Restaurants' sneaky fees -- a guide

[Anonymous]

maybe that whole tipped wage thing wasn't such a hot idea

https://www.washingtonian.com/2024/01/11/these-helpful-tools-are-tracking-every-restaurant-fee-across-dc/

[Anonymous]

I haven’t studied the fees controversy in depth but it always seemed to me that restaurants were using it as the scapegoat for raising prices by adding fees. The tipped wage increase should have just been added to the cost of doing business but owners would rather add fees in random ways that result in more revenue under the guise of “but you voted for this!”

[Anonymous]

Anonymous wrote:I haven’t studied the fees controversy in depth but it always seemed to me that restaurants were using it as the scapegoat for raising prices by adding fees. The tipped wage increase should have just been added to the cost of doing business but owners would rather add fees in random ways that result in more revenue under the guise of “but you voted for this!”

When you ask people in the restaurant industry about this, they'll say they can't just raise prices to cover the costs because then people won't come to eat/drink there because it will be too expensive. This is pretty explicitly an admission that the fees are *intentionally* misleading, to bring people in with artificially low prices and then hit them with extra fees on the backend when they can't do anything about it. But people in the restaurant industry in DC think this is a persuasive argument.

And the whole thing obscures the larger issue, which is that if you can't figure out how to offer your product/service at a price people are willing to pay, then your business model is fundamentally bankrupt. Now this isn't entirely the fault of bars and restaurants -- as is the case with many cost issues in DC, a lot of the blame lies with landlords who overcharge on rent because they are inadequately disincentivized to leave storefronts empty (they can use them to declare a business loss and write down taxes, and DC doesn't not sufficiently penalize landlords who don't make real efforts to find tenants for commercial spaces). But it's still annoying when we have so many restaurants and bars charging these fees specifically to trick customers into dining there, thinking it costs less than it does, but then complain that this is the only possible way for them to stay afloat as a business. Then your business is bad! No one made you open a restaurant.

[Anonymous]

Anonymous wrote:maybe that whole tipped wage thing wasn't such a hot idea

https://www.washingtonian.com/2024/01/11/these-helpful-tools-are-tracking-every-restaurant-fee-across-dc/

Many restaurants had fees before the tipped wage referendum passed.

Maybe restaurants should just update their pricing so that there aren't multiple % increases in things and instead menu prices accurately reflect the walk away costs?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I haven’t studied the fees controversy in depth but it always seemed to me that restaurants were using it as the scapegoat for raising prices by adding fees. The tipped wage increase should have just been added to the cost of doing business but owners would rather add fees in random ways that result in more revenue under the guise of “but you voted for this!”

When you ask people in the restaurant industry about this, they'll say they can't just raise prices to cover the costs because then people won't come to eat/drink there because it will be too expensive. This is pretty explicitly an admission that the fees are *intentionally* misleading, to bring people in with artificially low prices and then hit them with extra fees on the backend when they can't do anything about it. But people in the restaurant industry in DC think this is a persuasive argument.

And the whole thing obscures the larger issue, which is that if you can't figure out how to offer your product/service at a price people are willing to pay, then your business model is fundamentally bankrupt. Now this isn't entirely the fault of bars and restaurants -- as is the case with many cost issues in DC, a lot of the blame lies with landlords who overcharge on rent because they are inadequately disincentivized to leave storefronts empty (they can use them to declare a business loss and write down taxes, and DC doesn't not sufficiently penalize landlords who don't make real efforts to find tenants for commercial spaces). But it's still annoying when we have so many restaurants and bars charging these fees specifically to trick customers into dining there, thinking it costs less than it does, but then complain that this is the only possible way for them to stay afloat as a business. Then your business is bad! No one made you open a restaurant.

Agree with this! If your business model includes paying your workers $2/hour, then it’s a broken model.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I haven’t studied the fees controversy in depth but it always seemed to me that restaurants were using it as the scapegoat for raising prices by adding fees. The tipped wage increase should have just been added to the cost of doing business but owners would rather add fees in random ways that result in more revenue under the guise of “but you voted for this!”

When you ask people in the restaurant industry about this, they'll say they can't just raise prices to cover the costs because then people won't come to eat/drink there because it will be too expensive. This is pretty explicitly an admission that the fees are *intentionally* misleading, to bring people in with artificially low prices and then hit them with extra fees on the backend when they can't do anything about it. But people in the restaurant industry in DC think this is a persuasive argument.

And the whole thing obscures the larger issue, which is that if you can't figure out how to offer your product/service at a price people are willing to pay, then your business model is fundamentally bankrupt. Now this isn't entirely the fault of bars and restaurants -- as is the case with many cost issues in DC, a lot of the blame lies with landlords who overcharge on rent because they are inadequately disincentivized to leave storefronts empty (they can use them to declare a business loss and write down taxes, and DC doesn't not sufficiently penalize landlords who don't make real efforts to find tenants for commercial spaces). But it's still annoying when we have so many restaurants and bars charging these fees specifically to trick customers into dining there, thinking it costs less than it does, but then complain that this is the only possible way for them to stay afloat as a business. Then your business is bad! No one made you open a restaurant.

Agree with this! If your business model includes paying your workers $2/hour, then it’s a broken model.

I think a lot of those workers would disagree with you.

