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What is a COVID-19 surcharge? Why some restaurants are adding an extra fee to your bill

TODAY logo TODAY 5/13/2020 Chrissy Callahan

Like many restaurants across the country, Kiko Japanese Steakhouse & Sushi Lounge in West Plains, Missouri, has struggled to keep its menu prices low as the cost of food quickly rises. To help manage costs during the ongoing coronavirus pandemic, the restaurant recently implemented a "COVID-19 surcharge." So far, customers have had very mixed reactions.

a close up of a receipt © ky3.com

Earlier this week, the restaurant was thrust into the national spotlight when a customer posted a picture of the receipt showing the new charge on Twitter.

"‘Scuse me ... what? A covid surcharge...?" user @talialikeitis wrote.

Tweeters were quick to comment and many weren't exactly thrilled.

Others questioned whether customers had been informed about the new charge prior to ordering from the restaurant.

Some folks said they'd be more than happy to pay a surcharge to help support their favorite local businesses which have been suffering due to the health crisis.

The restaurant's owner and managing partner Billy Yuzar told TODAY Food the 5% surcharge was implemented on May 6 following a noticeable price increase on meat, seafood and vegetables from their local supplier.

"We were hoping to adjust the charge weekly based on the prices we get from our suppliers instead of raising all of our prices across the board on our menu," he said. "We also planned on taking this surcharge off completely once all the prices return to normal."

Related: States are ordering restaurants to decrease capacity, keep crowded bar areas closed and more.

The state of Missouri recently announced local restaurants could reopen dining rooms at 25% capacity, but Kiko has decided to continue offering takeout only while concerns over the deadly virus are still heightened.

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Before implementing the fee, the restaurant posted signage outside its front door, at the register, in the entryway and on social media to notify customers about the change.

Yuzar said that most of his local customers had been pretty understanding about the surcharge, but once that receipt went viral on Twitter, the restaurant owner said his staff was flooded with complaints from people all across the country.

This week, the restaurant decided to remove the surcharge entirely and raise menu prices.

"We can take the harassment on our social media, but when they start being ugly to our employees here, it really bothers us," he said. "This is why we decided to just eat the cost of printing new menu and adjust it weekly. We will go back to our normal prices once food prices go back to normal."

Related: A viral post raised several important questions about whether third-party apps truly help or hurt struggling restaurants.

As restaurants continue to grapple with rising food prices and other new operating costs, diners across the country should be prepared for the possibility of seeing a COVID-19 surcharge on their own receipt, Gregory Frank, a partner at Frank LLP Class Action Litigators, told TODAY. According to the New York City-based attorney, these charges are legal.

"Generally, restaurants are allowed to structure their pricing however they like," Frank said. "The important question is whether the restaurants are disclosing to consumers what they are paying before they pay it, so they can make their own informed choices."

Restaurants typically handle changes in costs by altering menu prices, but the cost of reprinting menus can pose an additional burden to already struggling restaurants.

"For short term cost increases, like this crisis, it makes more economic sense for the restaurant to change their point of sale system to add a fee. Doing it this way can also make the customer more comfortable paying the fee knowing that it is temporary and related to the circumstance," he continued. "It also makes it more likely they will lower the prices again after the crisis as a 'COVID-19 fee' would certainly look suspect after the crisis."

Apparently you guys cant share the whole post of our previous FB post , so please share this one! We will upload the...

Posted by Kiko Japanese Steakhouse & Sushi Lounge on Monday, May 11, 2020

Bootleggers BBQ, another West Plains restaurant, also recently implemented a COVID-19 surcharge. Owner Brian Staack told TODAY that he and his wife, Jessica (with whom he co-owns the eatery), considered adding a charge a few weeks into the initial shutdown, but officially started charging it on May 8. They alerted customers about the change the day before on social media and in the restaurant.

"When we decided to add the 5% surcharge it was to help cover the huge cost increase in our beef," Staack said. "We looked at it as a way to cover that cost, by spreading the 5% across the whole menu. A small fee across the board was better than a huge jump on related menu items.

He added that the restaurant is currently only offering service through its drive-thru.

I always try to be upfront and honest with anything to do with Bootleggers. It has always just made sense to me. We have...

Posted by Bootleggers BBQ on Thursday, May 7, 2020

At first, Staack said his regular customers were supportive of the surcharge. But then the restaurant was inundated with calls and messages, the majority of which accused the restaurant of ripping off customers, a claim that Staack is quick to refute.

"We had nothing but endless Facebook posts and phone calls that were getting quite ugly," he said. "Sadly, these calls were from people out of our area and mostly out of state, not even our customers."

Stack has also started limiting the items his staff is preparing each day due to meat shortages, which he said has adversely impacted sales. While the couple had planned on raising and lowering the surcharge based on each week's shipment costs, they decided this week to remove it entirely and just raise menu prices to offset rising costs.

"I have 26 employees that we have managed to keep at the same hours or more throughout this," Staack said. "All I was trying to do was cover our added food cost and keep them working. But people who wouldn't take the time to listen to me on the phone, or read our explanation on Facebook would rather make threats. My staff didn't deserve that at all."

We have updated our menu to reflect our increase in food costs and dropped the surcharge. We absolutely hate doing this,...

Posted by Bootleggers BBQ on Monday, May 11, 2020

The restaurant has printed new menus and Staack said he'll review prices each week going forward.

"While this was not the way I wanted to go, our employees did not need to go through the harassment another day," Staack said.

RELATED VIDEO: West Michigan business implementing COVID charge (via WXMI Grand Rapids)


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