Should restaurants charge a pandemic fee?

Discussion
Photo: Goog’s Pub & Grub; Source: Facebook/Harold’s Chicken on Broadway
Aug 24, 2020
Tom Ryan

Bonnie Brae Tavern in Denver has joined a number of other restaurants around the U.S. adding a “COVID-19” fee to its bills. The charge is two dollars for any purchase over $10.

“We didn’t want to be extravagant with it but we hope people understand we had to do it in order to keep the doors open,” the establishment’s co-owner Michael Diresaid told Fox21News in Denver.

Bonnie Brae Tavern’s sales are down 40 to 60 percent as it has significantly reduced seating capacity to keep customers safe. New sanitation requirements such as gloves have added expenses.

Miami’s The New Wave Billiards is adding a three-percent ”COVID-19 fee” to customers’ bills to cover the costs of fiberglass partitions, new signage and cleaning supplies. The restaurant’s owner Alfredo Pineres told NBC Miami, “The sanitizers have gone from $15 to $60, $70 a gallon. It’s a burden.”

In Hollard, MI, Goog’s Pub & Grub is charging a flat fee of $1.00 per meal to cover rising food prices and the costs of disposable containers and utensils.

“Other places are just raising their price and not telling you,” the pub’s owner Brad White told Fox 17 in West Michigan. “It’s going to be a while before the food industry, the suppliers catch up.”

Articles have also surfaced describing dentist offices, hair salons and nightclubs charging COVID-19 surcharges as businesses look to offset added costs and revenue shortfalls.

The surcharges have led to some backlash on social media from customers surprised to find fees on their bill. The restaurants generally claim to have detailed the fee on their websites and in signs at the establishments.

The increased incidence of fees has led to some debate over whether establishments should add a fee for transparency purposes or just covertly raise prices, as usual. Food journalist and hospitality consultant Erica Bethe Levin, told the local CBS affiliate in Chicago, “If want our restaurants to survive, and you know we all do, they’re such a big part of our lives, then there has to be some give and take, we have to give in a little bit, too.”

DISCUSSION QUESTIONS: Would you recommend restaurants charge a COVID-19 fee to offset rising sanitation, food and other costs tied to the pandemic? How transparent should business establishments be about the challenges they’re facing?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The cost is the cost. People want to support restaurants and bars, but they're also managing their own budgets - no one wants to be surprised at the end of the meal."
"The food prices in the grocery store are rising and they do not have COVID-19 signs."
"I’m pretty sure supply and demand still applies here. As much as I’m a fan of honesty and transparency, it just seems wrong to add a fee or charge to a bill."

Join the Discussion!

42 Comments on "Should restaurants charge a pandemic fee?"


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David Naumann
BrainTrust
David Naumann
CEO and President, Cogent Creative Consulting
3 months 6 days ago

There is no question that restaurant costs have risen due to COVID-19 and increased food costs. It is necessary for restaurants to adjust their menu prices to reflect the current operating costs. However I don’t suggest adding the charge as a line item on the bill. The best approach is to update menu item prices accordingly.

Shawn Harris
BrainTrust

The economics of running a restaurant have changed. Restaurant owners must make the price/cost adjustments required to maintain a viable business. I’m all for a COVID-19 fee.

Richard Hernandez
BrainTrust

I went out to eat this past weekend and saw signs clearly posted stating that pricing had gone up on all food and drink due to the increased costs of operating during the COVID-19 pandemic. I think this is pretty standard now, and so far I have not seen anyone argue over the increased costs.

Stephen Rector
Guest

I have no problem with restaurants doing this – as long as they state it clearly. This is happening in restaurants in my area already and there has been little pushback. We have to do whatever we can to help local restaurants survive.

Suresh Chaganti
BrainTrust

It depends on the good will that restaurant had before COVID-19. It is generally easier for local and family owned restaurants to do so. People relate to that and want to help. But when a national chain restaurant tries something similar, we should expect a level of backlash. They will probably try to slip in with increased prices or offering less in promotions.

Bob Phibbs
BrainTrust

Just raise your dang prices: no one wants the “gotcha” tax at the end. It’s like those fees at hotels for internet usage.

Dick Seesel
BrainTrust

Understanding that restaurants work on slim margins at the best of times, I’m on the side of slight price increases instead of a flat COVID-19 fee. The downside of charging extra for better sanitary practices is the hint that those practices weren’t strong enough in the first place.

At this point, customers willing to patronize restaurants have a right to expect a safe environment without paying a fee for it. At the same time, nominal price increases will help mitigate the restaurants’ margin squeeze and perhaps help them maintain their payrolls.

