Brian Edwards Media

Some free advice for restaurants and cafes – your 15% surcharge may damage your customer goodwill. (Based on an unhappy experience in Herne Bay.)

 

Judy and I probably fit the common perception of the trendy Jafa. Our day isn’t complete until we’ve walked for an hour or more around Herne Bay, Grey Lynn, Ponsonby and back to Herne Bay. And the walk has to finish with coffee and occasionally a ginger biscotto (Thanks, Peter Calder, for the Italian lesson!)  at one of the many cafes on the strip.

Queen’s Birthday Weekend was no exception until…

Well, today (Monday) we had coffee an one of our usual Herne Bay haunts. Fine and dandy. Judy had been doing university work during the morning and it was almost lunchtime when we’d finished our coffee and were heading home. Faced with the prospect of making lunch – I’d already mowed the lawn and trimmed the hedge and was feeling self-righteous – I suggested we buy something from our favourite cafe-deli.   

I need to tell you a little about this particular place: The coffee’s great; the staff are lovely; their deli items are expensive but delicious. And as if that weren’t enough, it’s common for us to be shouted a free scone, and occasionally the coffee to go with it, if we arrive near closing time.

We decided to buy one of their yummy enchiladas to take home and have with a little salad. The young woman behind the counter was new to both of us.

“There’s a 15% surcharge today,’ she said with neither smile nor apology. We paid. The enchilada cost us 12 bucks something.

Outside Judy said, “Why are we paying an extra 15% when all she did was hand us something we’d bought?  If we buy a litre of milk at the dairy next door will we be paying an extra 15% on that as well?”

Well, the point here isn’t the extra $1 or $1.50; it’s that, for the first time in a decade or more we both felt negative about a place we really like. And the graceless take-it-or-leave-it attitude of the young woman serving hadn’t helped.

We won’t be writing to Fair Go. For this one negative experience there are literally hundreds of positive ones we’ve had at the same place.

I’d prefer to give our favourite cafe-deli and other eateries a little free advice. Rightly or wrongly, there is widespread public distaste for the 15% surcharge in cafes and restaurants on public holidays. Places that decide not to add the surcharge are benefiting from that distaste. The smarter business option might be either close on public holidays or not to charge it.

And if all the service you’re providing is exchanging goods for money across a counter, it’s bloody difficult to see how you can justify charging the buyer an extra 15%.

We’ll still go back to our favourite cafe-deli. We love them really. And the slightly sour taste in our mouths will probably disappear when we’ve downed the enchilada.

Still…

59 Comments:

  1. Exactly. I’ve never quite understood why the hospitality industry do this. My partner is working today at a retail store and being paid extra but his store doesn’t whack 15% on the fine merino clothing he sells. Nor does the bookstore, the supermarket and the dairy as you both point out.

    Suck it up! it’s the cost of business. Now please don’t start me on the credit card surcharges creeping in all over the place especially in flash hotels. Um how would you like us to pay? Cash?

  2. “And if all the service you’re providing is exchanging goods for money across a counter, it’s bloody difficult to see how you can justify charging the buyer an extra 15%.”

    Brian, there are higher wage costs on a public holiday, hence the surcharge (but I am certain you klnow that!). Market forces behaving as they should. You have the choice, as the customer to not purchase the product.

    If their product is not met by demand, they will go broke, surcharge or not!!

  3. Hi Brian, I’m not so sure it’s as bigger deal as you think it is – at least, my personal view is that it might not be. Don’t get me wrong, I dislike paying the surcharges as much as the next guy, but then I also don’t much like going to work on Mondays either, so I’m OK with paying slightly more on the occasional glorious public holiday.

    Thinking about it from the Cafe manager/owners perspective for a moment… If the cafe or deli has 4 staff earning about $15 an hour (which – both in terms of staffing and wages – would be rather conservative by Ponsonby standards) then their way bill is normally $480 per day. On public holidays they have to foot time-and-half plus a day in lieu. So really their wage bill jumps to about $1200 for Monday, so they are short about $700 bucks. Sure, some cafes will do extra business on a public holiday (such as those near the beach or popular holiday spots), but I doubt a Ponsonby cafe would really see much of a boost, what with all their corporate lunches drying up. So they face two options, close (as you suggested) or stay open and charge people an extra dollar or two.

