Surcharges could be on the up as costs rise

Wednesday, 9 January 2019

There's broad support for public holiday surcharges in restaurants.

Getting out on a public holiday for a meal is often up there with beach going and a country drive, but why are some eateries adding a surcharge?

Hospitality New Zealand national treasurer Tony Crosbie said bigger cities, including Wellington and Auckland, were 'really hitting hard' with the holiday surcharge while operators in smaller cities were less inclined to charge extra or opting to close.

Closing in peak tourist time wasn't ideal either, he said.

Crosbie said during visits to Kaikōura and Blenheim over the Christmas period, he saw 60 per cent of the eateries shut for business.

'It's quite concerning because all the accommodation is chocka and a lot of people had nowhere to go.'

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Clare and Blue Fleming, owners of River Kitchen in Nelson, don't believe in passing on extra costs to their customers on public holidays.

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He said, where possible, eateries should be opening and passing on the costs to customers 'where they can' to allow for the increased cost of wages.

Many cafes and restaurants around Nelson were split on hiking up the prices, some justifying the percentage increase with covering wages and others not buying into it.

Nelson's Lambretta's Cafe Bar co-owner Ryhs Odey said adding a 10 per cent surcharge, which was lower than the standard 15 per cent, was necessary.

In accordance with Employment New Zealand, staff working on a public holiday are required to be paid at least time and a half, and if the day falls on a normal work day for the employee, they are also entitled to another day off on pay (day in lieu).

Odey said the costs were 'massive'.

The 10 per cent surcharge didn't come close to recovering the extra needed to pay staff.

'It's the days in lieu that kills you.'

Odey said there hadn't been any resistance from customers paying a little extra.

Comments on social media site, Neighbourly, showed support and opposition of a 15 per cent surcharge.

Lambretta's Cafe in central Nelson has a 10 per cent surcharge on public holidays to cover staff wages.

Opposing views included: 'I avoid any premises that [have] surcharges.'

'I also steer clear of eateries that surcharge on public holidays. As far as I am aware no other business type that opens on such days charge extra. So why do they do it?'

One in support of a surcharge said: 'When you have to pay time and a half plus a day in lieu I can understand completely why places charge or just don't open on public holidays.'

River Kitchen Nelson opens nine out of the 11 annual public holidays and doesn't increase the bill at the counter.

River Kitchen Nelson co-owner Clare Fleming said as an employer you've got to 'suck it up'.

'Before we had a cafe, I just wouldn't go to places that charge a surcharge. It just annoys me.'

She said more than half their turnover on a public holiday went towards paying staff wages.

'If we don't think we're going to busy enough to cover it, we don't open.'

Jellyfish restaurant and bar owner Debbie Lavery says they didn't apply a surcharge but increased costs may eventually force them to.

Fleming said the minimum wage going up to $20 in a couple of years might force employers to introduce a surcharge.

'Because at that rate, you might not have an option.'

Jellyfish Restaurant and Bar owner Debbie Lavery said she didn't apply a holiday surcharge 'as it deters customers away from the business'.

But aspects of running the eatery would eventually force her to bow to the surcharge, including increasing supplier and legislated compliance costs.

'Hospitality is a massive industry for New Zealand and a significant contributing employer, but margins are becoming further compressed and costs sky rocketing.

'Sadly something has to give.'

Crosbie echoed Lavery's views on hospitality demands.

He said hospitality was already a challenging business with compliance costs and the government's hike in the minimum wage would 'tip a lot of them over the edge'.

'You'll see it where they all close on public holidays.'

He said in Nelson, many open-for-business eateries had a local following and chose not to hit their customers in the pocket.

'They're just not doing it like we expected them to.'