[Anonymous]

Restaurants are now getting sued over these fees. Good job DC.

https://www.washingtonian.com/2024/01/18/mi-vida-succotash-among-dc-restaurants-sued-for-allegedly-deceptive-menu-fees/

[Anonymous]

Anonymous wrote:

Anonymous wrote:maybe that whole tipped wage thing wasn't such a hot idea

https://www.washingtonian.com/2024/01/11/these-helpful-tools-are-tracking-every-restaurant-fee-across-dc/

Many restaurants had fees before the tipped wage referendum passed.

Maybe restaurants should just update their pricing so that there aren't multiple % increases in things and instead menu prices accurately reflect the walk away costs?

I suspect they do it because, if people knew the true cost upfront, some percentage of them would go elsewhere.

[Anonymous]

"According to Federal Reserve data, full-service restaurant employment in Washington grew roughly 17% in the year before the tipping changes took effect. Since Initiative 82 came into force in May 2023, employment has fallen 4%.

This is just the start: The tipped wage will continue to rise for the next three years, when it meets the regular minimum wage that is increased every year for inflation. An April survey published by the Employment Policies Institute of more than 100 local restaurants in D.C. found that most planned to lay off workers. Half planned to expand into lower-cost states such as Maryland or Virginia, and nearly 1 in 3 planned to close locations.

To offset costs, hundreds of restaurants have opted to add fees or other surcharges to customer checks. Diners are responding the way you’d expect: A National Restaurant Association poll of nearly 1,000 D.C.-area adults found more than half are dining out less because of higher prices. Some said they’re choosing to patronize restaurants in Maryland or Virginia instead."

https://www.wsj.com/articles/why-no-one-goes-out-to-eat-in-d-c-anymore-fd01e31e

[Anonymous]

The solution to all this is to keep workers' wages high and increase menu prices, but tell diners that they no longer need to tip in light of the increased menu prices. It's our bizarre tipping culture that is causing all of this.

[Anonymous]

Waiters don’t want this! They make more with tips.

[Anonymous]

Anonymous wrote:

"According to Federal Reserve data, full-service restaurant employment in Washington grew roughly 17% in the year before the tipping changes took effect. Since Initiative 82 came into force in May 2023, employment has fallen 4%.

This is just the start: The tipped wage will continue to rise for the next three years, when it meets the regular minimum wage that is increased every year for inflation. An April survey published by the Employment Policies Institute of more than 100 local restaurants in D.C. found that most planned to lay off workers. Half planned to expand into lower-cost states such as Maryland or Virginia, and nearly 1 in 3 planned to close locations.

To offset costs, hundreds of restaurants have opted to add fees or other surcharges to customer checks. Diners are responding the way you’d expect: A National Restaurant Association poll of nearly 1,000 D.C.-area adults found more than half are dining out less because of higher prices. Some said they’re choosing to patronize restaurants in Maryland or Virginia instead."

https://www.wsj.com/articles/why-no-one-goes-out-to-eat-in-d-c-anymore-fd01e31e

Maryland restaurants are doing it too, because they can. Personally, I’m eating out less in general but I’m checking online first to see if they have added fees (looking at you, Clydes, and founding farmers!) and avoiding those restaurants. And if it’s a surprise fee at the end of my check, then I tip less that amount. One of my local restaurants said they were charging the fee because it was becoming standard practice, and all of the restaurants are charging fees so they were too.

[Anonymous]

Anonymous wrote:The solution to all this is to keep workers' wages high and increase menu prices, but tell diners that they no longer need to tip in light of the increased menu prices. It's our bizarre tipping culture that is causing all of this.

No, it's politicians with more ideological fervor than common sense (or training in economics) who are causing all of this. It would have been simpler to just leave things as they were. Probably most waiters would tell you they made more money under the old system. This was always a solution in search of a problem.

[Anonymous]

There's an easy way to avoid these fees. Eat at home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I haven’t studied the fees controversy in depth but it always seemed to me that restaurants were using it as the scapegoat for raising prices by adding fees. The tipped wage increase should have just been added to the cost of doing business but owners would rather add fees in random ways that result in more revenue under the guise of “but you voted for this!”

When you ask people in the restaurant industry about this, they'll say they can't just raise prices to cover the costs because then people won't come to eat/drink there because it will be too expensive. This is pretty explicitly an admission that the fees are *intentionally* misleading, to bring people in with artificially low prices and then hit them with extra fees on the backend when they can't do anything about it. But people in the restaurant industry in DC think this is a persuasive argument.

And the whole thing obscures the larger issue, which is that if you can't figure out how to offer your product/service at a price people are willing to pay, then your business model is fundamentally bankrupt. Now this isn't entirely the fault of bars and restaurants -- as is the case with many cost issues in DC, a lot of the blame lies with landlords who overcharge on rent because they are inadequately disincentivized to leave storefronts empty (they can use them to declare a business loss and write down taxes, and DC doesn't not sufficiently penalize landlords who don't make real efforts to find tenants for commercial spaces). But it's still annoying when we have so many restaurants and bars charging these fees specifically to trick customers into dining there, thinking it costs less than it does, but then complain that this is the only possible way for them to stay afloat as a business. Then your business is bad! No one made you open a restaurant.

Many of these places were doing OK until the DSA guilt-tripped DC residents to supporting this ridiculous new bill. The bar and restaurant model, while odd, was working very well for a long time. I paid my way though college working primarily for tips at an upstate NY bar. We did serve wings so that helped. But my point is that very few servers wanted this bill and no owners wanted it. But communists are going to be communists and can't help themselves when it comes to things like this.