Restaurants fight back against the FTC crackdown on 'junk fees' as diners balk at new charges
Restaurants fight back against the FTC crackdown on 'junk fees' as diners balk at new charges
The FTC is trying to crack down on "junk fees." Restaurants are fighting to keep fees and surcharges on their checks.
Lawmakers want to crack down on “junk fees,” but restaurants are trying to stay out of the fight.
Surcharges or fees covering everything from credit card processing to gratuities to “inflation” have become more popular on restaurant checks in recent years.
Last year, 15% of restaurant owners added surcharges or fees to checks because of higher costs, according to the National Restaurant Association. In the second quarter, 3.7% of restaurant transactions processed by Square included a service fee, more than double the beginning of 2022, according to a recent report from the company.
Opponents of the practice say those fees and surcharges may surprise customers, hoodwinking them into paying more for their meals at a time when their wallets are already feeling thin. Fed-up diners compiled spreadsheets via Reddit of restaurants in Los Angeles, Chicago and D.C. charging hidden fees. Even the Onion took a swing at the practice, publishing a satirical story in May with the headline “Restaurant Check Includes 3% Surcharge To Provide Owner’s Sugar Baby With Birkin.”
Restaurant operators say the fees keep their menu prices lower
lmao, they just want to use deceptive pricing in their menu.
Fuck that, increase the price of your stuff instead of being dishonest.
126“Lying about our prices on the menu keeps the prices on the menu lower!”
62
We need to go to what other countries do.
No tips, people earn a living wage. And all taxes and percentage fee charges are baked into the price you see.
If something is $99.99 on the sticker/menu, then you pay exactly $99.99
116I forget how much I take this for granted until I visit the US. It's such a hassle, I guess it's one of those things you just get used to after while to be fair but when you're not used to it it's baffling.
35It's purposeful forced mental labor.
They want the customer to be confused, stressed, and ready to just pay to make it all go away. They make the customer do a lot of work to be informed about their products.
Anything where the customer knows the situation and the price is anathema to these dorks.
44Yeah, you just always assume you'll be nickle and dimed.
People bitch about it in food delivery apps, and it is a problem there, but it's a problem offline too. You just see it immediately on the apps, where if you're sitting down you don't realize till after you ate and you don't care as much.
Ironically seeing the real total up front makes people more angry than if they don't know till after they ate.
11I'm from the US. I assume outright beforehand that any private business I have to deal with is trying to scam me, because in my experience they are. After speaking to a few contenders, you pick the one that comes off as least slimy or do whatever it is yourself if they're all completely shitty.
8
My tinfoil hat theory is part of this is because conservatives want to keep people low grade mad at government. Like they keep stuff like "5% tax" highly visible so people see it and get mad, then later they can campaign on how the government is axiomatically bad etc etc.
18I mean, the strategy itself isn’t even a conspiracy theory. That’s literally their game plan for dismantling established departments and government branches. The US Post Office is a great example. Conservatives make it harder and harder for them to stay funded every year, all in an attempt to slow down postal service and drive up delivery prices. They intentionally add bloat, cut funding, and increase costs. This is explicitly so they can point at the USPS and go “look at how bloated and ineffective this is! We should privatize it instead!”
10
Agreed. The counter argument is that every state and county has different tax rates. One valid reason taxes that are percentages.
But the register can deal with all of that just fine.
8I've been visiting Brazil the past couple weeks and this is something I see here, it's so nice to not have to arbitrarily round up prices in my head to figure out the true cost before going to the register. I'll miss that when I get back home.
7This shit is just as abd in Japan. So many places have bullshit seating fees or they make you buy cabbage as an appetizer or something.
Taken the practice from host clubs and just ran with it.
2
All listed prices should be the final maximum cost for any specific product. "Additional fees may apply" should not be allowed, as they exist to deceive the user about the final cost.
Upcharges for additional things is fine, as long as the customer knows what the additional cost is.
Also, tipping needs to fuck off and all employees need to be paid a living wage. If businesses can't pay a living wage they don't need to exist.
69Yup, at this point it's just false advertising. Per the article, restaurant owners are saying they want to keep menu prices low as to not scare off customers, which is really just a fancy way of saying they'd rather bait them on the promise of low prices, and then ram the full cost of the meal up their asses at the end of it.
Just roll everything (cost/taxes/tips/fees) into the menu price. This constant bait and switch in the US needs to finally die. If you won't survive by showing the true costs your customers need to pay, maybe you need to rethink your business model or find a new profession.
