Restaurants Adding Inflation Fees Amid Razor Thin Margins

As restaurants across the country feel the squeeze from rising inflation, a tight labor market, and minimum wage increases on an industry with notoriously thin margins, owners are passing along the pain in the form of various fees tacked onto the tab, according to the Wall Street Journal.

Fees for a “noncash adjustment,” “fuel surcharge,” or “kitchen appreciation” have been showing up on more bills lately. Industry analysts say this wave of surcharges is mostly being driven by restaurants trying to cope with the impact of rising inflation and a tight labor market on their bottom lines. In addition, Mastercard and Visa in April raised transaction fees for many merchants. -WSJ

According to point-of-sale software developer Lightspeed, fee revenue has nearly doubled from April 2021 to April 2022, based on a sample of 6,000 restaurants on their platform. Restaurants adding service fees increased by 36.4% over the same period.

“As the costs of doing business have changed, we’ve seen more merchants leverage this tactic,” said exec Peter Dougherty.

The fees are effective in part because unless people are paying close attention, many fail to notice them. When the bill arrived following a mid-April dinner at Romano’s Macaroni Grill, Lizzie Stephens was about to grab her wallet to pay. Instead, she pulled out her phone to Google the “temporary inflation fee” she noticed had been added to her check. 

“I was just like—wow, now we’re getting fees at a restaurant, too?” said Ms. Stephens, 34 years old, who lives in the Stockton, Calif., area. 

Inflation has hit the average restaurant operator to the tune of 17.5% since last year, according to NPD Group. Consumer spending in restaurants, meanwhile, rose just 5% during the same period. – READ MORE