Restaurant surcharges are essential to survive in a competitive environment. This is your guide to effectively implementing these fees.
United States, 12th Sep 2024, - Restaurants are implementing restaurant surcharges, increasing menu prices, or laying off labor due to increases in minimum wages and taxes.
While reducing the number of staff or their payrolls seems to be the easy way out, it leads to more complexities.
Increasing the cost of restaurant technology, such as kiosk ordering and QR code menus, isn't a great option either because it can directly impact the number of visitors.
This guide will help you understand what a service surcharge is, how it works, how to implement it, and much more. Understanding this information as a restaurateur is critical, so let's begin.
Restaurant Surcharge
Restaurant surcharges are the additional costs customers pay to restaurants on top of the price of food and beverages they consume. They show up on the customers' bills in various forms, such as service charges, employee healthcare, government taxes, and the like.
While surcharges can take several forms, two of the most common are public holiday surcharges and credit card surcharges.
1. Public Holiday Surcharges
The hospitality industry experiences a surge in costs during public holidays. It is the time of the year when penalty rates for employees kick in, increasing their wages significantly. Since restaurants operate on public holidays, they purchase more ingredients to meet the more-than-usual demand.
All of that means a direct addition to the customer bill. The amount of addition can vary based on factors such as:
2. Credit Card Payments
When customers pay their bills with credit cards, the restaurant charges a small percentage of the transaction. The amount isn't very high, but these small amounts add up over time.
Benefits of Restaurant Surcharges
While the idea of surcharges seems counterintuitive, they actually benefit both restaurants and customers.
For Customers
Customers really appreciate businesses' transparency. When restaurants clearly itemize surcharges on the bill, they give customers insight into operational costs and challenges.
It helps customers understand the complexities of running a restaurant and develop a more empathetic relationship with the business.
In addition, these surcharges ensure that customers have a better and more refined dining experience.
For Restaurants
Overhauling menu prices is hectic and might push people away, so surcharges are a more practical option for restaurants. They help them avoid sticker shock and maintain customer loyalty. Surcharges also enable restaurants to offer employee benefits, enhancing their morale and retention rates.
Addressing the Challenges
Surcharges have unique benefits but are not without challenges, especially regarding customer perceptions and regulatory framework.
1. Customer Perception
One of the major problems restaurants face when introducing surcharges is customer backlash. Since customers form the backbone of any business, their sentiments and perceptions are of supreme value to any business.
That's why restaurants should communicate the need for these surcharges and offer a clear rationale behind them. Tell them the value and service quality they receive in return for these charges.
After all, nobody wants their favorite restaurant to close just because the latter couldn't handle its finances.
2. Restaurant Law on Surcharges
Another issue restaurants face is regulatory compliance. Surcharges are often subject to complex regulatory and legal requirements, which can sometimes be hard to understand.
Recently, the Federal Trade Commission (FTC) proposed a rule to ban restaurant service surcharges. There have been protests against this rule, especially because it will force restaurants to raise the menu prices and affect regular operations.
In addition, it will create several kinds of menus, depending on dine-in or delivery, payment types, size of the dining party, and much more.
The State of California passed a restaurant law on surcharges that mandated restaurants to add them to the menu prices. According to the officials, they wanted to streamline the pricing mechanisms so that customers pay what they see.
Non-compliant businesses had to pay customers damages of at least $1,000 at least according to that law. However, Gavin Newsom signed emergency legislation that gives restaurants an exemption.
These two examples, including the restaurant surcharges California, show how tricky the regulatory framework can be.
Tips to Implement Restaurant Services Surcharges Successfully
Amidst all the challenges and complexities, you can find ways to add surcharges to restaurant receipts. Here are the tips to do it successfully.
1. Get Customer and Staff Feedback
The difference between service surcharge and menu price increase is mostly semantics. In both cases, customers have to pay more. What works for one restaurant might not work for another, so it's better to do some work.
The best strategy here is to do a customer poll and ask them whether they want this additional charge on their menu or as a surcharge. Also, talk to your staff and see what insights they can provide.
2. Be Honest About the Surcharge
Hiding the surcharge from customers will only annoy them, so it's way better to be upfront about it. It leads to trust issues and surely a few bad Yelp reviews. Plus, it will surely go against restaurant surcharge laws.
You don't want that, so notify them about the change in the digital restaurant menu. Stress the positive impact it will have on the service quality and the employment benefits your staff will get.
Add Surcharges to Restaurant Receipts With Interactive Restaurant Menu Software
The QR code menu systems are changing the way restaurants deal with customers. And to create them, you need advanced software like MENU TIGER. Here is how you can use it to add surcharges to the menu.
1. The Taxation Feature
MENU TIGER has a special taxation feature through which you can seamlessly add applicable taxes to your menu. Once customers scan the QR code to order, they get the full details, including all the taxes, for maximum transparency. Since it applies to all invoices, you'll have a detailed record of all orders.
2. Making Tips Better
The tipping feature in MENU TIGER is the exact equivalent of asking for tips on the table or over the counter. It surpasses traditional tips because it makes the whole process much easier for restaurants. Customers can also give tips more conveniently with a few clicks, minus the usual pressure.
Use QR Code Menu Software For Enhanced Surcharge Implementation
Running a restaurant is no small feat: from nitpicky customers to regulations to employee wages, there is a lot to juggle. Add the competition and the difficulty one has when hiring quality talent, it becomes increasingly clear why technology is the answer to stay alive in this industry. One area restaurateurs are often confused about is restaurant surcharges. Sure, there is a lot of regulatory complexity and customer sentiments involved in them, but there is a great way out of that. That is implementing a quality QR code menu that clearly states all the surcharges and why they are being levied. It increases the trust between you and your customers, promotes transparency, and ensures that you thrive without facing any regulatory hurdles.
Organization: Menutiger
Contact person: Benjamin
Website: https://www.menutiger.com/
Email: info@menutiger.com
City: New York
Country: United States
Release id: 9800
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