Categories: Restaurant innovation

New York City Approves Restaurant Surcharge

It could cost more to dine in New York City restaurants.

The City Council approved an optional 10 percent fee restaurateurs can charge to ease the financial hardship brought on by COVID-19, The Wall Street Journal reported.

The panel’s action Wednesday (Sept.16) ends a ban on restaurant surcharges that was implemented in the 1970s. Lawmakers said it is meant to mitigate some of the financial challenges restaurants have faced since the start of the pandemic in March.

Restaurant owners breathed a sigh of relief earlier this month when Gov. Andrew Cuomo approved indoor dining at 25 percent capacity starting Sept. 30. The governor has already given the green light for take-out and outdoor dining.

The COVID-19 Recovery Charge measure gives restaurants the freedom to pass along the surcharge to help cover rising labor and compliance costs and keep them in business, according to the legislation.

For years, City Councilor Joseph Borelli, a Staten Island Republican, has backed a permanent version of the measure due to increasing labor costs, the WSJ reported.

Manhattan Democratic City Councilor Keith Powers noted the coronavirus pandemic has given councilors an opportunity to implement the surcharge temporarily.

“I think most New Yorkers would be open to paying just a little bit more right now to make sure that their favorite neighborhood spot stays open through the pandemic,” said Powers, the legislation's sponsor.

Mitchell Schwartz, a spokesman for Mayor Bill de Blasio, a Democrat, said the mayor will sign the measure.

“This is an unprecedented emergency, and we’ll do everything we can to support the industry that employs thousands of New Yorkers and makes us the greatest city in the world,” Schwartz told the WSJ.

The legislation allows restaurants to charge the surcharge until 90 days after full indoor dining starts. It provides restaurants with no more than 15 locations to add the fee to the tab. Customers must be given a heads-up about the charge, and it is for indoor dining only.

From March through July 10, a minimum of 2,800 small businesses in the city have closed, including 1,289 restaurants, according to New York City Comptroller Scott Stringer.

Nationwide, more than 15,000 restaurants closed during that period, according to Yelp Inc., the San Francisco-based company that publishes crowd-sourced reviews.

“Restaurants have been financially devastated,” Andrew Rigie, executive director of the New York City Hospitality Alliance, a nonprofit trade group representing restaurants and clubs, told the newspaper. “If adding a surcharge can help them during this horrible situation, then our elected leaders have a responsibility to support these small businesses and the New Yorkers they employ.”

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.