39abiutbthe fi al
You okay?
7My thumbs must have had a seizure!
4
- get rid of ridiculous fees
- get rid of tips
- pay your staff a living wage with proper benefits
- set real prices on the menu to account for the above
Which is what restaurants in a number of places that are not the US actually do.
59And if we aren’t willing to pay those prices we can let the industry shrink. I love restaurants, but I see people using them as a convenience instead of a night out but that makes financial sense some places but not here not today.
9As someone who grew up in the US and worked in nearly every position in a restaurant (from serving to cooking to managing) and now lives in another country, it's wild how cheap restaurants are in the US. They can definitely shrink. Maybe at that point we might do something about food deserts. I'm also not sure if/how it's correlated with the obesity epidemic, but I wouldn't be surprised if it's also a factor.
3
I won’t return to a place that has a “cost of living charge.” Don’t make my dining experience about your protest. If you need to raise prices… just raise them.
46Yup, that's my stance 100%
12
The weirdest one has been watching the "15%+ service fee" go from groups of 8 to 5 in only 2 years.
Also an easier way to alleviate junk fees would be to remove credit card transaction fees.
You know the thing that banks have been exploiting for decades to make profit out of virtually nothing.
It's like paying for gamepass but for every time you open the game.
And don't come in here saying that it covers PCI DSS requirement. This technology is cheaper to run than a rassberrypi mining dodgecoin.
41There are quite a few places around me that add a service fee for everyone. I don't frequent those places. Which is sad because some of them actually have good food.
5Just make people pay the fee when they dine and you will see how many switch to other payment options
1
They should have started cracking down years ago when restaurants started charging "delivery fees" that the delivery drivers didn't get.
20Add a service fee or an inflation fee if you'd like. I'll circle it and leave a big fat 0 for the tip. Without it, I'll leave 20% minimum. Problem solved.
17I am tired of prices going up AND tips going up. It already was a percentage of a total, and now it's a higher percentage of a higher total?
I remember 10 percent tip. Was sort of annoyed at 15. At 20 percent with five times the bill it's gotten way out of hand.
And now my area is trying to normalize 25 percent, with 30 being "good service".
I am about to say fuck it and go back to 15. It's either that or never eating out again.
24A "quick haircut" sort of place (kind of a barber, sort of , but super-high-volume and just one worker, the owner) that I've been using for a while now has a super-annoying dark-pattern in their payment flow. They book appointments, and take in-person payments using Square. After your cut, when you're paying via their hand-held kiosk with a card, the screen shows you a bunch of huge "tip amount" buttons, and it's implied that the customer has to choose one of them, while the provider looks on, in order to finish the transaction and leave (probably not true - they've already got your CC info by that point). Guess which button is highlighted/pre-selected and front-and-center! That's right, 20%. If you want to select another tip, or no tip, you have to select another button while she watches you do so. The owner lists all prices on her square website, and it's those prices you think you'll be paying when you book an appointment online, but she still feels the need to be tipped. You KNOW that the provider/barber has configured Square to present that UI to the customer. Not quite the same as the restaurant fees scam, but it's actually more manipulative though, in my view.
16I'm tired of tips in general. Every job should pay a liveable wage. Fix the system. The more in the middle class, the more things we can have. Healthcare, education, housing, food, innovation,....etc. Fuck ripping people off so a few assholes can sleep with women just as shallow as them or rape ones that turn them down.
6I have never left 15% and if I'm not happy with the service 10% or lower.
1
I'm sure your server will understand. They're usually the ones in charge of decisions like these. /s
-1You mean the servers that are overwhelmingly opposed to minimum wage laws applying to servers?
The same ones that complain all day about their wage and make >$40/hour with no education or training while not reporting their cash tips to the IRS?
The same ones that just drop off your food, never come back and take 20 mins to process a tab?
lol.
2
I've started doing Google reviews of these "fee" places, giving an honest opinion of food/services received and adding a simple statement of any fees added to menu prices. At least it makes it a little more visible.
15THIS is why we need Government OUT OF OUR LIVES (except in the Bedroom and Doctors Office)! If these Regulations go away then OBVIOUSLY Prices will DROP!
15Give me the real price or I will go elsewhere.
15The credit card fee is the only one I don't mind. CC fees siphon a lot more money out of what we pay than people think. It's unfair that restaurants/stores have to take that hit because the CC industry has been successful in making credit cards ubiquitous.
