Increasing restaurant surcharges could be due to business inefficiencies, not inflation

Dr Sandy Fitzgerald, Senior Lecturer, Marketing

Topics: surcharges, service, restaurants, cost of living, public holidays

“It has become a standard practice that cafes and restaurants inflict a 10-15% surcharge on diners on public holidays, weekends and “peak periods”, in addition to the 10% GST and a 1.2% card service fee.

“In this economic climate where consumers have less disposable income, they are less tolerant of this practice.

“Despite how unhappy consumers are, there’s not much that can be done as the ACCC stipulates that businesses can charge whatever amount they want – so long as they don’t hide their surcharges.

“Businesses argue that surcharges keep their doors open because the operating costs of running a business on certain days are higher (mainly wage-related). 

“However, many people have criticised restauranteurs for charging exorbitant surcharges yet failing to deliver good service experiences. In turn, customers avoid dining during these periods, meaning less income for the business. 

“Restaurants should look more closely at operating costs, make intelligent decisions and think creatively to improve their profit margins rather than relying on surcharges to make a profit (if that) or break-even. They can do this by: 

• Reducing food costs – make informed decisions on what to serve on the weekends and public holidays. Is there a cheaper/healthier alternative? Should they have a different menu for weekends? 
• Reducing serving sizes and removing unpopular dishes – reduce portion sizes on certain dishes, especially if staff notice constant food wastage on some dishes.   
• Improving service – great service encourages diners to return and has potential to bring in new customers through word-of-mouth referrals.  
• Rewarding regulars – there is potential in creating a system where regulars are charged a lesser surcharge.

“This will help them stand out from the rest of their competitors and in the long run, their business remains viable.”

Dr Sandy Fitzgerald's research is focused on understanding, measuring and managing the success factors that relate to improving the well-being of consumers, employees and communities. She also investigates the psychological and environmental factors that represent triggers or barriers to individuals who strive to change their current health habits.  

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