A Los Angeles restaurant has come under fire after a top podcaster disputed an unknown surcharge on its guest check: an additional 4% automatically added to the bill to help fund workers’ health insurance.
As Alimento, the restaurant in the Silver Lake neighborhood of Los Angeles, California, was chosen for the move, restaurants across the United States are increasingly charging customers beyond the prices listed on the menus . Nearly one in six restaurants said they were adding fees or surcharges to checks to combat rising costs, according to a December survey by the National Restaurant Association.
Alimento owner Zach Pollack said on Instagram that the supplement is common in the restaurant industry, noting that many restaurants in Los Angeles have instituted the practice since the Affordable Care Act passed in 2010, requiring companies with 25 or more employees to provide full-time employees with health insurance. He added that his restaurant offers to waive the fee at customers’ request, a fact that it prints on every customer check.
Alimento did not immediately respond to CBS MoneyWatch’s request for comment.
It has become increasingly common for restaurants to add extra charges, such as bread and water, to customer bills or to encourage them to tip beyond what a customer would normally be able to. offer for the service. For restaurants, which typically operate with thin profit margins, these surcharges are intended to offset rising food and labor costs, subsidize employee health insurance coverage and even combat climate change.
Josh Luger, co-founder of fast food chain Capital Tacos, does not provide table service at his restaurants, but he still asks customers to tip workers. Tips are split among employees, all of whom perform a combination of job functions.
“What consumers generally want is a lower listed price and the ability to tip if they wish. As long as it doesn’t meet a requirement, I think it’s all fair,” Luger said. at CBS MoneyWatch.
Common during the pandemic when restaurants were only allowed to operate at partial capacity, these fees have survived the health crisis. And in most cases, restaurant surcharges are perfectly legal as long as they are clearly disclosed to customers before their food arrives.
“Confusing for customers”?
Yet the fees can confuse customers, who are more likely to look at menu prices to gauge the cost of a meal.
“I have a problem with all of this,” said Brian Warrener, professor of hospitality management at Johnson & Wales University. “These surcharges hide the true cost of a meal. As an operator, you don’t have to factor these extra expenses into the cost of a meal and it still allows you to charge extra to customers.”
Not all companies try to squeeze every cent out of customers. And raising menu prices to keep up with inflation while providing workers with competitive wages and benefits can also backfire. Some operators are “petrified” that raising menu prices would scare off diners, Warrener said.
“Some places are raising prices to provide perks like salary and health insurance, and it’s confusing to consumers who are now asking, ‘Why have your prices gone up so much, and why am I paying for a something that’s not my decision? to provide benefits to your employees?” he said.
“Before the pandemic, we started to see operators imposing surcharges as compensation. The pandemic catalyzed it,” Warrener added.
Surcharge laws vary from city to city. In New York, for example, it is illegal for restaurants to add a surcharge or other charge on top of the listed food or drink prices.
In contrast, since 2019 California restaurants have been allowed to add a 1% fee to combat climate change, though customers can still opt out of the fee.