    I don’t think it’s outrageous to charge a small surcharge to try and claw back some of the lost extra wages on public holidays – assuming that that the cafe is not already breaking even because of extra business, in which case the surcharge isn’t really justified.

    BE: We don’t normally disagree, Jake. But on this we do. I see the 15% as an additional service charge. If I have a cup of coffee, someone will have to make it, bring it out to me, provide free sugar or sweetener, clear the table after I’ve left, and the cup, saucer and spoon will have to be washed. A café-deli like this has two separate functions: one is to provide a meal and drinks service; the other is to retail goods which may or may not have been made that day.This second function is no different to what the dairy next door is doing: selling a product which has a marked price, handing it across the counter and taking the money.

    In the end of course the customer has a choice. Judy and I could have gone to half a dozen other cafés in the area who aren’t adding the 15% surcharge. The café owner also has a choice: to charge the extra 15% and risk some loss of good will and possibly future custom – or not. I guess that’s what they call ‘the market’.

  4. Don’t worry , Brian..when they hear about this blog you’ll get a freebie next time you drop in so you’ll end up square :-)

  5. It’s ubiquitous. Saw a guy on the pavement today with a sign asking for money and at the bottom was written, “15% holiday surcharge, please.”

  6. Jake, here is some advice for free. Instead of alienating your customers with a surcharge, do a proper budget at the start of each year, work out how much your public holiday wages are going to be for the year, and build this into your cost structure for the whole year.$7,000 in extra wages for public holidays over 300 days that you are open (assuming a paltry one day off a week)is just $23 a day. Don’t forget that you are not a monopoly. There are lots of other place for your patrons to defect to. Once they go, the odds are not that good that they will return.

    BE: Now that sounds pretty sensible to me.

  7. Brian, how about looking at it a different way. You and Judy could think – we are happy to pay a little bit extra so the people serving us are being paid the little bit extra to work on a public holiday. I don’t agree that employers do it, I like others think the employer should wear the extra wages and not pass it on to customers. It’s BS really. And, you could always let the owner know you are unhappy about it. I’m sure they dont want to lose regular customers. There are plenty of cafes that dont charge the extra.

  8. Exactly. I’ve never figured out why businesses don’t work out the budget for the year and amortise it across the year, with an average daily cost thus figured out. Then the regular and irregular customers can simply drop in as usual no matter what day it is. Surely that’s a better service/ambience.

    Then again, I’m no businessman…

  9. Rather good points made by Peter and the alarmingly named “WAKE UP” that businesses could – and should – simply factor the public holiday wage expenses into their annual wage budget.

    Also, fair point Brian that what you were complaining about *in particular* was not a Cafe (with all its associated labour costs) charging a surcharge but an over-the-counter deli, which, as you point out, should be behaving just like the dairy next door, it ain’t got tables to clear nor dishes to wash. I can only agree with you on that.

  10. @ WAKE UP (and Peter)

    “Exactly. I’ve never figured out why businesses don’t work out the budget for the year and amortise it across the year, with an average daily cost thus figured out”.

    Hmmm. Seems like good advise, but I’ll pay Devil’s Advocate…

    Possibly because the poor old cafe owner, usually a small family business, has a shortage of time and energy to accurately forecast and factor in yet another complication, along with other administrative costs like PAYE, GST, ACC, Health & Safety etc., into their medium term/annual profit and loss equation. Is part of the reason Labour’s “no GST on fresh fruit and vege” was such a dog of an idea among those who know how death-by-a-thousand-cuts works for small businesses.

    Instead, it is far easier and less-risky to recoup the cost on the day it is incurred.

    Less risky that is until the owner remembers, as BE rightly speaks for many customers “the slightly sour taste in our mouths will probably disappear”.

