What on earth is a “Hospitality Charge,” as seen at Bruegger’s Bagels in the Minneapolis airport? There’s signage explaining that a 4.5% surcharge is added on top of menu prices to cover ‘hospitality’ but also explains that this is not a tip and does not go to workers. (HT: Paul H.)
- Menu prices appear to be 4.3% lower than they actually are. The price of an item listed at $10 on the menu is not $10, it is $10.45. How can this be allowed?
- And what is this surcharge even for? There’s not even a narrative that it provides anything other than undefined hospitality – and it doesn’t go to the people providing hospitality.
It’s expensive to operate in airports. Rents are high, and a percentage of total sales is often taken by the airport as well. Usually these fees either reduce charges to airlines, or a portion are distributed back to airlines directly. In the case of Minneapolis – St. Paul airport the major beneficiary would be Delta Air Lines.
- HMSHost has the concessions contract, and they’re part of a multi-billion dollar revenue conglomerate.
- The more money they take in, the better off Delta is.
I first ran into restaurant surcharges at the San Francisco airport years ago. Businesses with more than 20 employees have to either provide employee health benefits or pay into a fund for uninsured residents that do not qualify for Medicare or Medi-Cal. It’s a cost of doing business that’s required in the jurisdiction so it should be part of the price and it comes across as sneaky, almost fraudulent when imposed as a surcharge. But that isn’t everything that’s going on.
In Washington, DC the voter-approved Initiative 82 eliminated the ‘tip credit’ that allowed restaurants to pay $5.35 an hour. The $17 minimum wage applies, and restaurants have responded by adding surcharges.
One way I’ve heard restaurant owners and managers there explain why they are doing this instead of raising the price of meals is interesting – it isn’t just “we want to trick customers who will think that prices are lower and then be surprised by the bill.” Instead they want customers to see that amount as a surcharge and have the opportunity to offset with lower tips.
If they find they can attract workers at $17, they don’t need tips to increase the wage. It’s an explicit way to shift a portion of what patrons used to spend on a meal from direct employee compensation to the bottom line of the restaurants themselves.
The Biden administration has a war on fees, but board members of the Minneapolis Airports Commission don’t seem to be listening, and neither is the D.C. City Council.