By Ben Walker, Contributor

Since the World Health Organization declared a worldwide pandemic in mid-March, tens of thousands of U.S. restaurants have shut their doors. Of the 26,160 restaurant closures, 15,770 restaurants are reported to have permanently closed, according to the Yelp Economic Average report.

As owners work to reopen their restaurants, they’re faced with new challenges and difficulties. Overall restaurant expenses have increased between soaring inventory prices and the implementation of safety recommendations from the Centers for Disease Control and Prevention. Keeping your restaurant properly sanitized, but reducing your capacity is sure to raise your costs, too.

In an effort to recoup money, restaurant owners have few solutions to choose from. Enter: COVID-19 surcharges. These are fees that are commonly seen as a percentage-based line item on a bill or as an increased price of service/goods. It allows owners to share the higher cost of doing business with customers. Implementing this type of fee can help businesses with their bottom line, but not everyone is happy about these new charges.

A FinanceBuzz survey about COVID-19 surcharges found only about 20% of Americans thought it was fair for businesses to implement a COVID-19 surcharge. However, if customers realize why the increased costs are happening, they may be more accepting of an added charge. For example, nearly half (47%) of respondents thought a COVID-19 surcharge was justified if it was used to help cover higher cleaning expenses.

Why Restaurant Expenses are Rising

Restaurant expenses have risen during the coronavirus pandemic.

From an outside perspective, it may seem simple for a restaurant to reopen and resume its normal business procedures, but things have changed in the restaurant industry since the pandemic. Restaurant costs are up and pre-COVID dining norms have become a thing of the past.

Here are a few contributing factors to rising restaurant costs:

Increased inventory prices: Food costs have increased by 38% during the pandemic, according to Business Insider. This includes an 87% rise in price for standard beef cuts, 81% for fresh ground-beef patties, and 23% for chicken breasts.
Following CDC guidelines: Restaurants are using social distancing guidelines, which means fewer customers inside and less overall revenue for the restaurant. In addition, sanitizing wipes, sanitizing spray, gloves, masks, and other supplies all cost extra money.
Third-party food delivery services: Restaurant delivery is in demand because it allows people to get food from their favorite restaurants while adhering to social distancing guidelines. This may have kept some businesses running while their indoor dining areas were closed, but it’s not always a highly profitable strategy for restaurants. As restaurants reopen, many owners will still have to rely on third-party food delivery services like Grubhub and DoorDash, even though the charges and fees cut into their returns.

How to Offset the Increased Costs

Restaurants can implement a COVID-19 surcharge to offset the riding expenses of operating during the pandemic.

It’s not easy to deal with increased restaurant costs during turbulent times, but restaurant owners can implement certain strategies to stay afloat.

Here are a few ways restaurant owners can offset their increased costs:

Charge a percentage of the bill as a line item. Because your increased costs are largely due to the coronavirus pandemic, it might make sense to add a COVID-19 surcharge to every customer’s bill. You didn’t have to pay for personal protective equipment (PPE) or as many sanitizing supplies before, so you need to make up the expenses somehow.
Raise prices. Alternatively, you can decide to raise your menu prices instead of charging a set percentage. It’s effectively the same solution, except customers may be more accepting of this method because it’s not tacked on as an additional charge.
Use business credit cards. When you use a credit card, suddenly your expenses become an opportunity. The best business credit cards provide excellent opportunities for earning rewards, such as cash back, on everyday business purchases. As an added bonus, these cards also make it easier to separate your business and personal expenses.

Using business credit cards is one of the best tools to balance out your costs, and it’s not at your customers’ expense. It lets you earn money back without charging anything more on your restaurant bills. However, that won’t always be enough. If you need to add COVID-19 surcharges and/or raise your menu prices, be sure to keep customer needs and expectations in mind.

Tips to Keep Guests Happy When You Add COVID-19 Surcharges

How restaurants can add a COVID-19 (coronavirus) surcharge to guests bills.

If you decide to add COVID-19 surcharges, it’s essential to maintain customer satisfaction as you try to offset your new rising restaurant costs.

Here are a couple of tips for keeping your customers happy while adding COVID-19 surcharges:

Communicate before service/purchases. Forty-three percent of FinanceBuzz survey respondents hadn’t heard of COVID-19 surcharges, and 49% of those who noticed a COVID-19 surcharge on their bill tried to dispute it. Having the right information and avoiding surprises is key. If you want to prevent customer frustration, let them know about COVID-19 surcharges before you offer them services or they purchase something.
Commit to making the surcharge a temporary change. Your customers need to know about the existence of COVID-19 surcharges, but they should also know the charges won’t last forever. Communicate with your customers about why the charges are happening and let them know your plans to phase out these charges. Social media posts, website banners, and in-store signs are great ways to communicate effectively to your customers.

Making money and keeping customers happy can be a narrow line to walk in the restaurant industry. With new CDC guidelines and inflated inventory prices amid the pandemic, you’ll have to tread carefully and rely on patience and understanding from your customers. After all, we are all in this together.

Final Words

As you look to maintain your restaurant operations during the pandemic, consider how you can find a happy medium between offsetting costs and keeping customers content. COVID-19 surcharges can help with your bottom line, but only if your clientele knows what they are and why they exist. Remember, you can’t keep everyone happy, but you can do your best while adjusting to life amid a pandemic.

About the Author
Ben Walker is a credit cards and travel writer at FinanceBuzz who loves helping others achieve their travel goals through financially-sound decisions. For nearly a decade, he has been using credit card points and miles for the sole purpose of traveling the world. Ben has been featured in The Washington Post, MSN, Debt.com, and Finder.com.