  11. Marketing 101. Suggest to the owner that he puts all his prices up by 15%. On every day that isn’t a public holiday he then presents you with an account showing a 15% discount. He would end up in the same position but everyone, but an accountant, would view him in a more favourable light.

  12. 12

    The surcharge is utter bullshit.

    The businesses that follow this practice do not deserve to be in business.

    The underlying causation depends on hourly pay rates and paid days off in lieu.

    This has been a constant factor in NZ industrial relations for many, many decades. I would need to check but I think it goes back (at least) to 1950’s.

    It is nothing new.

    There are, at maximum, 11 days out of 365 that are involved.

    Anyone preparing an annual business plan/budget that cannot factor that minor event into their plan does not deserve to be in business.

    DO NOT SUPPORT THEM!

  13. Well, in Jake’s model the cafe/deli is out by $720 before he opens his doors – that’ll mean he has to do at least an EXTRA $1500 in trade that day just to break even, so it doesn’t look too pretty from that point of view: that’s a huge ask, even for a Ponsonby cafe, serving a public, half of whom expect he’ll be shut anyway.

    The fact that your enchilada was simply bagged doesn’t, of course, mean there was any less work for someone along the line, Brian: someone had to make it, and someone had to clean your share of the tray it came from.

    The owner has two choices if he’s going to stick to the law: open and pay the $720, or close and give his staff $480 for staying away; and what REALLY sticks in the craw is the employer must pay a day’s pay to his staff on those holidays when he’s not even allowed to open!

    No wonder most of the cafes, and nearly all of the dairies and takeaways, are owned by immigrant families where tax, GST, holiday pay, minimum wage are often not considered barriers to entry.

  14. Oooopssss!

    “open and pay the $720″ of course means “open and pay the $1200″.

    Silly me!

  15. I’ve always thought that the surcharge is based on two fallacies. The first is that all of the costs of running a cafe or whatever are attributable to wages which are higher on public holidays. That’s obviously nonsense. Even if they were that would not amount to anything like 15% extra. The vast majority of business costs are actually incurred on a fixed standard basis no matter what day of the week it is. The second fallacy is an apparent belief that all cafe owners anxiously add up their takings at the end of each day to establish whether or not they have met their costs for that day and if they don’t then they are out of business. This too is nonsense. Cafes set their prices over much longer periods and these even out over the accounting year to tell you whether or not the businesses in question (like all other businesses) made a profit or loss for that year. This is simple Accounting 101. In fact the surcharge has always seemed to me to be an attack on collective bargaining i.e. it seems to be saying: if workers insist on being paid collectively a decent wage and a bit extra for having to work on public holidays when all the rest of us are doing R&R then we the cafe owners are going to punish you the consumer by making you pay more. Eventually, the thought seems to be, this will have a political effect and lead to governments which will ‘deregulate the labour market’ i.e. oppress workers, further by abolishing any extra pay or days off for working on a public holiday.

  16. I dont begrudge the employees their penal rates for working on a public holiday.Although I agree there are better ways to fund the extra wage costs I m ok with the 15% surcharge-if it is actually used for that purpose .Im interested at how the figure of 15% was arrived at.

  17. I am a former restaurant owner and feel no sympathy for the cafe owners that feel so hard done by that it is necessary to add a surcharge.

    Another factor to consider is that cafes and restaurants have significantly higher patronage during these public holiday which will cover the cost of penal rates on wages.

    On those days earlier in the week when we didn’t have a full house we didn’t throw a surcharge at customers because our ratio of staff cost to seats occupied reduced our profit margin.

  18. @peterlepaysan:
    “The underlying causation depends on hourly pay rates and paid days off in lieu.
    This has been a constant factor in NZ industrial relations for many, many decades. I would need to check but I think it goes back (at least) to 1950′s.
    It is nothing new.”

    Not so. Penal rates go back many years, but paid days of in lieu appeared relatively recently – certainly no more than 15 years ago.

  19. 19

    If the food was prepared fresh that day then the surcharge is justifiable, otherwise not.

