom_B_Sr

    So, next will be surcharges for:
    property rental
    property fire insurance
    property taxes
    property utility costs
    property maintenance
    health insurance for employees
    401K for employees
    maternity leave for employees
    sick leave for employees
    court leave for employees
    ‘a day without women’ leave for employees
    workman’s compensation costs
    bonus costs for management
    profit for owners’ investments
    retirement for owners
    stock-options for owners
    unemployment/reemployment costs
    legal costs

    • skydove

      These expenses are already reflected in the prices charged by businesses big enough to offer 401K’s and health insurance — in other words, the businesses most people, poor as well as rich, are obliged to deal with to get through life.

      As legal costs rise, along with those to come (protest leaves, mandatory day care, on-site fitness equipment, &c), mid-sized corporations and franchise operations will be driven out of business, opening up opportunities for small business. With the hoped-for diminution in government regulations, this could turn out to be a good thing.

      • Tom_B_Sr

        The point of my initial comments was to show the fact that up-til-now, wages were also included in the prices charged by businesses. Since the businesses want to add a surcharge, this is only a ‘first step’ in adding additional surcharges.

        Auto repair shops have been doing this for years. I tell them up front that I don’t pay for surcharges. I only pay the published price plus sales tax (and other state-ordered taxes.)

        With the rise in labor costs (direct and indirect), comes automation! Jobs will be lost!

        • skydove

          You’re undoubtedly right that jobs will be lost as businesses confronted with unplanned-for and often unwarranted increases in employee compensation look for ways to offload the expense. I think it will be hard for them to get away with surcharges for items everyone knows are already factored into the price of their products or services. But this doesn’t mean some firms won’t try.

          The bottom line remains the same: given the vanishingly small possibility that U.S. schools will have risen to meet the challenge in four years, jobs will be lost. The short-term costs of compensating the newly unemployed, many of whom have no or few marketable skills, will be enormous, as will the costs of retraining or simply supporting the displaced workers. It doesn’t look good.

          • Tom_B_Sr

            So, nothing changes. 🙂

          • skydove

            Right. Deck chairs on the Titanic.

  • Herbsman200

    I never agreed to that… $15 equals 32K a year Some teachers that have degrees make that… I do not feel that people that want to sit on their ass and not educate themselves to get the same pay as others that did.

  • Pompano Queen1

    We knew this was coming! Burger jobs were not created to raise a family on. They are for seniors and students. Between the robotic burger flipper and the self order kiosk you can say goodbye to the jobs. There is no way I would even eat at McDonald’s nonetheless pay a surcharge for their rude employees and fake food.

  • EarnitYourself

    Lmao…. I knew there was an “I told you so” coming for those of us that said all you’re doing is driving higher prices, not actually upgrading standards of living long term.
    I didn’t expect it to be an itemized, incremental charge though!

    Or do they waive the surcharge like it’s an employee discount?