NYC Restaurants Debate Whether To Use New 10% COVID Surcharge

With Erika Adams of Eater New York,

Restaurant owners are grappling with whether to use a new emergency measure that City Council approved this week allowing NYC restaurants to add a COVID-19 surcharge of up to 10 percent to diner’s bills, the New York Times reports.

On Wednesday, the City Council voted, 46 to 2, to let restaurants impose a temporary “Covid-19 recovery charge” to help them through their fiscal straits. The bill, which Mayor Bill de Blasio will sign, according to a spokesman for his office, will allow restaurants the option of adding a surcharge of 10 percent or less to each bill (though not for takeout or delivery), as long as it is clearly noted on menus.

New York restaurateurs have long fought to strike down a city rule that forbids such surcharges, which are allowed at any time in other parts of the state and most of the country. In the pandemic, a city-sanctioned fee may be a way to allow restaurants to increase revenue without raising food prices, and to ascribe the charge to government.

But in interviews, many restaurant owners said they weren’t ready to add the new surcharge, especially at the full 10 percent.

While the extra revenue would be helpful to offset operating costs, some restaurateurs say they are concerned that the additional charge will scare off customers. A restaurant owner in Little Italy, Nick Criscitelli, told the Times that he won’t be adding the surcharge to bills as it’s difficult already for his customers to come to the restaurant during this time.

“Our customers are all families,” and during the pandemic most are neighbors and other regulars whose finances are as challenged as his own, Mr. Criscitelli said. “So why should we charge them any extra? It’s hard for them to come out now.”

Kalergis Dellaportas, the general manager of his family’s Bel Aire Diner, in Astoria, Queens, said that if the bill had passed at the start of the pandemic, he might have been tempted. But six months in, he has already planned for the extra costs of running a restaurant, including restarting indoor service at the end of the month.

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Philippe Massoud, the owner of Lebanese restaurant Ilili in Flatiron, says that he may add a small surcharge of up to 3 percent while explaining the current pandemic-related operating costs like masks, gloves, and outdoor dining buildouts, to customers.

That’s exactly the point, said Andrew Rigie, the executive director of the NYC Hospitality Alliance, which has about 2,500 members — mainly more established restaurants, hotels and bars — and lobbied for the surcharge. “This bill is only meant to be one tool restaurants can apply to try to survive right now,” he said.

Others are more excited about the new surcharge: “They finally did the right thing, now they need to make it permanent,” said the chef Russell Jackson, a veteran of restaurants on both coasts and the owner of Reverence, a tasting-menu restaurant in Harlem. He compared the new surcharge to a small one he imposed while running a restaurant in San Francisco, after that city made restaurateurs responsible for some extra health care costs.

Yet even Jackson thinks 10 percent is too much. He said that he would try 5 percent, and that he had counseled one of his neighbors who runs a more casual restaurant to add 3 percent.

The surcharge, which comes before tax on the bill, can only be applied to in-person dining tickets, not takeout and delivery checks, the Times reports. Surcharges historically have been illegal to use in NYC, although the practice is allowed elsewhere in the state. The temporary surcharge — set to expire 90 days after indoor dining returns at full capacity — will be available for use after Mayor Bill de Blasio, who supports the measure, signs the new bill into law.

Source: Zerohedge

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