Restaurant Surcharges Could Curb Diner Appetites and Make Already Weak Restaurant Traffic Even Worse
Rising costs are an issue that nearly all companies must contend with. Some boost prices but run the risk of losing customers. Grappling with rising minimum wage costs, restaurants are starting to roll out a “labor surcharge”. Thus far it appears to be a percentage of the bill, not a flat fee, which is already starting to alienate some diners. While it may not effect the Emerging Ultra-Wealthy, odds are the Cash-Strapped Consumer and those in the falling aspect of our Rise & Fall of the Middle Class will either search out restaurants that have no such service charge, eat at home or perhaps get carry out. If this labor surcharge becomes wider spread, the potential risk to be had is at companies like Darden Restaurants and perhaps Yelp, while those like Kroger and GrubHub are likely beneficiaries. From a bigger picture, this could help return dining out to the Affordable Luxury it once was.
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.
Source: Restaurants Adding Surcharge To Customers’ Bills Amid Rising Labor Costs – Consumerist
