Minnesota’s Economic News – W/E 4/9/21
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Diners may find more offerings on the menu at an increasing number of Twin Cities restaurants these days but not necessarily the usual gourmet fare. In addition to entrees, drinks and desserts, the tab now often includes a health care or other surcharge as restaurants seek to recover higher costs due to minimum wage hikes, paid time off and other costly new local government regulations.
The trend remained largely under the radar until a diner surprised by a three percent surcharge tacked onto the cost of his meal filed a law suit, according to the Star Tribune.
Christopher Ashbach, 40, of Arden Hills, has sued the Minneapolis-based Blue Plate Restaurant Co., alleging that it has concealed the “employee wellness” surcharge from diners before the bill arrives in order to avoid scaring off business…
The suit, filed in Hennepin County District Court, alleges that Blue Plate “has reaped hundreds of thousands of dollars in this scheme to defraud consumers by using the deceptive charge.”
Ashbach, a commercial airline pilot and self-described foodie, spells out in his lawsuit that he suspected he was being deceived during a visit last month to the Freehouse, in downtown’s North Loop.
The Twin Cities restaurant chain disputes the allegation over disclosure of the wellness fee.
Public relations consultant Blois Olson, speaking for the restaurant group, said the mandatory surcharge is disclosed to customers.
“Blue Plate says it has had the surcharge information on the menu since they began charging [the] surcharge in June,” Olson said.
The Pioneer Press compiled a list of the creative names eateries have dreamed up to give diners indigestion over the expensive new fees.
The surcharges are spreading like ants at a picnic, and they come with an array of justifications: to help pay for real estate, raise wages or even fight climate change.
In the metro area, a 3 percent fee for health insurance is becoming more common, and add-ons appear for credit card use, takeout food and use of certain rooms. They are on top of sales taxes, special restaurant taxes and, of course, a tip.
Some establishments may be imposing surcharges, rather than raising prices on entrees and other dishes, as a way of calling out the reason behind the increased cost of eating out.
Struggling restaurants are seeing how many extra fees their customers will tolerate.
“This is an experiment in the industry,” said Ben Wogsland, director of government relations for Hospitality Minnesota, which represents restaurants and resorts.
Why don’t restaurants just increase prices?
Wogsland said most restaurants believe higher prices will drive customers away. But he said most customers don’t know how endangered restaurants are.
There’s no indication local governments have a clue when it comes to the impact on the restaurant business. But the higher cost of doing business due to more local regulations certainly factors into a noticeable turnover in Twin Cities restaurants lately.