All those rewards we get as consumers for using CCs come straight from the vendors pockets, and the banks get a much larger cut of the fees than they "give" back via rewards.
There is no reason why credit card fees need to be so steep in the digital age. And most vendor agreements require that vendors aren't allowed to charge a separate CC fee to cover the cost to them, so they instead have to raise prices on all (cash) customers through a menu price hike.
It's the same kind of bullshit as Apple requiring that app owners are not allowed to sell their app on other platforms for less than their Apple Store price.
14Yeah. I used to work at a retailer that had a credit card for the business. People think the incentive for the business is to get the $80 commission for signing up new people. And while that's nice, the real reason for us was that processing fees were waived at our store for anyone using the card.
That's why you'll get get more "points" for using the card at the retailer than you do elsewhere. That 2-3% back or whatever is way less than the processing fee the business would otherwise be paying.
7
"Restaurant operators say the fees keep their menu prices lower, improve employee compensation and are better for customers."
HA!!! *but we want it this way so people don't realize how expensive their meal will actually be until they've already eaten and it's too late. We want to hide our profit grab in innocuous fees that visually feel like non-negotiable taxes they are just used to paying without objection!!!"
14What is the purpose? They control the base price, so why break it out? I guess they are just trying to pass the buck symbolically and literally.
13Get rid of banks processing and merchant fees to start. Banks can make it by just fine without those.
12So those restaurants don't want visitors anymore? What kind of shortsighted idiots run those places?
9Comments like this are just the definition of irony...
-2
Note that by "stay out of the fight" the article means "stay out of the Biden administration’s crosshairs" which actually means something different.
8I've never been to a restaurant with fees and if I ever found one, I wouldn't be going there. I rarely eat out anymore at all though. High prices for mediocre food and mediocre service keep me away.
7How enforceable are these fees? Like if I sat down, ordered from the menu with whatever set prices they had in the menu, get back a bill with fees added on that I never agreed to, what would happen if I just refused to pay those fees? Like I'm not coming back either way, so don't care if they ban me, but can a restaurant tack on whatever they want and the police would treat it as a non-payment of what's due or is the legal obligation only for the food ordered plus reasonable expectations added on (such as taxes, though personally I also believe they should be included in the advertised price)?
7If it is listed on the menu, you must pay it. I can see if it's not mentioned that you could make the case it's BS, though
4
Am I the only one? The whole thing of charging 4% if someone’s paying by credit card, because that’s what it costs to run their credit card, makes perfect sense to me.
Maybe it is because I used to be involved with a business that paid credit card fees. What we eventually wound up doing was publishing prices that were nice round numbers that roughly included the CC fees, giving a discount below the published prices for cash payments, and including a separate 3% CC fee onto custom quotes that were itemized, if people were paying with a card. That seemed like a pretty solid system. But yeah I definitely get it if a restaurant wants to say that there’s a certain percent fee if you’re paying with a card.
“Cost of living adjustment” can fuck off though
3Cash discount is the way to go. Price is the price but offering discounts is fine.
10Keep in mind, these "service charges" are usually double to triple what the actual thing costs...
7Cash has fees associated with it too when you have a business bank account. It’s probably not a as high but might be now that there is so much cashless.
2?
What do you mean? Depositing $100 has always credited me $100. There are monthly fees and etc associated with the account sometimes, but they are irrespective of whether you’re depositing cash.
Usually what we would be trying to motivate people towards is ACH instead of credit card (very low fee but still everything automatic, not a pain in the ass like cash is). But idk of any cash fees associated with any business account I’ve ever been involved with.
0
So when there is a service fee, how does that change the tip?
2Restaurants are seconds away from charging a per-bite subscription to their menu. 30 bites per month individual plan or shared 150 bites per month family plan
- Any large bites count as 3 bites
- All bites where you open your mouth are categorized as large bites.
- Uneaten food is evaluated by our proprietary AI and given a remaining bite count (which is then doubled and subtracted from your regaining monthly bite total as a penalty).
1CNBC - News Source Context (Click to view Full Report)
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Wikipedia about this sourceThe Onion - News Source Context (Click to view Full Report)
Information for The Onion:
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https://theonion.com/restaurant-check-includes-3-surcharge-to-provide-owner-1851474578/?utm_campaign=TheOnion&utm_content=1716484954&utm_medium=SocialMarketing&utm_source=twitter
https://www.cnbc.com/2024/08/24/restaurants-fight-ftc-junk-fee-crackdown-over-surcharges.html-10