    So the only question is whether you prefer to pay it all on one day, or spread across the year. As a regular customer who would pay either way I don’t understand why that is an issue for you?

  20. Tony Simpson:

    “if workers insist on being paid collectively a decent wage”: mine don’t – they’re not unionised, and not collective. They’re all on different rates which match their place in the pecking order. The holiday pay business is not, as you so quaintly put it, about collectivism, a fair deal for the undertrodden, and “wot abaht va workers?”, it’s about the law.

    “a bit extra for having to work on public holidays”: I don’t call a 250% increase from the previous Monday’s pay to Easter Monday’s pay ‘a bit extra’ – I call it ‘a helluvalot extra’, and a punishment on the stinking rich, milk-the-poor and crush-the-working-classes bakery owners.

    Having said all that, I don’t charge a surcharge myself at such times.

  21. Zinc @
    Sounds almost feudal

  22. Total nonsense, the whole notion of running a business is to be aware of your costs, 15% as a surcharge sounds more like as easy way to profiteer.
    Brian, if it was me with the wife kids, I’d have got up and walked, if I was on my own, the manager would have got a flea in their ear.

  23. Zinc – where do you think the law to which you refer came from? The work of altruistic and generous employers? I don’t think so. If your own employees are not in a union then that is their choice but they should be aware that they are free loading on those who organised collectively in the past to improve their working conditions. Of course it could be that they don’t feel entitled to take the benefits obtained for them by past workers who did join their union and turn down penal rates and days off in lieu as a part of their ‘choice’ not to join the union.

  24. 24

    No-one wants to answer my question above, so let’s take logic further.

    Consider Cafe Blanc whose usual clientele are virtuous tight-assed socialists (VTaS) who strongly support generous holiday pay legislation to protect workers from the evil worker-exploiting capitalists (EWeC). M. Blanc serves his VTaS lattes for $4.50 but on public holidays he charges 15% surcharge so they cost $5.20. However, on those days most of his customers are not regulars but people out enjoying themselves on their holiday by doing something different somewhere else and by and large happy to pay what it costs. Some of his regular VTaS customers do come in and squeal like stuck pigs at the surcharge. A few even go down the road to Cafe Noir.

    At Cafe Noir, M. Noir serves mainly the evil worker-explointing capitalists who are resigned to the fact that every law Parliament creates costs them money. M. Noir charges $5 for his lattes and with the extra margin pays for a little better premises, more glossy furniture and covers the holiday surcharge for his staff. So M. Noir serves the visiting VTaS customers on the public holiday with a quiet smile because he knows that they will disappear next day when they can buy their latte for $4.50 down the road again.

    At the end of the public holiday, MM. Blanc and Noir both go home happy, the EWeC and holiday-makers go home happy, and the VTaS go home still squealing.

  25. “Zinc – where do you think the law to which you refer came from? The work of altruistic and generous employers?”

    No, Tony – it came from a Labour movement which confused, ownership with wealth. My staff don’t see themselves as free-loaders – none of them was aware of the Holidays Act and most of them wouldn’t care if they get paid extra or not, but neither they nor I can opt out of the law.

    Praise the Lord for the labour movement for stopping us sending 8 year old kids up chimneys and down coal mines a million years ago, but the modern business world is full of examples of unions negotiating such great deals for their idle, slack-arsed workers that either they get sacked or the company goes to the wall, and everyone ends up having to eat their golden goose.

    @pjr – It IS feudal – the way Tony has it! Lol!

  26. If the coffee shop was levying a surcharge, they should state that by way of an easily-recognised notice, before the customer orders and certainly not at the time of paying.

  27. Somewhat of a comedown having to answer your own questions isn’t it Alan? Do you also explain the jokes punchline?

    Perhaps that ‘EWeC’ Hekia Parata should stop being a ‘VTas’ and meet the ESG for a coffee or two!

  28. 28

    Kat, I’m glad you think I answered my own question. So I really do understand the VTaS mindset – that laws to benefit workers shouldn’t cost themselves anything, whether spread out across the year or just on the days they are incurred.

