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Coronavirus surcharges cause consumer push back

May 26, 2020
By: FOX BUSINESS

As much as 86 percent of consumers have taken their business elsewhere when faced with a surcharge

Some customers struggling with their finances amid record unemployment rates and pay cuts aren’t happy about paying coronavirus surcharges.

As businesses start to reopen in states nationwide, restaurants, hair salons and others are taking on a COVID-19 surcharge to make up for added costs they’re now having to front for personal protective equipment for staffers like gloves and masks in addition to sanitizing sprays and rising food costs. But some customers are pushing back against seeing the surcharge on bills without an explanation of why.

A Missouri restaurant added a 5 percent surcharge because of rising food prices. A Florida dentist is charging $10 a visit for personal protective equipment. And a Texas-based hair salon also began charging $3 “sanitation charge” to its clients to offset the costs in cleaning products.

“Many customers are angry about the changes. The businesses that have enacted them, on the other hand, view the added fees as essential ways to offset their increased costs and to compensate for revenue lost during the lockdown,” CreditCards.com industry analyst Ted Rossman wrote in a recent blog post.

And a number of small businesses could lose customer loyalty if they continue to do so. As much as 86 percent of consumers have taken their business elsewhere when faced with a surcharge, according to a recent American Express survey as reported by CreditCards.com. What’s more, seven out of 10 customers say a surcharge makes them feel like a merchant doesn’t value their business, according to the same survey.

“We obviously know there’s an increase in meat prices so if you want to adjust the items that bear more cost that makes sense, but it’s a Catch 22 because right now we know everybody is suffering and a lot of people are out of work,” New York-based restaurant consultant Jason Kaplan, owner and founder of JK Consulting told FOX Business Tuesday. “Personally, I think if you’re going to be adding an additional charge I would just raise the price on your items not add a COVID charge because right now we have to support each other.”

Some restaurants have started to back peddle on surcharges. A Missouri-based restaurant Kinko Japanese steakhouse faced national criticism when it tacked on a 5 percent surcharge to customer bills without an explanation. The restaurant’s owner said it was a result of food price increases for seafood, meat and vegetables.

The restaurant has since updated its menu to reflect its price increases in food products to explain to customers why certain meal prices have gone up.

“If it continues to go down, we will lower our prices as well,” the restaurant wrote in a post to its Facebook page. “It is our way to ensure our employees can still earn some income & keep our door open.”

FOXBusiness

REPOSTED FROM FOXBUSINESS.COM – READ FULL ARTICLE HERE

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JK Consulting is a New York-based international restaurant & hospitality consulting firm. We specialize in restaurant & bar openings along with turnaround programs. Our expertise is in developing highly effective operational systems, management procedures, hospitality services, staff training, beverage, menu and mystery shopping programs.
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