NYC restaurants will be charging up to a 10% COVID-19 surcharge to restaurant checks

Would you pay more to dine out?

The New York City Council approved a bill that will allow restaurants to charge a COVID-19 recovery surcharge of up to 10% to help eateries struggling during the coronavirus pandemic. Restaurants will have to let diners know about the “COVID-19 Recovery Charge” before they order food. The charge expires 90 days after full indoor dining resumes.

City Council Speaker Corey Johnson said, "When the cold weather comes, and if they're not at 100 percent capacity, which I doubt they'll be at, we need to think about a variety of ways to support them." 

The bill's prime sponsor, Councilman Joe Borelli of Staten Island, explained, “Now that they are stretched to the max, New York’s restaurants can now join every other city in the country and transparently ask their customers to pay into their recovery, without having to hide costs into their pricing.” “This is an option the restaurant industry long sought to deal with rising costs.”

New York City Mayor Bill de Blasio expressed support for the legislation. According to reports, restaurant owners can put the revenue toward any aspect of their operating costs. The surcharge can be up to 10% of the total bill, and cannot be used as tips for employees.

Some say the new bill was necessary to override a decades-old city law that prohibits restaurants from charging any fees beyond the price of food, drink, and taxes. Surcharges are already allowed elsewhere in the state and other U.S. cities, including San Francisco and Los Angeles. The NYC Hospitality Alliance, the city's leading industry group, praised the move.

"The passage of the COVID-19 recovery bill will help struggling restaurants generate additional revenue to help pay for expenses like PPE for their employees, outdoor dining setups, rent, labor, and other expenses to give them a fighting chance of survival," said the group's executive director, Andrew Rigie.

Once indoor dining is back to full capacity, restaurants can keep the surcharge for up to 90 days. Who will convince restaurants to end the surtax when the 90 days end? 

I have a feeling this surcharge may be permanent. When indoor dining finally returns to NYC, restaurants are only allowed to have 25% capacity. It’s one of the million or so ridiculous COVID-19 rules. Why not make the surcharge 75%? to make up the difference in revenue? I still don’t understand why businesses can’t have 100% capacity right now. What is the science behind the 25% limit?

Will people pay less in tips because of this tax?

I may be wrong, but don't people generally react negatively to surcharges? Why has the city intervened? Politicians think if you simply raise prices, you make more money. Judging by the quotes above, they seem oblivious to the elasticity of demand. Can't restaurants handle their price increases on their own? A surcharge looks like yet another tax. 

Sales tax+tip+surcharge(tax)=about 40% total increase on the sticker price of a meal. With all of these taxes and surcharges, your check may start looking like your cell phone bill pretty soon.

I read somewhere that all of the wealthy people haven't moved out of the city yet. The rich love it here and are sitting tight, waiting for things to open in 2087 or 2088. By then, the COVID-19 pandemic may be over. I also heard the super-wealthy who left because of the pandemic in March are dying to move back to the city that never sleeps.

They're the main ones who are ready, willing, and able to support this kind of thing, aren't they?

Are you?

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