Food News

Nickeled and Dimed: The Era Of Dining Surcharges Needs To End

Maybe Apothecary should raise money for a bigger sign. Jk. The mystique is part of the appeal. But can the same be said for a 3% surcharge?
Maybe Apothecary should raise money for a bigger sign. Jk. The mystique is part of the appeal. But can the same be said for a 3% surcharge? Lauren Drewes Daniels
We’re ecstatic any time we hear about a restaurant paying its employees more, whether in the form of higher base pay or better benefits.

On New Year’s Eve, Lower Greenville restaurants Rye and Apothecary rolled out a new 3% surcharge on all guests’ checks. Walkabout Hospitality, which owns both establishments, says that the surcharge goes toward funding employee benefits, including health care coverage and paid time off. Next to the surcharge is a QR code, which directs diners to a list of the benefits being offered to Rye's full-time employees.

From that vantage point, Rye and Apothecary should be lauded for doing the right thing for their employees. Tanner Agar, one of the owners of Rye and Apothecary, told the Dallas Morning News that the owners believe the dining experience will be improved by the surcharge.

"You will have a better experience if you’re served by people whose whole lives are supported and who are able to go on vacation, take time off to see people they love, go to the doctor and get medicine if they’re sick, etc.,” Agar said.

We agree that happy staff in both the front and back of the house should make for a more enjoyable meal. We just wish that happiness weren’t contingent on a surcharge found at the bottom of guest checks. Agar was careful to frame this surcharge around the benefits it provides rather than as a blatant price increase, explaining that management is "focusing on our team," and it was a "really targeted decision."

To paraphrase Rick and Morty, that just sounds like a price increase with extra steps.

Don’t get us wrong; we’re all too aware of the fiscal challenges that restaurants face, despite a dining public still showing a willingness to eat out post-pandemic. According to a November 2022 poll by the National Restaurant Association, 89% of restaurant operators said labor costs were a “significant challenge”; only food costs (92%) ranked higher. As a result of rising costs, 87% say they raised menu prices.

Of course, raising prices comes with its own risks. Restaurants face an uphill battle against misinformed diners who truly don’t understand just how much it costs to run a restaurant. Labor and food costs make up two-thirds or more of a restaurant's receipts, with utilities, occupancy, supplies, general/administrative and repairs/maintenance accounting for another 29% of sales, according to National Restaurant Association statistics.

Sarah has 17 years of experience in the Dallas area as a host, server, bartender and manager. She asked that we use only her first name, lest her opinions clash with those of her current employer. Her thoughts on the surcharge echoed several other front-of-house staff we spoke to.

"The general understanding amongst those who work in service is that the job doesn't come with many perks or benefits, no paid time off," Sarah said. "You're lucky if you're offered things like health insurance, major holidays off, or a discount on food."

She thinks a surcharge that benefits the staff is a great idea.

"I'm all in favor of surcharges that go directly to the staff," she says. "A lot of people in the industry genuinely care about what they do and the people they provide experiences for, so when a company makes the conscious effort to extend that same compassion to their staff, it speaks volumes."

Agar tells us that at Rye and Apothecary this change covers 22 full-time employees, with another 14 employees who are part-time but able to earn some benefits.

"Before this went into effect only 12% of our team could afford, and had, health insurance," Agar says. "Now 100% of the team is covered. This program is incredibly successful with our team, and so far not a single guest has asked for the 3% to be removed."

While the benefits fee is the only surcharge that Rye imposes, diners are generally turned off by surcharges that clearly benefit the restaurant and not the staff. Credit card surcharges are popping up at more Dallas restaurants (despite Visa discouraging businesses from doing so).

Sue is another waitress who spoke to us on the condition of anonymity. While she supports efforts to provide benefits, she agrees that some customers are tired of extra fees. Sue is also suspicious of some restaurant operators who will find any way they can to pad the bottom line, even if it means taking advantage of their waitstaff.

Instead, the surcharge feels like a subtle jab at workers who are demanding to get paid fairly by an industry that has long outsourced their pay to the tipping whims of the customers they serve.

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"I would want to make sure that the surcharge really goes to the employees," Sue says. "I worked at a restaurant during the pandemic that used PPP [Payroll Protection Program] loans to pay us and withheld our tips, so I know these kind of things can happen."

We asked Agar if Rye considered a modest bump in menu prices instead of the surcharge. From Agar's point of view, the customer is paying for the program either way, so no one should be upset.

"The reason we didn't [raise menu prices] is because we felt this was a way to be more transparent with our team and our guests about what we're doing," Agar says. "Except for this charge is one you can opt out of so this is actually a more guest-forward policy despite what the critics are saying."

But there's the rub. The vast majority of Rye’s food menu would see an increase of less than a dollar per item had that been the approach instead of tacking on a surcharge. The price hike could have been built in and hardly anyone would have noticed. Instead, the surcharge looks like a subtle jab at workers who are demanding to get paid fairly by an industry that has long outsourced their pay to the tipping whims of the customers they serve. Agar tells us that no one has yet opted out of the 3% fee, but it's probably only a matter of time before someone does, then takes to social media to raise a ruckus.

We applaud Walkabout Hospitality’s altruism in taking steps to improve the lives of its staff. And we’re all for transparency while promoting this benefit both to their customers and to current and prospective employees.

But we can't help but think that the self-aggrandizing pats on the back for doing right by their staff is another example of shifting the responsibility of better treatment of servers to the customer. Rye and Apothecary could have accomplished these goals with a few truly modest adjustments to their prices, but for the one-time expense of some new menus and an update to their website.

Yes, a surcharge was probably easier. The trend of surcharging customers when they go out to dinner is one that we hope comes to an end sooner rather than later.
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Chris Wolfgang started writing about barbecue for the Dallas Observer in 2015, and became the Observer’s restaurant critic in October 2021. In his free time, he’s a dog owner, plays a mediocre guitar and is likely recovering from his latest rec-league sports injury.
Contact: Chris Wolfgang

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