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Have you noticed an increase in restaurant dining and takeout costs recently? The recent Consumer Price Index report showed that “food away from home” — which includes takeout, full-service dining and food served at employee sites and school — has risen by 7.2% in the past 12 months. Full-service meals alone rose by 8.7%, its highest jump since 1997.
A number of factors are driving up restaurant costs, including prices of food and fuel, and ongoing supply chain challenges. With those economic factors capturing the brunt of your attention, you may have overlooked a few more hidden dine-in and takeout costs that have become more prevalent since the pandemic.
1. Credit Card Surcharges and/or Cash Discounts
The rules on restaurants imposing credit card surcharges or incentivizing cash purchases through discounts vary by state. According to Merchant Maverick, currently only two states (Connecticut and Massachusetts) plus Puerto Rico explicitly outlaw credit card surcharges. A handful of other states have anti-surcharge laws on the books, but are unenforceable based on recent court decisions.
In all states, businesses are permitted to offer a cash discount to customers who choose to pay by cash, debit card or paper check. This discount is typically the same amount as credit card fees. But rather than adding money to the bill for paying by credit card, businesses offer a discount for paying cash.
Whatever form it takes, these businesses are passing the burden of credit card processing fees onto the customer. But some customers aren’t having it.
“Personally, I won’t patronize businesses that do this,” said Chris Palermo, a communications consultant from Ronkonkoma, New York. New York is one of the states where it is technically illegal to implement credit card surcharges, but largely unenforceable. Palermo noted that if he is eating out of state, where credit card surcharges are legal, he tries to find restaurants that don’t collect such fees, or he makes it a point to pay cash and avoid the extra charges.
Similarly, Cliff Lundin, an attorney in Hopatcong, NJ, changed his ways once his favorite pizza place started imposing a 10% surcharge on all credit card orders. “They have a coupon online for 20% off if you print it and use it for takeout. Since they added the surcharge, I’ve started using the coupon even though I have never used it in the past.”
For many, however, the charges feel fully justified. Wes Morrell, owner of The Alternative Sport paintball field in Blountville, TN, said he usually pays cash, anyway, but credit card surcharges wouldn’t bother him if he decided to pay by card. “Being very mindful of a small business, the charge doesn’t bother me at all if I know that’s going to help them put more money in their pocket. After all, that’s why we do it, to support our families and grow our business.”
The important thing is for consumers to understand the charges in any place of business and make informed decisions. For some, the convenience of using a credit card outweighs the fees. And if you have a card that issues rewards, the surcharges might be offset by the cash back you receive. You might also, as Lundin did, look for coupons or other opportunities to save while still enjoying the convenience of paying by credit card.
2. Suggested Tips for Takeout Service and Delivery
In addition to imposing credit card surcharges, more businesses have been “suggesting” tips at the point-of-sale when people pay by credit card via an iPad terminal or even at tables when patrons pay via the table-top kiosk. Often, the tabletop kiosk pre-sets the tip amount to 15% or 20%, so if you want to tip more (or less), you’ll need to adjust it.
Suggested tips are popping up on screens nationwide, and many consumers resent the pressure they feel to tip for services they haven’t in the past, including fast food takeout orders. “I have the ‘opportunity’ to tip for any service that takes a credit card and virtually every suggested tip begins at 20%,” said Julie Paulson, a long-term care volunteer in San Antonio, TX.
She mentioned that, often, workers hover over the screen as they await you to choose the tip amount and process the transaction. This can put pressure on patrons to tip a certain amount or rush the transaction without thinking about how much they are paying.
“This happens in restaurants, especially when it’s busy and the waitstaff wants to close out and move on,” Paulson said. “They swipe your card and just hover until you’re done. It’s awkward, and you have little time to think, [so] you check the 20% option because it’s expeditious.”
Rather than feel pressured to tip more than you feel the staff deserved — or more than you can afford — take a breath and don’t rush. You may find yourself feeling good about the 20%, or you may choose to adjust the amount.
3. Added Gratuities
Restaurants often add gratuities onto bills for large parties — usually parties of six or more people. But some resorts and restaurants may add gratuities for any size party.
“I don’t like it when they do it,” said Steven Futoran, a salesperson in the financial services industry and self-proclaimed “foodie” from Alpharetta, GA. “I understand why they do it for bigger parties, but it still should be up to the customers. What if the service isn’t great and you wouldn’t want to tip that much?”
Added gratuities may actually result in less money for the waitstaff, regardless of the level of service. Some customers may be inclined to tip more than the standard 18% or 20% if the tip wasn’t already included on the bill.
“If a restaurant adds the tip to my bill, then that’s what they get. If they would have left it up to me, about 80% of the time I would have tipped more,” said Rick Komendera, a consumer electronics industry executive in Austin, TX. “However, if they take the choice away from me, they get what they asked for and nothing more. I understand why they do it, but it really irks me.”
If more people tipped generously on their own like Komendera, chances are restaurants wouldn’t feel compelled to add gratuities to the bill. But for servers, automatic gratuities can increase their wages substantially and make it possible to survive on less than minimum wage.
“As a waitress, I would love to see gratuity added to every check,” said Jennifer Saunders, a server and mom-of-three from Coram, NY. “It’s true, not all service is great, but not all customers are great, either. We work very hard and it’s very disappointing to go above and beyond to make people’s dining experience a happy one only to be shorted or not tipped at all.”
Spend Wisely at Restaurants
Whether you opt to follow the prompts on the iPad, go along with the automatic gratuity or tolerate credit card surcharges, it’s all a matter of being informed. Review your restaurant check or takeout receipt carefully to ensure accuracy and know exactly what you’re paying for. By avoiding excess charges and fees, you might be able to make your food budget stretch a little further.
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