Cathy Hotka
BrainTrust

While restaurants need to recoup some money, adding a line item will only raise questions from customers. As Bob Phibbs said, “Just raise your dang prices.”

Richard J. George, Ph.D.
BrainTrust

These are certainly challenging times for restaurants. If these fees help restaurants to survive, then they are no different from fuel surcharges during high fuel prices. I like the transparency (noted rather than hidden in price increases) as well as the communications (website, signage, etc.).

With the approach of cooler weather and the diminished attractiveness of outdoor dining, foodservice operators will need all of the assistance they can get to avoid following in the footsteps of the thousands of restaurants that have permanently shuttered their businesses.

Scott Norris
Guest

But we all know what happened with fuel surcharges after 9/11 – they never went away, and every year FedEx and UPS keep raising those fees, regardless of the price of petroleum. Just recalibrate the list prices and let consumers budget appropriately. (Gosh, perhaps even pay the staff an appropriate wage and eliminate tipping as well?)

Nikki Baird
BrainTrust

I’m always fascinated by the psychology of these kinds of decisions. People looking at a menu may or may not register that prices have increased – and seeing the prices increase for things like meat in their grocery stores, I’m pretty sure you wouldn’t have to say anything in order to explain that costs are rising and you’re going to have to pass those along to the customer. Calling out an extra fee, with basically an asterisk at the bottom of the menu or a sign on the wall, alongside the ones about masks and social distancing, etc. – I think that is taking a risk it will be overlooked. The cost is the cost. People want to support restaurants and bars, but they’re also managing their own budgets – no one wants to be surprised at the end of the meal. And “temporary” in this case could extend well into 2021. So just raise the prices and avoid any confusion.

Tony Orlando
BrainTrust

All of our costs have risen, and the restaurants are not alone in this. My opinion is very simple — NO and NO.
Up the prices of your entire menu to make up the increases, as adding a fee in our industry is beyond stupid. Consumers hate added fees and we aren’t a utility or the cable company — so redo the menus and if people ask about the new prices, be honest with them and most will understand. Keep the service excellent, and your food fresh, and everything will be fine.

Ralph Jacobson
BrainTrust

Requiring your customers to pay for something beyond their control in these tense times may not be the best way to recover additional expenses. Bumping up your menu prices will cover the same costs and fewer people will feel it.

Chris Buecker
BrainTrust

A compulsory fee will be counterproductive. Why not be completely transparent and kindly ask the customers after being seated if they would be willing to support by donating an amount of their free choice? I think this approach would be much smarter.

Dr. Stephen Needel
BrainTrust

I get that and don’t have a problem with it. Except for my local pizza place which has added $2 but only does takeout – that seems a bit much, especially when the crew rarely wears masks of doesn’t clean the counter after each pickup.

Dick Seesel
BrainTrust

Sounds like you need a new pizza place!

Dr. Stephen Needel
BrainTrust

Oh Dick — if only it was that easy in Atlanta, a city that thinks Marco’s pizza is pretty good. 🙂

Brandon Rael
BrainTrust

The COVID-19 pandemic has resulted in a great acceleration, and requires every single organization to shift their operating models around the changing “new normal.” Restaurants and customer service-oriented businesses are no exception.

Everyone realizes that restaurants have suffered quite a bit since the pandemic emerged. However trust and transparency matter, and a compulsory fee for extra sanitation and cleaning is not going to fly well when folks are faced with strained budgets. A more worthwhile strategy would be to stealthy increase the menu prices to offset the costs of increased sanitation.

Shep Hyken
BrainTrust

The short answer is to change prices. A modest increase in a few key items will more than cover what would otherwise be a $2 fee added to the bottom of a check. Probably more. Done right, the customer will barely notice, if they notice at all. Furthermore this is a good opportunity to train employees to upsell to enhance the guest’s experience. An extra dessert or appetizer added to a check will go a long way to help offset cost. It’s a win/win/win. The restaurant gets a higher guest-check average. The server makes a bigger tip based on that higher guest-check average. The guest gets a better experience when they try that delicious appetizer and delectable dessert!

Neil Saunders
BrainTrust

This depends on the restaurant, its circumstances, and the customers it serves. However in all situations, restaurants should be honest and up front about the fees they are charging. In my view, the most honest approach is to just increase menu prices so that everyone knows in advance what the costs are and what the bill is likely to be. Surcharges that are added on sometimes cause resentment and a sense that businesses are nickel and diming it – like those dreaded resort fees at hotels where you get charged for “free” internet access!