"Minimum wage fee" tacked on by restaurant

Watching television at the gym this morning (as I worked at reducing the damage inflicted at Ward , there was an interesting story. It seems a place called Oasis Cafe in Stillwater, MN, has started adding a $0.35 charge to all its checks--to help defray the cost of the new higher minimum wage now in effect in Minnesota (raised by $0.75). There's been a nasty backlash on the restaurant's website and so CNBC (the business channel I was watching) did a poll of its viewers: "Would you eat at a restaurant that charged a minimum wage fee?"

As reported on the CNBC website, "Oasis Cafe manager Colin Orcutt defended Beemer's move by saying that, in order to stay operating, indirectly raising prices through food costs would be "'a lot more backhanded.'"

Edited to update (note: these percentages have remained been remarkably stable)
On the CNBC website, 3350 votes as of 8 am, 8/8: 50% no, 39% yes, 11% unsure.

Finally, for what it may (or may not) be worth: as of the same time as the CNBC website (albeit with far fewer votes), LTH has voted exactly the same way.

Cabs in Chicago get to charge a $1 when gas prices go up.

Wages are just one one of dozens of factors in the cost of doing business. Why put a surcharge on just one component? I don't get it.

Dave148 wrote:Wages are just one one of dozens of factors in the cost of doing business. Why put a surcharge on just one component? I don't get it.

To make a political statement?

The Yelpers have spoken: http://www.yelp.com/biz/river-oasis-cafe-stillwater

stevez wrote:

Dave148 wrote:Wages are just one one of dozens of factors in the cost of doing business. Why put a surcharge on just one component? I don't get it.

To make a political statement?

I get that part Steve.

What if the Farm Bill imploded and dairy prices shot up? Would a surcharge on milk be a good idea to put on a menu?

I've seen a 3% "health care" service fee tacked on.

At least here in California, any automatic fee is considered income to the restaurant, regardless of what they call it on the menu. So even if it's called a "mandatory service charge" it's not considered a tip to the server. The restaurant can do whatever they want with the money.

So the minimum wage fee is just a way to avoid raising prices on the top line, hoping you'll think it's like a tip when it's added to the bottom line. Pretty disingenuous if you ask me.

If I wanted to eat at the restaurant, and I realize I am fortunate, a $20 fee wouldn't put me off.

I don't know why this isn't just treated as a cost of business. Is it any different than merchant fees on credit cards ( assuming this business takes credit cards)?

chitrader wrote:At least here in California, any automatic fee is considered income to the restaurant, regardless of what they call it on the menu. So even if it's called a "mandatory service charge" it's not considered a tip to the server. The restaurant can do whatever they want with the money.

I think you'll see many restaurants abandoning the automatic gratuity as the IRS has really begun cracking down on restaurants that do not treat such automatic gratuities as regular wages (which are subject to restaurant payroll deductions, as opposed to being an employee responsibility, as is the case with an ordinary gratuity). The IRS issued this ruling in June 2012, but apparently has just stepped up enforcement.

In any event, I'm not offended by a restaurant letting me know that they will not automatically include a certain food item anymore where prices of that item have gone through the roof. Similarly, I'm not bothered if a restaurant chooses to explain a dramatic price increase in some dishes due to the temporary spike in the price of an item, to let the customers know that the restaurant is not arbitrarily (and significantly) raising prices.

However, I question the business sense of a restaurant that starts noting minimum wage increase price adjustments, ACA adjustments, and the like. Why include a line item that is more likely to offend and keep people away than bring new customers in? Undoubtedly, this practice (politically motivated of course) will alienate some customers. Of course, when the restaurants go out of business, they'll undoubtedly blame the various bits of legislation . . . which somehow allowed hundreds of thousands of other businesses to survive.

As an aside from the issue at hand, the food at River Oasis is really good comfort tuck with few if any shortcuts, in a zone where other places take 'em since the river views compensate. I personally don't like the line item, but this isn't a crappy or unknown place looking for attention.

pairs4life wrote:I don't know why this isn't just treated as a cost of business.

Exactly. And that's what would put me off. I have my own business, and I would never line item something like that (unless, of course, I was making a political statement, which is obviously what these folks are doing. More power to 'em, but I ain't eatin' there.)

Apparently the owner's real concern is the absence of a tip credit in Minnesota.

Hard to think of a worse way to publicize that concern, though.

Re:
Tacked on Fees....
if there wasn't an absolute Monoploy held by
The Legend AirCarriers - would ANYONE in their right mind agree to their tacked on fees?
Bite ME!
That business model will be in Business Class Textbooks in a decade or so-
in class lectures titled :
"How The US Lost an Entire Industry"

pullllease!