Surcharges have become a common practice in the restaurant industry, helping businesses manage rising costs while maintaining service quality. As dining expenses increase, many establishments implement these additional charges, particularly during peak times. Understanding why surcharges exist and how they impact both restaurants and customers can provide valuable insight into modern dining trends.
Surcharges in Restaurant Operations
Restaurants face rising expenses, from wages to rent and ingredients. To manage these costs, many impose surcharges, especially during peak periods. This practice helps cover higher operating expenses, retain staff, and maintain profitability while keeping menu prices competitive.
Higher Operating Costs
Restaurants face various expenses, such as labour costs, rent, ingredients, and utilities. During busy periods, these costs can escalate, leading establishments to impose surcharges to offset the additional expenses incurred in delivering quality service. The Sydney Morning Herald’s John Collett took note of data from payments app Tyro, which indicated that as of May 2023 40 per cent of Australian cafes and restaurants levied surcharges to combat inflation, up from 25 per cent in May last year.
The team at ecommerce platform Lightspeed noted in its 2024 Hospitality Industry Report that current practices set the surcharge amounts at 10-15 per cent. The ACCC limits businesses on the amount of surcharges for credit-card or EFTPOS payments, and according to RMIT senior marketing lecturer Dr Sandy Fitzgerald, stops them from hiding the surcharges.
Staffing Challenges
Managing a fully staffed and efficient team during peak times can be a logistical challenge for restaurants. Surcharges can help attract and retain skilled employees by compensating them appropriately for working during busy periods, where demand is high and service expectations are increased. Under current Restaurant Industry Award rules, full- and part-time employees are paid as much as 225 per cent their base rate with the penalty rates and casual staff are paid 250 per cent.
Balancing Profitability
Restaurants operate on thin profit margins, and surcharges can help maintain their financial viability. By adding surcharges during peak times or on public holidays, establishments can ensure profitability while keeping regular menu prices competitive and affordable for customers.
Writing for Yahoo! Finance in January 2024, Tamika Seeto took note of how the general public was conditioned to be on the lookout for surcharges during the Australia Day weekend, with at least one business tapping surcharges as high as 20 per cent.
Managing Restaurant Surcharges Wisely
While surcharges are common in restaurants, there are ways to navigate them wisely. By staying informed, planning ahead, and considering alternatives, you can make the most of your dining experience without unnecessary surprises. Here are some practical tips to help you manage surcharges effectively.
Check the Fine Print
Before making a reservation or dining out, check the restaurant’s website or contact them directly to inquire about any potential surcharges. Being aware of the fees in advance allows you to make an informed decision and plan your dining experience accordingly.
Consider Alternatives
If the surcharges are a concern, explore alternative dining options. Look for restaurants that do not apply surcharges or consider dining during off-peak hours when surcharges may not be in effect. This way, you can still enjoy a meal without incurring additional costs.
Plan Ahead for Special Occasions
Public holidays and special occasions often come with surcharges. If you have a celebration or event planned, consider booking well in advance and discussing the possibility of waiving the surcharge with the restaurant. Some establishments may be open to accommodating your request, especially if you are bringing a large group.
Factor Surcharges into Your Budget
If you choose to dine at a restaurant with surcharges, plan your budget accordingly. Take into account the additional fees when determining how much you are willing to spend. This way, you can enjoy your meal without any unexpected financial surprises.
Focus on the Dining Experience
Remember that dining out is not just about the cost but also the overall experience. Consider the ambiance, quality of food, and service provided by the restaurant. If the establishment consistently delivers an exceptional experience, including during peak times with surcharges, the additional cost may be justified.
Communicate with the Restaurant
If you have concerns about the surcharges or the value they provide, communicate with the restaurant management or staff. Provide constructive feedback and inquire about the rationale behind the fees. Open dialogue can help you gain a better understanding and may even lead to adjustments or compromises.
Tip Appropriately
Keep in mind that surcharges are separate from gratuities or tips. If you receive excellent service, consider leaving a tip to recognise the efforts of the staff. Tipping is a personal decision, but it is a way to show appreciation for a positive dining experience. However, be aware of the common perception that while it’s voluntary to tip in Australia, the high minimum wage can compensate for the employee rendering good service.
Customer Reactions to Surcharges
The inclusion of surcharges in a diner’s bill can prompt some episodes of customer reactions.
News Corp Australia’s Brooke Rolfe noted how dining conglomerate Pacific Concepts has implemented a 6.5 per cent “venue surcharge” for its outlets. A customer at Pacific brand el Camino Cantina complained that he went there to order a 24-ounce margarita for $32 (GST included). When he reviewed the invoice, he found he was billed for $34.54 – now including a venue surcharge of $2.08 and $0.46 in credit-card processing fees. While the complaint garnered some revulsion, Pacific Concepts officials claimed the venue surcharge was a common item in the local dining industry.
In April 2023, a member of the public was planning to have dinner at Sydney’s NOLA Smokehouse and Bar until he saw the fine print on the website, which stated that the restaurant was mandated to charge a 10 per cent tip. This became a common item in the restaurant’s google reviews. When asked to comment by Nine, restaurant officials said this surcharge is simply discretionary and may be removed upon request.
Conclusion
Restaurant surcharges in Australia are implemented to address higher operating costs, staffing challenges, and to maintain profitability. While they can impact the overall dining experience, understanding the rationale behind these fees and adopting proactive strategies can help navigate them more effectively.
DISCLAIMER: This article is for informational purposes only. QUICKLE has no relationships with any restaurant or stakeholders in the dining industry, nor intend to endorse or disparage any restaurant mentioned.
