The Surcharging Debate

Media Release

The Surcharging Debate

Auckland, 5 February 2013 - This week restaurant and café operators up and down the country will face a choice as they do on every statutory holiday. Should I open?

For many it’s not an easy decision, says Restaurant Association of New Zealand Chief Executive, Marisa Bidois.

“The Holidays Act requires significant additional payments to employees who work on a public holiday* which means restaurants and cafes face additional costs if they open on a statutory holiday,

“It’s often a no-win situation. Many restaurants have put public holiday trading in the financial ‘too hard’ basket. They would love to open, but the reality is that costs of operating on public holidays are significantly higher, and many that do open, run at a loss on those days.

“With slim margins (roughly 5%) and labour costs sitting at a third of all costs. It’s not hard to see why some operators might seek to recover their costs either directly or indirectly, and why others choose not to open.”

Those restaurants that do open are divided on surcharging. Competing schools of thought advocate user pays, meaning that those who wish to dine on public holidays pay extra for the privilege, and the other approach sees everyday prices rise across the board, so that all diners bear the cost of holiday dining.

In Australia, the Federal Government is about to reverse its position on weekend and holiday surcharging, says Bidois.

“Previously restaurants had two different menus, one for weekdays and one for weekends and public holidays, which had higher prices as restaurants were not allowed to impose a surcharge.

“After many years of lobbying, Restaurant and Catering Australia were successful in removing the two-menu system. They argued that it made things more difficult for customers and businesses alike. Soon restaurants will likely revert to a one menu system and apply a surcharge on those days (weekends and public holidays) where costs are higher.”
In New Zealand, it would be fair to say that the majority of customers are against surcharging. But is it right to charge all customers more, to accommodate the few that choose to dine on public holidays?
Bidois says that’s the dilemma facing the industry.

“User pays is nothing new in New Zealand. Call out fees for after-hours work and other similar charges are common practice in many industries including the trades. It’s up to consumers to decide whether they really want the plumber at 7pm at night or if they can wait until normal business hours.

“Likewise, Waitangi Day diners have clear choices when faced with a surcharging situation. Regardless of whether they leave for another venue, stay and pay or perhaps even not go out at all, the most important thing is to have the choice and convenience dine out on a public holiday,” says Bidois.

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The Restaurant Association of New Zealand, an industry body representing more than 1800 hospitality businesses, predominantly cafes and restaurants. The Association provides essential support to members, and advocates on behalf of members. The Association was formed in 1975 with the aim of assisting business owners in the restaurant, café and catering areas of the hospitality industry.

* The Holidays Act (s 50) requires employees that work on those days:
• an hourly rate of at least time and a half
• An alternative holiday must be provided if the employee works on the public holiday, and that day is a regular work day for that employee

ENDS

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