With more than 23,000 closures since March, restaurants are one of the industries hardest hit by COVID-19, according to the Yelp Local Economic Impact Report. Not only were thousands of restaurants required to close for a period of time, but inventory prices have increased and the Centers for Disease Control and Prevention has recommended potentially expensive new sanitation processes and reduced capacities.
To help offset all of this, some restaurants have implemented COVID-19 surcharges, either by raising menu prices or adding a fee to the total bill. But how do customers feel about this?
A FinanceBuzz survey about COVID-19 surcharges found that 31 percent of Americans would stop frequenting local restaurants and 41 percent would stop going to chain restaurants that charge this fee. In addition, 45% of bar-goers said they’d stop patronizing bars that impose a COVID-19 surcharge.
As restaurants continue to permanently close, restaurant management is faced with a complicated dilemma: Do you raise prices or charge customers a fee to stay afloat or take the hit to keep customers happy and returning? There’s no ideal solution, but if you decide to implement COVID-19 surcharges, here are some helpful tips to keep in mind.
Ways to Implement COVID-19 Surcharges
1. Overcommunicate with Your Customers
There’s nothing worse than finding out about an added cost after the fact. But unfortunately, 38 percent of survey respondents said they didn’t know about the existence of a surcharge until after making a purchase. It’s essential to let your customers know if you’re charging anything extra at your restaurant. You can’t control how they’ll react to the information, but it’s better than looking like you’re trying to hide a surcharge.
Make sure there’s clear and visible signage around the restaurant. Make posts on your website and/or social media pages announcing the surcharge. Be sure to include why these surcharges were implemented. Restaurants are struggling to survive, including yours, and you need to recoup costs somehow. Many people will understand that. And if you’ve made the effort to let your customers know about additional charges, they won’t feel like they’ve been ambushed.
In addition to overcommunicating about surcharges, let customers know how you’re keeping your restaurants clean and sanitized. Fifteen percent of Americans aren’t confident local restaurants have implemented sufficient sanitation protocols, and 19 percent lack confidence when it comes to chain restaurants and 28 percent for bars.
Customers need to know exactly what you’re doing to keep them safe, or they might not feel comfortable at your restaurant. Let your customers know if you’re practicing social distancing, wiping down surfaces, or even improving indoor air quality. Put in the effort to get the word out and market your restaurant with your new cleaning processes. For in-person visits, have visible signs describing your new cleaning and seating policies that customers can see as they walk in. This will create a comfortable and safe environment for your guests.
2. Know You Won’t Make Everyone Happy
If your daily expenses are going up, you need to compensate for the increased costs. When you pass these added expenses onto your customers, more money is coming out of their pockets. And even though many Americans want to help, one in five can't afford to.
FinanceBuzz's COVID-19 surcharge survey found that consumers are split 50-50 on whether they'd prefer businesses to increase menu prices or add a line item to their bill.
Because both options make the bill higher, it may come down to which method of delivery receives the best response from your customers. Our survey indicated that 49 percent of restaurant-goers tried to dispute these new fees when they came across them, so people may be reluctant to accept an add-on charge. But if the fee is already included in the raised price, there’s not much to dispute.
At the end of the day, you can’t please everyone. It’s a difficult decision to charge customers more money, but you have to do what’s best for you and your business.
3. Make Sure to Handle Disputes with Respect
Even if you let your customers know about COVID-19 surcharges, your staff may still need to handle disputes about it. This could be because the customer legitimately didn’t know they would be charged extra (despite your best efforts to inform them), or they just might not agree with the practice.
If there’s a dispute, make sure to handle it with care and respect. Your staff may not know what to do in this situation, so be sure to thoroughly prepare them in advance and educate them on your business’s dispute policy. Having respectful discussions with customers can help to reduce any chance of a negative experience concerning new surcharges.
4. Take Care of Your Staff
Twenty-seven percent of Americans said they’d tip less if a restaurant added a COVID-19 surcharge to their check. Because this could significantly affect your staff’s income, you need to consider how you’ll take care of your staff. You may need to supplement your staff’s wages if this occurs or you could risk losing valued employees.
If you see a decrease in tips, make sure your staff isn’t suffering because of it.
5. Offset Your Own Additional Costs with Business Credit Cards
If your costs continue to pile up, consider looking into business credit. A business credit card can help separate your business and personal expenses and you can potentially earn rewards to help offset your everyday restaurant costs. Separating your expenses can offer long-term organizational benefits, but earning rewards on your business purchases equals immediate value.
As restaurants prepare for a new normal, be ready to adjust to changes along the way. Keep your staff prepared for these new practices and let your customers know what changes you’re putting into place. There’s no playbook for the coronavirus pandemic, so do your best as you implement COVID-19 surcharges.