Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 40 original podcasts with new episodes released every day.
Nickel and Diming Us
I’m well aware that many businesses, especially restaurants, are still struggling in this economy. I try to be fair with the tips we give (15-20%), unless we get terrible service. But lately I’ve become annoyed at the stupid decisions that some restaurants are making—stupid, because they alienate their customers. I know, too, that they are trying to keep prices down, and we have tried to be understanding when we see them going up. The cost of everything seems to be on an upward trajectory.
The two most recent incidents were not far from home. The first was a visit to a new Ford’s that had opened up nearby. We’d been to two other facilities of theirs and enjoyed their hamburgers. But when we walked in the door, we were told up front, before we were even seated, that there would be a 15% surcharge. I didn’t even ask if that would go to the server. We turned around and walked out.
Ridiculous.
Last night, however, we went to a restaurant here in our development. I have to admit I was a tad bit annoyed that we didn’t get our drinks until most of the way through our meals, but that wasn’t my issue. Stuff happens. But when my husband checked over the tab, there was a “Convenience Charge” of 3%. Excuse me? We asked the waiter to explain, and he said that was the charge for using a credit card. Seriously? He quietly told us that we could buy a gift card and charge it for our meals, but we’d still need to make the tip in cash. By the way, the 3% charge this time was only $1.47.
Good grief. We have gone to this restaurant periodically for almost 20 years. The food is decent and the site is only five minutes away. I understand that the restaurant has to pay a fee to the credit card companies. But we live in a 55+ community, many of them from New York (sorry if that insults you) and when they see that charge, they are going to have a fit. I didn’t take my annoyance out on the waiter—he’s just doing his job. But a convenience fee?
Give me a break.
Published in Culture
The 15% surcharge is something we see around here for large (6+) parties and makes a certain amount of sense in terms of efficiency. That doesn’t make it any less annoying.
The “convenience” fee is the restaurant passing on the cost of doing business via credit card. The restaurant itself has been paying that for every credit card transaction all along. The restaurant in question is probably not doing terribly well financially.
I don’t think it’s necessarily for efficiency. I have noticed over the years, that when some people are in a larger group, they tip cheaply. Maybe they think they have cover, won’t be noticed by others, and maybe not remembered by the server as the cheap one. These are just guesses, but it is behavior that I have seen.
And, of course, handling larger parties is quite a bit more work for the servers.
For the record, we expect the surcharge for large parties (which we were not).
Dropping that charge on everybody is not a smart move.
There are many small businesses that have been passing on the fee charged by the credit card companies. Our favorite bagel place started with a sign that asked people to use cash, and now (after two years) posts two different prices for items. Some customers pay cash, some use a card. The difference in price is mere pennies. My horse barn/trainer accepts credit cards, or you pay by check/ACH withdrawal and avoid the credit card fee charged by quickbooks. I have no problem supporting small businesses in this way. I also enjoy using cash as a way of keeping a bit of privacy in my life; I clearly recall de-banking for wrongthink that happened in Canada.
As you know, we went to this restaurant every Friday for Date Night. Before we moved, we started tipping the servers in cash because the management began making them wait until the end of the month to get their tips.
In addition, historically whenever the development clubs used the Ballroom for large parties and banquets, management added a service charge (perfectly reasonable) which they had always divided among the servers. However, last year they changed their practice. They raised the servers hourly pay by a small amount and continued the service charge as if it were still going to the servers – but it didn’t. I’m sure you can imagine that the pay raise was much less than what the servers had been getting as their portion of the service charge.
It is not clear if this is a “mandatory tip” or if this is a price increase, before they were able to get new menus printed with revised prices. I would love a follow-up (perhaps a phone call to the restaurant) asking for an explanation on what that 15% is for.
I have seen a few diners (primarily breakfast joints) who had chalkboard notices that there will be an additional $0.25 charge per egg on an order, because of the increases in egg prices.
I get my shorts in a twist when the local Great Clips hair cutting joint has “suggested tips” on the check out screen that are $5, 10, and 15, when my haircut is typically $ 12. There is a “custom tip” button too, but there is a sense of guilt, as the hairdresser watches in real time, the numbers you put in.
Don’t have a problem with that, Haircuts and sit-down/table-service restaurants are the two main places where a tip is pretty much considered mandatory.
Let me explain, I have no problem leaving a tip, 3, typically, 4 or 5 if they were particularly pleasant or it looks Mahvelous. But, my issue is the dollar amounts, which amount to 33% 80% and 120% . or custom.