    If I were Hekia, I would make the ESG a simple offer: come up with realistic, evidence-based proposals to improve education within the existing budget and I will meet with you at Cafe Noir and even pay for the coffee and a bun.

  29. Im not sure you understand the mindset, specifically the use of virtuous.The TA Socialists you write about seem to lack it.

  30. Hekia Parata is out of her depth. Even more so than Tolley was. And it appears 80% of New Zealanders think it is the ministers job to “come up with realistic, evidence-based proposals to improve education within the existing budget”.

  31. 31

    pjr, ah, but they occupy the moral high ground because they believe in always supporting the poor and the workers – just with other people’s money, not their own.

  32. @ Alan Wilkinson

    Judging by Kat’s response to your amusing post (but not necessarily accurate – let’s leave that out of the equation), would I be right in assuming we can agree that neither the market, nor government regulation can bestow a sense of humour on some people – especially when the joke is at their expense?

    Typical – some people always want someone else to pay! :)

  33. 33

    Kimbo, my simple mission in life is to teach the VTaS some economics. To bestow a sense of humour as well is a step too far.

  34. Fair enough.

    So if we make it “pot luck” we’ll leave it to others to bring the sour dough?

  35. Alan, you would be best to pick another ‘mission’ other than economics or humour, maybe just common sense could be worthwhile. You may even convert Kimbo!

  36. “Alan, you would be best to pick another ‘mission’ other than economics or humour, maybe just common sense could be worthwhile. You may even convert Kimbo!”

    Thanks – sour dough supplied as requested, with a hint of a bitter taste, and unseasoned with wit – and from the usual and expected source!

  37. Alan, forget trying to convert Kimbo, just feed him more of that ‘EWeC’ black humour!

  38. he he he.

    That’s better. Now we get a song with our supper.

    Slightly off key (and from Kat we can always guarantee it is well and truly always off-Key). Also slightly strident, but nevertheless impassioned, appealing to nebulous but emotive sentiments such as economic-nostalgia, Dickensian villains, and the possibility of everyone sharing freely without the need for nasty and unhappy things like profit and competition in a gumdrop world of raindrops on roses and whiskers on kittens…

    I’d offer to broker a deal for Alan Wilkinson to be your manager, Kat, as you certainly have a consistent and distinctive singing voice. However, I fear you would mistake opportunity for exploitation.

    But thanks nonetheless for the song.

  39. 39

    No, Kat, unfortunately common sense has been obsoleted by socialism and replaced by blind rule-following.

    For example, my local council is most upset that I didn’t invite them to do a “final inspection” of my sewage connection to their new system (which cost $20M instead of their budgeted $3M.)

    I, on the other hand, consider a “final inspection” of a sewage connection that is entirely and invisibly buried underground more than slightly pointless. They would then have demanded the qualified drainlayer with a lifetime of experience who did the work provide them with a total guarantee for his work – and thereby total legal butt-protection – upon which they would condescend to issue an official Certificate of Compliance.

    Regarding none of that as contributing one iota of value to the human race I have told them to get stuffed. Here endith the first lesson on common sense for you.

  40. Yes, Alan, but I fear that your attempt may be fruitless without the quick addition of lesson two: –

    The problem with common sense is that it is actually not that common, and reception of the lesson communicating aforesaid common sense is not determined primarily by the clarity of the lesson, but rather the pre-disposition of the recipient.

    Here endeth the second lesson on common sense for you. Do I hear a familiar singing voice warming up in the wings, preparing a response?

  41. Dear Alan, I agree with you totally on that one, the sewage stuff, Kimbo etc, its all just small mindedness & petty bureaucracy gone mad isn’t it?

    And the present Key & Co National govt just keep dishing up more of that ‘compliance’ or ‘else’ that forces local councils to make our lives miserable, eh what? Oh for those #8 wire days when we could just fix-it ourselves.

    Bugger it, we should never have complained back then about those dammed hippies polluting the countryside with their long drops and composting odours.

  42. There’s worse. In one coffee bar on Willis St they don’t tell you about the surcharge or have a sign that there is one, they just add it to the bill.

