On Saturday, the city’s plan to allow NYC restaurants to add up to a 10 percent surcharge to diners’ bills officially went into effect. Plans to add a restaurant surcharge have been in the works for a couple of years now due to rising costs for restaurateurs, but this particular surcharge is tied to the impact of the COVID-19 pandemic on the restaurant industry.
As a result, it attracted a lot more supporters this time, including Mayor Bill de Blasio who voiced his support early on for the measure when it was introduced in the City Council in September. For restaurants, the surcharge is meant to help pay for additional costs incurred by the pandemic like buying sanitizer or installing outdoor seating areas (though owners don’t have restrictions on how to spend the money), and the measure will remain in place until 90 days after NYC resumes indoor dining at full capacity.
Still, many in the restaurant industry are split over the surcharge. Some owners have already said they won’t be adding the surcharge in the hopes that customers aren’t deterred from eating out, and others like the organization One Fair Wage have argued that the measure has the potential to negatively impact workers’ tips, with diners likely to leave fewer tips with a surcharge on the bill.
With the surcharge measure now underway, here’s everything to know about it before you go out to eat.
The COVID-19 surcharge is optional
Restaurants don’t have to apply a surcharge, and some have already committed to not adding it onto customers’ bills. But when applied, the surcharges have to be uniform. A restaurant cannot charge different surcharge percentages to different customers.
For those that do use the surcharge, they can charge up to 10 percent, but it doesn’t have to be that amount. The Times previously reported that Lebanese restaurant Ilili in Flatiron plans to utilize a one to three percent surcharge, for example.
The surcharge needs to be clearly indicated
If a restaurant does decide to add on the surcharge, the percentage of the surcharge, and the fact that the restaurant is charging it, should be clearly indicated on the menu or an app, if the customers are using the latter to pay for in-person dining.
The surcharge — which also comes before sales tax on the bill — must be clearly identified on the bill as “COVID-19 Recovery Charge,” or “COVID Charge,” along with the dollar amount of that charge. Restaurants also need to disclose on the menu or elsewhere that the surcharge does not cover tips.
The surcharge can’t be applied to takeout and delivery orders
Regulations specify that the surcharge is only for in-person dining, meaning indoor and outdoor seating on-site at the restaurant, because the extra money is meant to offset revenue losses due to capacity restrictions. Owners can’t add the surcharge to takeout and delivery bills.
Not all restaurants can use the surcharge
Restaurant chains with more than 15 locations, including companies like Shake Shack and Chipotle, are excluded from utilizing the surcharge at their NYC shops.
Yes, you still have to leave a tip
The surcharge does not take the place of gratuity for front-of-house staffers. Unlike tips, revenue from the surcharge can be applied towards any area of the business that the owner sees fit, whether it’s buying plastic partitions for indoor dining or a tent for winterized outdoor dining.
Yes, restaurants can get fined if they don’t do this right
The city’s department of consumer and worker protection can levy fines of up to $350 per violation on restaurants if they don’t take the appropriate measures when adding a surcharge to a bill.