Some Restaurants Are Adding Surcharges To Help Pay For Employee Health Care

As if how much you should tip a restaurant server wasn’t enough of a point of contention, now there’s something else we can debate about – apparently some restaurants are adding a surcharge to their customers’ bills to help pay for the business’ employees’ health care coverage.

The charges began to show up on the bills of several restaurants across the country sometime in 2016, and the concept is growing.

According to the Chicago Tribune, restaurants in Chicago wanted to bring health benefits to an industry notorious for not offering them, especially among smaller, independent restaurants. Advocates say offering health insurance is necessary if restaurants are to maintain stable workforces amid surging competition of large chains that do offer such benefits. So after much consideration, several restaurants began charging a small surcharge of a few percentages or a few dollars per bill – some with the option for it to be removed, some not.

Restaurants in Los Angeles, San Francisco, Austin, Minneapolis and other larger cities have also begun adding the small surcharge as a separate line, giving it names such as, “health insurance charge,” “hospitality provision fee,” “employee health insurance,” “health and wellness charge” or “community value contribution.”

Restbill

As per the Chicago Tribune, there’s debate in the restaurant community about whether a surcharge is the wisest way to pay for improved working conditions, but some restaurant owners said they weighed other options and decided this was the best route.

Raising food prices would mean more tips but it wouldn’t have addressed health insurance. Removing tipping and imposing a service charge to distribute among staff might have angered servers if their earnings fell.

And with 5 percent profit margins, most of which goes back into the restaurant, they couldn’t afford to absorb the $120,000 additional annual cost that higher wages and benefits would cost.

Yet something had to change because employees were leaving for higher-paying jobs, and 95 percent of the restaurant’s staff had no insurance.

“With rising costs on all fronts, we are taking a holistic approach for the longevity of our business and the people we employ,” Conlon [a restaurant owner] said.

Joe and I haven’t come across a surcharge for restaurant service yet, but I’m sure we eventually will. Have you? What did you think about it?

*** Thanks to Emma C. for making us aware of this topic!

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This post first appeared on Your Mileage May Vary

5 thoughts on “Some Restaurants Are Adding Surcharges To Help Pay For Employee Health Care”

  1. I would happily pay more to properly take care of a restaurant’s employees. I’d rather it just be included in the price of the food, but I’m not conversant with the tax implications of of doing that, and if a separate line item on the bill is how it has to happen, so be it. The more that people are well taken of, the better it will be for all of us.

    1. 100% correct. When you buy gas they don’t add a surcharge to pay for health insurance. Ditto for every other retail company. Restaurants need to include the full cost of meal in the price, rather than dishonest surcharges.

      1. I second that. How about caring for the consumer’s expectations for a moment?

        Europe has some high restaurant prices. But one constant expectation, always met, is that the tag (menu) price is what you get charged. Anything extra is truly (as opposed to theoretically, in the US) up to the consumer, for good service.

  2. I’m not sure how adding the rising expected tip rate and now this insurance surcharge is any different than resort fees. It makes it so costs look like one thing on the menu and then they hit with the other charges.

    Be honest and increase prices.

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