Restaurants across the United States have increasingly turned to the use of surcharges and fees to cover costs such as credit card processing, gratuities, and “inflation.” This practice has become more prevalent in recent years, with 15% of restaurant owners adding surcharges or fees to checks due to higher costs. In fact, 3.7% of restaurant transactions processed by Square included a service fee in the second quarter of the year, more than double the beginning of 2022. While some argue that these fees are necessary to keep businesses afloat and compensate employees fairly in a competitive industry, opponents claim that they may surprise customers and lead to them paying more for their meals unknowingly.
The issue of junk fees in restaurants has sparked controversy, with some customers compiling spreadsheets of establishments charging hidden fees. Critics argue that these fees may lead to customers tipping less, resulting in lower income for restaurant workers. Additionally, there is concern that some businesses may engage in wage theft by claiming to distribute service charges to employees but failing to do so. The National Women’s Law Center has warned that service fees increase the risk of wage theft and negatively impact workers’ income.
On the other hand, restaurant operators defend the use of surcharges and fees, stating that they are essential for paying employees more and providing better benefits. Some establishments, like Galit in Chicago, have implemented service charges to cover costs such as healthcare for workers. Co-owner Andres Clavero emphasizes the need for transparency in communicating these fees to customers, as they play a crucial role in supporting the restaurant’s employees. Additionally, some restaurants argue that service charges help them navigate complex legislation, such as laws phasing out the tipped wage.
The Biden administration has expressed interest in cracking down on “junk fees,” with the Federal Trade Commission expected to publish a rule banning businesses from charging hidden and misleading fees. However, industry associations such as the National Restaurant Association are advocating for the preservation of certain fees, citing concerns about customer confusion, higher prices, and compliance costs. While some states have excluded bars and restaurants from anti-junk-fee laws, there is ongoing debate about the impact of these fees on both customers and employees.
The controversy surrounding junk fees in restaurants highlights the complex dynamics between businesses, customers, and employees. While some argue that surcharges and fees are necessary for maintaining operations and supporting workers, others raise concerns about transparency, fairness, and compliance with labor laws. As the debate continues, it is essential for stakeholders to consider the implications of these fees on all parties involved and work towards finding a balanced solution that addresses the needs of both restaurants and their patrons.