From environmental surcharges to wellness fees 'tipflation' on restaurant bills is driving customers nuts

8 months ago 5

D.C.'s attorney general is warning against "deceptive" restaurant fees. But WUSA9 found some restaurants will remove them if asked.

WASHINGTON — Go out to eat in Washington, D.C., and you might have noticed something new on the menu.

Restaurant fees.

A taqueria on Capitol Hill called it a 2.5% environmental surcharge. A empanada shop on 14th street called it a 2% supply increase fee. Other restaurants visited at random by WUSA9 charged fees ranging from a 5% administrative fee for COVID recovery expenses, to a 4% “wellness fee” for an “employee benefits program” and a 5% “restaurant recovery charge” to “help cover pandemic related losses and debts.”

Sarah Stella was so confused by it all she started a spreadsheet on Reddit to keep track which is now up to 143 entries and counting. The open-source spreadsheet includes the restaurant name, amount of service fee and the reason for it, in addition to notes about whether the fee was properly disclosed.

What Stella wants to see changed is a standardization of the language being used to explain these fees. 

"I think that a lot of places, they're not trying to be deceptive," she said. "But you know, this is kind of, like, new territory for everyone. So, you know, if there was something like, okay, you don't have to use this language, [or] here's an example of what we think is like, good, clear language. Let's just like settle on one or two names." 

In response to growing frustration among customers, much of it on social media, DC Attorney General Brian Schwalb issued a consumer alert warning DC restaurants against charging deceptive fees by:

  • Burying the fee in fine print
  • Failing to disclose how much the fee is until the bill comes
  • Using the fee for something other than what they say it’s for
  • Using ambiguous or misleading language about how the fee will be use

“We were receiving complaints from people in the community who were receiving bills, fees that they either didn't understand that were confusing and vague, or fees that they were not alerted to before they ordered,” Schwalb said.

Schwalb said under the law, restaurants are within their rights to charge the fees, depending on how they do it.

"There's no prohibition against restaurant owners charging fees to their consumers," he said. "What the laws require is that those fees be clearly and transparently disclosed to diners and consumers, before they make a decision whether to spend their money.”

During a visit to Colada Shop, a server explained a 2% supply fee to a WUSA9 reporter (who had ordered food but did not say he was a reporter) by saying, "Everything has become more expensive, so it's kind of just to offset, like instead of raising all the menu prices, to like offset the costs, the higher costs of the ingredients.”

Colada Shop Director of Operations Adrian Cane told WUSA9 management had debated whether to increase prices or just add the supply chain fee.

“In the interest of transparency, we decided to add that fee as a temporary solution," Cane said.

Cane said some of the cost increases they've seen apply to paper goods and cleaning supplies, which he said is harder to quantify to customers. The hope is to eliminate the supply chain fee as soon as possible, Cane said, noting managers are instructed that anyone who objects to the fee will have it removed.

"Our primary motivator is to make people happy and if they are not happy we will do what we can to fix that," Cane said.

Micheline Mendelsohn, Owner of Sunnyside Restaurant Group which operates Santa Rosa Taqueria, said the 2.5% environmental fee charged to customers helps with the "environmental offset" of the paper products they wrap carry out food in.

"We plant a tree a day, use recyclable goods and cleaning supplies," Mendelsohn said. "We’re always happy to take the fee and refund it a customer asks but I think in all our years of business we’ve had two customers ask that. Some customers even join us in planting."

Mendelsohn said the environmental fee has been in place since 2008 and is not pandemic related. She said her restaurant has “gotten lumped in lately" with debate over the increase in restaurant surcharges noting they "have never added an additional fee” beyond the environmental fee.

Shawn Townsend, president and CEO of the Restaurant Association of Metropolitan Washington, said the fees are a product of a restaurant industry still reeling from the pandemic, as well as anticipation of tipped worker wage increases approved by voters set to begin phasing in this May.

“I do see more service fee service charges,” he said of the increasing number of D.C. restaurants charging fees. "It'll be labeled in a number of ways.”

Townsend said the restaurant association is working with the DC Council on language to bring uniformity to restaurant fees in the district.

“I don’t want to go as far as saying we need more regulation,” Townsend said.

The office of DC Councilmember Kenyan McDuffie tells WUSA9, “The Committee on Business and Economic Development is actively looking at this issue to decide the best path forward for our residents and local restaurant operators.”

But Schwalb said there’s nothing in the consumer protection laws that require uniformity with these restaurant fees.

“What's important here is that restaurant owners can charge different service fees and they can call the fees different things depending on how they want to run their business,” Schwalb said. “They just have to make sure that their consumers know in advance what they're paying for.”

Until then, customers are left to figure it out on their own.

When a WUSA9 reporter questioned the server at Proper 21K about the 5% administrative fee added onto his bill, the restaurant agreed to take it off.

When we asked about a 2% “supply increase fee” at Colada Shop, the server said it’s possible to not pay the fee, but only if you ask the manager before you order.

Schwalb said while a diner can always ask to have a fee removed, it’s up to the owner or manager if they want to do it. A small number of restaurants put right on the menu that the service fee can be removed, upon request.

The attorney general said the best way for customers to protect themselves is to remember, restaurant fees cannot be hidden; the fees need to be clearly disclosed in advance.

Anybody who feels that they were surprised or misled by a fee on their bill should contact Schwalb's office and file a complaint.

“When you go into a restaurant and order a steak, the Attorney General is not saying how much money you have to pay the butcher,” said Rich Bianco, a restaurant and hospitality attorney in the District.

Bianco said Schwalb is going too far issuing the consumer alert warning restaurants about violating consumer protection laws by charging fees.

“There are no fewer than five regulatory agencies that hospitality establishments have to deal with,” Bianco said, adding guidance should “come from any one or a number of them.”

Schwalb defended his office’s role in fighting deceptive restaurant fees.

“Anytime you're at risk of being taken advantage of, it's part of the job of my office to protect [consumers],” Schwalb said. “And we're going to continue to do that."

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