For a business that lives or dies on its ability to please, the restaurant industry has an astonishing record for making enemies.
It cuts more paychecks for Americans than any party outside of government and healthcare, yet it’s portrayed as a leech that sucks the life out of U.S. workers.
In few other industries can you go as far and earn as much without formal education and a proper social pedigree. Still, parents would rather see their kids struggle in virtually any other trade.
If you want to get a guffaw about someone’s woeful career skills, just weave in a suggestion they’re only capable of restaurant work.
Ironically, the quip might well be delivered over a splendid restaurant dinner with friends or business associates.
With that propensity to conjure a damning perception, it shouldn’t be surprising that yet another powerful party has added horns, a pitchfork and a pointy tail to their mental picture of the restaurant business.
A year ago, if a dozen restaurateurs were asked what beef the Federal Trade Commission might have with the business, 11 might have answered, “Who?” Yet the fearsome federal agency has suddenly decided the industry has become, to borrow comedian John Mulaney’s memorable line, a horse let loose in a hospital.
The Commission astonished the business several months ago with the surprise announcement that it was considering a ban on all restaurant surcharges. The agency cited a good reason: When it asked the public for input on curbing the extra charges that are tacked onto ticket prices or cable TV bills for no other reason than the purveyors’ greed, it was flooded with suggestions that the FTC also rein in restaurant service charges.
At the time, a new type of surcharge was popping up on menus the way dandelions take over lawns in the spring. These were not the extras that have long been added to restaurant bills, like an automatic gratuity for large parties or a corkage fee for patrons who bring their own wine. These were outright attempts to boost revenues without raising menu prices, a reflexive move triggered by the highest inflation the industry has seen in decades.
Fearing a pandemic of sticker shock, operators tried to pass along their soaring costs in what they hoped would be a more acceptable way of adjusting bills, the addition of a surcharge.
Unfortunately, many got cold feet about describing the add-ons as what they were, a hopefully temporary way to cover near-vertical spikes in some costs. Instead, operators tried to make the extra charges more palatable by giving them near-fanciful names, like “kitchen fund contribution” or “staff appreciation fee.”
To make matters worse, there was no accompanying re-education of the public. All of a sudden, customers were hit with a significant bump in tabs with at best a hazy notion as to why or where the additional funds were going. They had ample reason to be annoyed.
More clarity was obviously needed. But instead of mandating that restaurants dispel the mysteries surrounding service fees, the FTC decided to go further. It proposed in essence that all restaurant surcharges be banned; other than taxes, nothing else would be added to customers’ bills after the tabs were tallied.
That meant no more automatic gratuities being added to the bills of large parties, a restaurant convention that’s been around nearly as long as the fork. Nor, presumably, would a place be able to charge a plating fee to discourage two patrons from splitting a meal.
Additional charges to cover the cost of delivering a meal would also be banned.
The restaurant industry is no virgin in dealing with governmental proposals that would hurt the business, but this situation was a bit different. The FTC opted to ban restaurant surcharges without any new legislation being hammered out in Congress, meaning the trade had no opportunity to protect its interests through lobbying.
Restaurants’ opportunity for input was limited largely to submitting input during the several weeks a regulatory agency collects feedback from the public on a rule that’s being considered. In that respect, lobbyists for the industry were among the 20,000 parties that submitted opinions and requests for adjustments, with a few face-to-face meetings wrangled with FTC staff.
They would have been among the 30,000 commentators who responded to the FTC's request for input on another proposed rule change, the ban on non-compete agreements. Although that issue was less of a four-alarm issue for the restaurant business, the trade was still opposed, calling it blatant overreach and another unjustified burden for employers.
Once the comment periods closed for both issues, so did the opportunities to push directly for changes. The five commissioners who make up the FTC are appointed, meaning they don’t have to curry favor with stakeholders who can vote them out of office if their input is not heeded.
Instead, the industry is focused on an indirect way of influencing what the agency puts in its anti-junk-fee rules. Groups like the National Restaurant Association are airing their arguments to members of Congress, to which the FTC commissioners are accountable. There’s leverage there, but it’s not the direct influence voters have on representatives fixated on their chances of being re-elected.
The industry has narrowed its requested edits in the surcharge ban to exempting large guest parties, delivery charges and credit-card swipe fees that are passed along to customers. None sound unreasonable, especially since operators report little pushback from customers on those add-ons. It's the nebulous staff-appreciation-type fees that have led to friction.
But reason isn't much of a compass in politics, nor in gauging how the industry is perceived. Too often it's viewed as villainous, and the streak looks as if it will remain intact.
The FTC is expected to issue its binding rules by the end of the year. The industry isn’t optimistic that it will be commemorating the day with high-fives all around.