Restaurants add fees to survive pandemic

But how long can COVID-19 surcharge last?

On Saturday night at Rack’s Fish House + Oyster Bar in Delray Beach, Irina Simkhovich glanced down at her $857.43 check and spotted a fee at the bottom, below the stuffed shrimp: $23.43 for something called “D-Operations.”

Simkhovich and her party of seven flagged a server. “We’re like, ‘What’s this?’” she recalled. The server called over a manager, who explained “DOperations” was actually a COVID-19 surcharge — totaling 3 percent of the bill — so the restaurant could afford sanitation supplies.

COVID-19 fees are rapidly becoming the new normal as pandemic-weary restaurants reopen to the public, with surcharges popping up — often to customers’ surprise — on dinein food checks. After statewide lockdowns, surging food costs and months of piddling takeout sales, restaurants now face a juggling act, balancing rising expenses against turning off customers.

For Simkhovich, it was the first time she’d heard the phrase “COVID-19 surcharge,” so she asked why no server mentioned it upfront. The manager said Rack’s new disposable pa

per menus listed the fee.

“I don’t think a single one of us saw that fee on the menu, and that’s why we were so outraged by it,” says Simkhovich, who posted a photo of her check on the Sun Sentinel-run Let’s Eat, South Florida Facebook group. “They should be raising menu prices instead of adding a fee.”

Restaurant owner Gary Rack says Simkhovich shouldn’t have been surprised because the “COVID fee was clearly labeled on the menu and website.” (A copy of Rack’s Fish House’s online menu lists a 3 percent dinein fee but does not mention COVID-19.)

“Food and cleaning costs are out of control,” says Rack, who tacks on a 3 percent surcharge at his other two restaurants, Gary Rack’s Farmhouse Kitchen in Delray Beach and Boca Raton. “All our expenses went up: disinfectants, paper menus, the to-go boxes, supplying masks and gloves to employees who want them. That’s why we call it an ‘operations’ fee, not a ‘COVID fee,’ because it encompasses so much more.”

Rack isn’t wrong. It’s no secret that COVID-19 has sewn chaos into the hospitality industry, and now his steepest expenses are safety upgrades – new signs, wall partitions, disposable paper menus, hand sanitizer, takehome containers – all designed to make customers feel safe to return to restaurants.

For Rack, this justifies an extra fee, a necessary burden passed along to customers to make up for lost revenue and to stay afloat. He added the surcharge when Palm Beach restaurants reopened May 11, and says “99 percent of our customers don’t question the fee.”

“Our loyal base isn’t going to complain about $3,” he adds. “You can’t make everyone happy but it’s disheartening when you hear anyone is irritated.”

Alejandro Lopez says customers would definitely scoff at a COVID-19 fee at his strip-mall chicken-wing joint, Wings in Weston, which is why he decided not to charge one after reopening in May. Takeout sales are down 30 percent on average since May, while his supplier’s cost for chicken wings shot up 30 percent. Meanwhile overhead costs — staffing, energy bills and reduced inventory — are rising as staff are rehired to work the dining room.

Raising prices now risks alienating the customers helping him survive this month, Lopez argues. “People are still afraid to go out,” he says. “I’m afraid my customers won’t respond well to fees. Friday used to be our strongest day, and we used to have 100 percent of the room occupied. I used to say that was our day to pay the rent. Now we might get eight, 10 tables on Friday. I can’t jeopardize even that.”

Lopez isn’t the only restaurateur afraid to draw ire from his already shrunken customer base. Across the country, COVID-19 fees have fueled customer backlash on social media and one-star reviews on Yelp. In Miami, the sports-themed restaurant New Wave Billiards added a 3 percent “COVID-19 fee,” prompting complaints on the business’ Instagram page.

Patty Miranda, owner of Olympia Flame Diner in Deerfield Beach, refuses to charge COVID-related fees even while absorbing extra costs for sanitation and installing divider walls. To offset rising food costs, she stopped offering NY strip steaks and fresh fruit at the diner.

“No one’s making money during this pandemic,” Miranda says. “We’re just trying to break even.”

Restaurants that must charge a COVID fee should be upfront about it, Miranda says.

“If they have a big sign out front saying we’re charging X amount for a COVID fee, that’s fine,” she says. “But if it’s not listed on a menu, the server says nothing and presents it on a bill with no reference, I can see how customers can be upset.”

That’s why restaurateur Tim Petrillo asked his customers before rolling out a 2 percent COVID-19 fee in May. The surcharge now appears on the bill at nine of 11 restaurants (including S3, Java & Jam, YOLO, Spatch) under Petrillo’s The Restaurant People hospitality group, which employs 675 people.

In May, The Restaurant People sent surveys to its email database of 30,000 subscribers with the question, “Would you be willing to pay a COVID-19 surcharge?” Petrillo says 62 percent of those who answered were “very comfortable,” 20 percent declined, and another 18 percent said they would only if the restaurant practiced safe dining and sanitation.

“When your server drops off the check, they say there’s a COVID fee of 2 percent to help cover sanitation costs, and if you’re not comfortable with it, our servers are happy to remove the fee,” Petrillo says.

So far, “only 2.4 percent of all customers ask for the fee to be removed,” Petrillo adds.

Petrillo is circumspect about ending his COVID-19 fee any time soon. He’s already spent $22,000 to print disposable paper menus, $9,600 for brass divider walls at his riverfront eatery Boatyard, plus $6,400 for gloves and $1,800 for masks – expenses that won’t easily be recouped for months.

“Once people are OK with using regular menus, or servers not being in masks, things will probably change,” Petrillo says. “But maybe that’s not around the corner.”

“I don’t think a single one of us saw that fee on the menu, and that’s why we were so outraged by it. They should be raising menu prices instead of adding a fee.” Irina Simkhovich,

Rack’s Fish House + Oyster Bar patron