Should Your Restaurant Add a COVID-19 Surcharge?

As restaurants start to reopen and ramp-up across the U.S., many are beginning to experience an increase in expenses compared to pre-COVID-19 times. Costs like personal protective equipment (PPE) for their staff, higher foods costs due to supply chain breakdowns, disposable products like menus, utensils, and condiments, and potentially higher wages to encourage workers to return to work, are not daily costs that were budgeted for and they are now eating into profits. Not to mention any new, one-time, expenses like bathroom renovations to become touchless, updated entrances and exits to assist with social distancing, additional outdoor seating, the list goes on. So, how does a restaurant combat these new costs? Some have resorted to adding a COVID-19 surcharge. Let’s dive into this a little further to see if it is the right move for your restaurant.

How Will Your Customer React?

The first thing you should ask yourself before implementing a COVID-19 surcharge at your restaurant is, how will your customers react? Do you personally know your regulars and know that they will be okay with adding 5% to their bill to help you offset this hopefully temporary new costs? Or, will your customers take this negatively and cause more harm than good? If you’re considering adding a surcharge, poll your customers on social media or through your email marketing channel to see what they think. If a majority says they’re fine with it, give it a try. If you get a lot of negative responses, this may not the be route your restaurant needs to take.

Disclose The Surcharge Appropriately

If you start to add a COVID-19 surcharge, it will be imperative that you make sure your customers are aware of this additional fee prior to ordering. Signs should be placed on the doors, add a note to all pages on the menu, and have your staff trained to personally disclaim this information to every new guest. Leave no stone unturned that would allow someone to receive their bill and be surprised to see the surcharge listed on it. Don’t forget about delivery and takeout customers as well. They won’t be privy to this information unless told when ordering, whether it’s over the phone or online. Make sure your website has this information about the charge front and center and clearly outlines what it will add to their bill and why. Being as transparent as possible will go a long way to keep your customers happy and your staff less worried about having to deal with irate customers.

Other Options

If you polled your customers and they gave a big, “NO” to this idea or you gave it a try and things went south fast, adding a COVID-19 surcharge may not be the route your restaurant needs to take to offset these new costs. Instead, you may need to find other ways to save money.

• One option is increasing menu prices temporarily. While this may generate backlash from some customers, it may easier to accept this change since it is directly related to the rising cost of meats and other foods compared to a separate COVID-19 charge on their bill.
• Another option is trying to lower costs elsewhere. Only opening for peak times will reduce the amount of payroll costs. Remove the less-popular items from your menu to cut back on food costs. Or, if certain food prices have skyrocketed, remove those dishes from your menu for a while and replace them with lower-cost options.
• Maybe your best option is to add new services instead of finding ways to cut costs. You could add grocery services to add more sales. This service wouldn’t incur any new costs besides purchasing the items to sell and the profits can help offset your new expenses. Or, you could add subscription services that allow your customers to try recipes from your kitchen with the supplies that you provide them each month. Here are other subscription ideas to try.

If you decide that a COVID-19 surcharge isn’t right for your business or maybe you add one and it doesn’t offset costs enough, we’re here to help. We know times are tough for the restaurant industry and you need someone in your corner to back you up. So, while other lenders are saying “no” to restaurants, we’re still saying, “yes”! Let’s continue your fight against the coronavirus pandemic and see your restaurant come out on top. Complete an online application today to receive a no-obligation quote from one of our loan consultants and see your restaurant thrive.