We’ve reached an absurd point in commerce where business owners want all the rewards of entrepreneurship, but expect customers to directly manage their accounts payable simply to maximize profit.
Is it exploitation? Or is it creative marketing?
The FIFA World Cup chose my hometown (Kansas City) to host some of the biggest games on the planet. This fine sporting event brought in soccer fans from all over the world. In the process of this, local restaurants were worried about the effect of having lots of hungry tourists filling their seats. They were worried it was going to make them busy beyond imagination.
This is where things got interesting.
Specific to the lead up to the World Cup, first came the actual price increases in restaurants. A dollar here, a dollar there – base menu prices were increased to make a few extra bucks. Many restaurants likely believed these increases would protect their already thin profit margins. That leads to my biggest frustration… After raising prices, many also began adding service fees and automatic gratuities on top of the higher menu prices.
It is not uncommon for venues to add a mandatory gratuity for parties of eight or more. That is a standard industry practice for legitimate reasons, and it makes sense. BUT, restaurants are now slapping automatic gratuities onto ALL orders, including takeout. I feel for the struggling business owners, but these two things do not fare well for enticing new customers, or keeping current ones.
“Service fees” are often completely ambiguous.
Management claims these fees cover “operational costs” like labor, kitchen supplies, administrative overhead, and infrastructure. Like the widely disliked pizza delivery fee, these surcharges quietly inflate your bill through percentage-based or flat fees.. I think this is much worse than that.
In short, a $10 pizza can easily become a $15 purchase before tax – not because the pizza changed, but because of added fees and surcharges intended to boost the restaurant’s bottom line. And then I’m expected to leave a tip on top of those added charges? This is not cool. If something is worthy of a tip, I’ll happily tip, but if the place is charging a service fee, it makes me less inclined to tip. ESPECIALLY on takeout orders!
If I have to get out of my car to walk inside to pick up something at a counter, why am I being forced to tip and being charged a fee as well???
I should be the one getting a tip (or at least a discount)…
When dining in, an automatic gratuity destroys any incentive for a server to provide exceptional hospitality. It is also deeply unfair to the hardworking staff who do genuinely provide great service. If a restaurant forces me to hand over an extra $5.00 directly to the house for nothing, I am far less likely to leave an exceptionally high tip for the server.
I get that food prices are skyrocketing and businesses have expenses, but why do the business owners expect customers to pay outright for all of the operating fees to run their business? Businesses will always have expenses, but come on…
Isn’t that what the 1,000% markup on fountain drinks is for?
Certain things in the restaurant business (like soft drinks, coffee and alcohol) have huge markups (1,000+ percent markup is not an exaggeration). Certain foods also carry huge markups, but when profit maximization requires hiding the true cost of doing business behind a mandatory surcharge, it isn’t creative marketing, it’s administrative failure.
Unfortunately, it’s not exclusive to the food industry. Food is just the most blatant. Don’t forget the so-called “resort fees” or “amenity fees” at hotels. Guests are often charged extra for amenities they may never use, or can’t use at all, such as a broken hot tub or an out-of-service fitness center.. Then, there’s “carrier-imposed surcharges” and “airport fees” airlines throw in. And “fleet recovery fees” and “license fees” for rental cars.
They say, “We have to pass on the costs”
Don’t forget the other latest money grab – surcharges for using a credit card at restaurants and other businesses that are usually around 4%-6% that they don’t tell you about until the bill arrives. How about the “environmental surcharge” for your trash pick up, or the generic “customer charge” on your electric or gas bill, or the service fees on movie and concert tickets. What about the “account maintenance fee” on your bank account or credit card?
Is someone really “managing” the $5.00 I have left in my checking account? If so, they’re not doing a very good job. Sadly, more and more businesses are doing this because the credit card companies are charging them ungodly fees. I know it’s a domino effect for all involved, but it doesn’t make it right.
How much of our money goes to these fees?
It’s time to draw a line in the sand and stop acting as a financial shock absorber for poor business management and pure exploitation. Aside from the charges mentioned, when you pay these deceptive restaurant surcharges without question, you aren’t being a polite customer – you are validating a broken system that penalizes transparency and exploits front line servers.
Unfortunately, unsuspecting tourists visiting our city (and locals) may not even question these hidden restaurant fees. As if that weren’t frustrating enough, we’ve become so accustomed to these junk fees that they’ve quietly become part of everyday life. Companies continue adding them to transaction after transaction because most people either don’t notice them or have simply come to accept them without question.
What can you do?
Don’t let these fees become the new normal. Always check your receipts carefully. If you find any, ask to have these service fees removed from your bill. Support restaurants that are upfront about their pricing instead of those that rely on hidden surcharges. Every dollar you spend is a vote for the business practices you want to see.
~ Marty ~
As a side note, the World Cup did not bring in the overwhelming crowds restaurant owners expected. As such, many customers did rise up, complaining about the fees and automatic tipping. Some establishments chose not to continue with the fees as they realized it impacted customer loyalty. Others didn’t care, arguing the point, saying it was necessary to do so to protect the workers. For restaurants that chose to keep their service fees, a disclaimer was added informing customers that the fee would be removed if they requested it. In that case, why add it in the first place? Oh yeah…because they can. How many people are actually going to say anything though – It’s only a few dollars, right?
Rant over. Time to eat pizza.
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