  43. Although councils may seem ,and are ,pedantic at times ,ensuring safe disposal of sewage and checking that tradesman have done a proper job isnt one of them.A quick veiw of Target and personal experience have taught me that.The adage of measure twice cut once applies here.(Sounds like common sense to me)

  44. 44

    pjr, I am sure my drainlayer knows a lot more about drains than a Council building inspector who anyway already inspected the connection when it was still visible. There is absolutely nothing to be inspected now except my garden.

    That is common sense.

  45. Why do you abhor the fact you were ‘forced’ to pay an additional 15% on the purchase of a good or service, but have little to say on the employer who is forced to pay an additional 50% to a worker on a specific day when, ceteris paribus, the worker may have worked for standard rates?

    Your logic is loaded.

  46. @ Andrew M: Brilliantly put, Andrew – except that it’s not 50%, it’s 150%, considering an alternative paid day’s holiday in lieu is the obligation.

    The employer can’t even save himself by staying closed for the day because the staff STILL get a day’s pay for doing nothing.

  47. Zinc,

    Do you begrudge having to pay your workers to give up THEIR holiday to come into work?

  48. 48

    millsy, Zinc doesn’t pay his workers to give up THEIR holiday to come into work, his customers do.

    And, as I pointed out, the VTaS hate doing so.

    If the customers won’t pay, Zinc can’t – but the VTaS think his money grows on trees.

    (I use the word “think” figuratively there.)

  49. So Alan, you think that workers should not be paid extra for working on a public holiday?

  50. 50

    millsy, no, I’ve never said that. I think terms of employment are best left to individual workers and employers to sort out and that the State should be involved only to protect health and safety and to ensure contractual obligations are freely entered into and are honoured.

    However I do note the immense hypocrisy of those who claim to advocate for workers rights but then complain about paying the cost of those rights. I have never complained about the holiday surcharge and pay it happily for good service when required.

  51. So you think that employers should not have to offer their workers paid sick leave, holiday pay, etc.

  52. 52

    That’s right. Just as self-employed and contractors have to manage their own needs – and do in various ways. Every time you make something compulsory you create inefficiencies and injustice because central decision-making is never aware of all the possible factors that exist locally.

  53. Cool, good to know that you would happily force people into complete and utter hardship.

  54. “Do you begrudge having to pay your workers to give up THEIR holiday to come into work?”

    No, Millsy – they don’t have to and shouldn’t be forced – but 250% of their usual fee is unreasonable. And if the business is closed anyway – why would I HAVE to give them a day’s pay for not being there?

  55. So you don’t want to pay your workers on public holidays then? Do you wish that you didn’t have to pay your workers anything?

  56. Most petty surcharges result in customer dissatisfaction. Imagine being told a cup of coffee is $3.50 biut then being told to pay an additional $0.20 cents per teaspoon of sugar – arguably justifable (sugar is not free) but most folk would think that is petty.

  57. 57

    millsy: “you would happily force people into complete and utter hardship”.

    Good to know you will spin any nonsense to suit your prejudices. Are you sure you don’t work for Fair Go?

  58. No Millsy – it’s like this: they turn up when they want to and I pay them for what they do. If they want a day off – any day – they ask for it (this means “they just let me know so I can find someone else”) and are given it – and if I didn’t give them the time off they’d just take it anyway. But pay them for not being there at all sticks in the craw.

    As an aside, your campaign against capitalist exploitation may suffer a little when I tell you each of them had at least 2 pay raises in the last 12 months before any of them needed to ask.

  59. I refuse to pay a surcharge. It seems to me that it’s one of those things that is charged because they can. Like letting agents who charge a “letting fee” just because they can, not because they’re providing an extra service. I either don’t eat out on public holidays or go to the cafes that don’t charge extra. It is really about perception and I don’t like feeling like I’m being ripped off. I will remember the places that don’t charge a surcharge and go to them in future. Good will goes a long way in my book. I am also own a small business owner and would never treat my customers like that.