From CNBC: 2024-08-24 08:00:01

Lawmakers are pushing to eliminate “junk fees” in restaurants, but establishments argue they’re necessary for financial stability. Statistics show a rise in service fees across the US, with 15% of restaurants adding them last year. Critics claim these fees mislead customers and reduce tips for staff, while advocates say they ensure fair compensation.

The Biden administration is expected to crack down on hidden fees in various industries, including restaurants. This move aims to enhance transparency and prevent businesses from deceiving consumers. Federal law prohibits employers from withholding tips, but service charges are considered company property in some states, creating potential wage theft risks.

Restaurant operators defend their use of fees, citing benefits for employees, such as higher pay and improved benefits. By incorporating transparent service charges, establishments can allocate funds to different staff members and enhance overall compensation. Surveys show that hidden fees and surcharges can have negative effects on workers’ income, sparking debates within the industry.

In response to rising operational costs and legislative changes, many restaurants have implemented service fees to manage expenses and provide better wages for employees. While these fees have faced criticism, they help businesses navigate financial challenges and offer competitive compensation packages. Industry experts emphasize the importance of transparency in fee structures to maintain customer trust and support fair labor practices.

The National Restaurant Association advocates for fee transparency and protection for certain charges, such as large party fees and credit card processing fees. With rising operational costs and slim profit margins, restaurants rely on these fees to sustain their businesses. Critics argue that eliminating these charges could lead to higher prices and reduced operational efficiency for restaurants across the country.



Read more at CNBC: Restaurants fight FTC junk fee crackdown over surcharges