Restaurants' sneaky fees -- a guide

[Anonymous]

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!”

[Anonymous]

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!”

And if they’re blaming the government for needing to charge fees, then they deserve to be out of business. Most restaurants don’t make it, so why should they?

[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!”

And if they’re blaming the government for needing to charge fees, then they deserve to be out of business. Most restaurants don’t make it, so why should they?

Entitlement is a really big problem nowadays.

[Anonymous]

We are busier than ever. We have customer fighting over the tables and complaining about not being able to get a reservation. I joke that we must be the only restaurant in town.
We do make better money than ever before, but mostly because we are busy and secondly because of the DC wage increase.
They finally raised prices a month ago and added a small fee about 5 months ago. They should get a medal for holding off so long. Maybe that's the reason we are so busy though. Well, food is good too.
I'm not sure about grocery stores winning, because GT Safeway is a rip-off and always empty. Now Lidle and Aldi, yes.

[Anonymous]

Anonymous wrote:Some restaurants make it hard to know what they’re charging. They present a grand total and force you to ask them for the breakdown.

This whole thing is ridiculous. It shouldn’t be this difficult.

We need a ballot initiative to repeal this ballot initiative.

Our worthless city council could do something productive for once and throw this whole regime out.

[Anonymous]

Anonymous wrote:

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.

Really? You think restaurant staff want to be paid $2/hour instead of a living wage? That makes sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Really? You think restaurant staff want to be paid $2/hour instead of a living wage? That makes sense.

Are there any waiters who prefer this? Most made more money under the old system.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Really? You think restaurant staff want to be paid $2/hour instead of a living wage? That makes sense.

The dirty little secret is that bartenders (especially) and wait staff at good restaurants make way more than a living wage on tips and they don't have to pay taxes on their full earnings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Really? You think restaurant staff want to be paid $2/hour instead of a living wage? That makes sense.

The dirty little secret is that bartenders (especially) and wait staff at good restaurants make way more than a living wage on tips and they don't have to pay taxes on their full earnings.

They also make a lot more than many tipped workers, many of whom are victims of wage theft and lack the social capital to prosecute it. Bartenders at hot restaurants downtown hated the elimination of the tipped wage, which allowed them to commit tax fraud and shelter large amounts of their income. Meanwhile, waiters at chain restaurants in lower cost neighborhoods, nail and hair salons workers, and many other workers who were making the tipped wage supported it. But they are more likely to be middle aged women, immigrants, lack college or high school educations, and therefore less visible to the media.

[Anonymous]

The fees are a problem because they often make it hard to know up front what the cost of your meal is actually going to be, and the way that restaurants present them is dishonest, like hotels that charge a bogus "resort fee."

Stop doing that. Just adjust the prices of your menu items and be done with it. That is the only correct answer.

[Anonymous]

Anonymous wrote:The fees are a problem because they often make it hard to know up front what the cost of your meal is actually going to be, and the way that restaurants present them is dishonest, like hotels that charge a bogus "resort fee."

Stop doing that. Just adjust the prices of your menu items and be done with it. That is the only correct answer.

Restaurants will never do that because they will have no customers.

The only correct answer is to repeal this silly initiative.

[Anonymous]

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.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am happy to pay the fee in lieu of tipping, whether it’s 20%, 22% whatever.
I haven’t been to a place that charges a high service fee like 20% *and* says that it’s *not* a tip.

The only place where this agitates me is a counter service place like Breadfurst which charges a 20% service fee (again, fine) but then you are expected to tip on the iPads. Honestly, after my last trip, adding 40% to buying 2 baguettes, I decided I wouldn’t go back. I mean 2 baguettes- $14. Plus 20% service fee, 10% sales tax, then then another tip at the counter? It’s like $20 for 2 loaves of bread.

Primrose in Brookland does this. We stopped going because not only is it on a whole piece of paper explaining that it’s a NOT a tip in a tone, but they’ve also jacked up their prices. It’s sad bc it’s a lovely neighborhood joint but I can’t afford their prices on a casual Tuesday no special occasion meal.

Primrose is ridiculous. They should close if they can’t honestly advertise the price.

I’m comfortable paying a higher price for a good dining experience but I don’t like the tone they set right when I sit down. Let me escape for an evening instead of starting off getting me riled up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Really? You think restaurant staff want to be paid $2/hour instead of a living wage? That makes sense.

I waited tables all through high school, college, and graduate school so for about 10 years. I made a ton of money relative to my education level and only paid taxes on a fraction of it. My 16 year old daughter waited tables last summer (in NJ) and made $22-25/hour on a base salary of $3/hour plus tips.
This type of bill would be a big pay cut for both of us during our "waiting tables" years.

[Anonymous]

I usually tip 20% but now deduct any service charges or other fees from that 20%. I am not paying twice. Also, I am eating out less. Now, I will pick up prepared food from a grocery store or get take out from a cheap place. A nothing special meal at a restaurant is rarely worth $200.