Restaurants' sneaky fees -- a guide

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Why not just raise the menu prices by 5%?

This question is logical, as is our answer. We want to maintain value for our guests while restructuring and evolving our business model in this new day. As menu item prices cross certain thresholds (ie, 19 to 21 or 29 to 30), guest buying behavior is affected, meaning that people may not select their first choice, but instead select an item priced well below – this trade, which can be from $31 down to $24 or $25, results in lower total sales, even though menu prices are higher. These decisions also affect ordering an appetizer, a second beverage, or dessert at the end of the meal. This means that in order to net the same revenue for the business through a price increase, we’d need to raise prices substantially (in the 15% to 20% range) more than 5% – costing diners more – which is why we see the 5% charge as win/win, as opposed to the even larger menu price increase which is lose/lose.

Imagine crafting this answer to this very obvious question and feeling like "yup, that covers it -- makes total sense!"

Literally their argument is that if they raise menu prices to cover these costs, fewer people will want to dine at their restaurant because it costs too much. So instead they give you artificially low menu prices and then surprise you with a service fee on the back end, thus tricking you into paying the amount you would have opted out of if it had been baked into the menu price.

It's a win/win! You get to pay 5% more than you wanted to pay for your meal, and we get to pretend our price point is lower while actually charging you more money! No losers here! AFter all, consumers have infinity money and this is just a game!

Yes, I read that with my jaw literally hanging open. “We know that if we tell you the real prices up front, you’ll realize you can’t afford it or it’s just not worth it to you and stop coming. So we’ve decided to trick you instead. It should work, since most of you are pretty dumb and don’t know basic math. We have absolutely no ethics so we still feel great about ourselves!”

To some extent, this is the airline business model with "unbundled" but belatedly added charges: seat selection fees, change fees, checked baggage fees, fees for simple snacks, no hand luggage without paying a fee. It's maddening.

It’s not really the same though since it’s actually possible to avoid those airline fees in most cases, even if most people would not want to avoid them. In the restaurant case, you get a higher bill than you’re expecting or able to pay and you still need to pay it all regardless.

[Anonymous]

The restaurants are just trying to survive. People are being ridiculous.

[Anonymous]

Anonymous wrote:The restaurants are just trying to survive. People are being ridiculous.

Maybe they don't deserve to survive. They are kicking the can down the road by charging all of these fees and fees. Customers will revolt and stop patronizing them at all.

[Anonymous]

Nope to any added fee! A 5% procurement fee or 20% service fee should be folded into the stated product price.

Tacking on a surprise charge at the end is insulting.

[Anonymous]

Anonymous wrote:Nope to any added fee! A 5% procurement fee or 20% service fee should be folded into the stated product price.

Tacking on a surprise charge at the end is insulting.

I completely agree. There have been some articles in food media about this, where a restaurant owner breaks down their costs and margins. Typically they say adding 20% (or whatever) to the sticker price of menu items would tank their business because people balk at higher menu prices, so they “have to” add it as a separate fee. I guess if they post it at the bottom of the menu or on the website or somewhere discreet, psychologically people don’t register the added cost of the meal until it’s time to pay at the end. Which, while I’m sympathetic to the point that restaurant owners are making, is still a bait and switch.

[Anonymous]

Realize this is an old thread, but I could not believe it when I saw Spike Mendolson's restaurant at Reagan had literally taped up handwritten price increases for all of their menu items. It's literally like we live in a third world country.