Small businesses can be charged over 5% by credit card processors. I used to pay upwards of $70K per year in card fees and we had a low processing fee because our charges were normally less numerous and higher dollar. I would not accept a CC for under $10. Today as a retired citizen, all I carry is a credit card and no cash. I often tell small businesses to charge me an extra dollar or two if I buy something inexpensive. But for a restaurant to announce a 15% surcharge is ridiculous. I would walk out too. It has been the case for decades that large parties have the tip as mandatory, but for 1 to 6 people…fagedaboutit!
It took some self discipline, but I’ve got tipping under control. For good service locally, I double the first digit. Got to take care of your neighbors. Outside my regular haunts, it depends but it’ll never go over 20%. And never tip for mere counter service – we need to break them of that habit.
Absolutely, we need to break the habit of eating and paying rent that all those servers have gotten used to.
We have come across more and more restaurants that charge that fee. Some even put the cash and credit totals right on the check to let you see the difference. Instead of labeling it a “convenience” fee, they should say what it is, a “credit card company” charge.
We pay cash for virtually all our restaurant meals, so we manage not to get worked up about it.
Actually, that would have worked for me. It just felt like they were trying to sneak it in–which they probably were!
But 15% is not what the CC fee is…not even close. If they were to call it a server fee, as is done for large parties, and the money goes to the staff, then at least I know that all, if not most, of the tip is included in the bill. Otherwise, they could call it a “We don’t want your business” fee.
To clarify, the extra convenience fee, which was intended to cover the CC, was only 3%. I think most CC companies charge 3-5%, but I’m not sure.
This is what I was referencing.
Credit card companies used to bring the hammer down on businesses that charged extra for using a credit card. They’ve never been able to police that policy 100 percent, but I see the differential advertised a lot more often now. Dunno if there has been a regulatory change that makes it possible, or what.
They didn’t add the charge separately before, which just meant it was built into the price – as with “free shipping!” – but you could still often get a discount if you paid cash.
Yes, that often happened, but they were usually careful not to advertise it. That seems to have changed.
I don’t have a problem with this. Times have been very inflationary of late and restaurants live on a thin margin. Better they tell you up front than put a note on the menu, which you would only see after you have settled into a seat and taken your glasses of ice water. I would have stayed.
Several local restaurants in the last five years (i.e., beginning with Covid) have started adding a “convenience fee” (generally about 3%) when using a card (credit or debit). One of them stopped a year or so ago. I’m not sure if it was due to negative customer feedback or due to the fact that the coffee shop switched to a different card processing service that may have a different fee structure. How the restaurants present the fee to the customer varies quite a bit. A 3% fee at a coffee shop when the bill is on the order of $15 – 20 is one thing, but at a BBQ/steakhouse when the bill is on the order of $75+ the fee becomes much more noticeable.
But locally it really surprised me when the very large local car dealer at which I get my cars serviced started a couple of years ago to charge a “convenience fee” for credit cards (though not for debit cards). My first encounter with the dealership’s fee was when I was buying $1200 worth of tires. Ouch! I am friends with a prior finance employee of that dealership. He tells me that the bank fees for debit cards are much lower than the bank fees for credit cards. But given that car repair bills are often beyond the cash customers have available at any moment, and that the banks will generate interest income on the transaction, a “convenience fee” for credit cards there seems nuts.
I am old, so I remember that eons ago (a few decades), restaurants resisted taking credit cards because of the fees. But then the restaurants were presented with data showing that credit card customers were bigger spenders than cash customers. So they began accepting credit cards (and absorbing the fees) to attract bigger-spending customers, benefiting the business overall.
I’m that old, too. We don’t use debit cards; gives them too much easier access.
You are correct. I had forgotten about that. My guess is that somebody won a lawsuit somewhere. Telling a business that they aren’t allowed to charge their customers extra to cover an extra cost seems like restraint of trade to me.
The merchants don’t get any of that interest, so Unless they stop charging the fee to the merchants, the merchants would be justified in recouping it.
I agree, but the way Susan described it, the restaurant did terrible job explaining. How about something like this:
“
In today’s high-inflation environment, we cannot keep changing the prices on our menu. We feel terrible about this, but we must add an additional 15% above the menu prices to cover our costs. This charge will be a line item at the bottom of your bill. Thank you for your continued support.”
When I was in business the credit card fee was 2 to 3% and a debit card transaction was $.35 cents. A lot has to do with the amount of the sale when feeling the pain of the fee. Most consumers had no idea that businesses paid a fee when the consumer used their card. Credit card banks worked very hard to keep the consumer ignorant. It really used to make me angry.
That would have made a big difference. We still might not have stayed.
People who don’t run a business have no idea of how much business owners pay for the convenience of credit cards being processed.
My small business pays 700 bucks a year in years when we are struggling and can pay three times that when doing well.
Many places don’t ask outright for the 3% as it is already factored into the prices of items being sold.
I support charging the CC fee to the customer. 3% is an absurd rent.