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City restaurant owners propose diner surcharge to offset rising costs

“Allow us the option of using a clearly disclosed surcharge to generate the revenue to simply survive,” a coalition of restaurateurs wrote.

Amid rising rent, wage and food costs, New York City restaurant owners are urging city officials to allow them to institute a diner surcharge to offset such expenses that they say could be detrimental to their businesses.

“The cost to run a restaurant and employ people in New York City is unbearable for many full-service restaurants. If you want to support local restaurants and staff, allow us the option of using a clearly disclosed surcharge to generate the revenue to simply survive,” a coalition of more than 100 restaurateurs wrote to Mayor Bill de Blasio in an open letter that was displayed at City Hall Wednesday.

 "As restaurateurs we are suffering, and our employees’ livelihood are being threatened, too," the letter continued, and highlighted ways they've had to work around growing expenses, including laying off tipped employees, cutting hours, changing menus, closing restaurants "which will continue closing at an increasing rate" and raising menu prices, which "cannot come close to offsetting mandated wage increases and real estate costs." 

While public hearings regarding the surcharge, which could range from 3 percent to 5 percent or more, began on April 20, restaurant owners have been lobbying for the charge for the past two years with the Department of Consumer Affairs, who bans such a fee, the New York Post reported.

The practice “is allowed everywhere around the country, including restaurants throughout the rest of New York state,” the letter said.

Andrew Rigie, the executive director of the NYC Hospitality Alliance, whose members employ more than 10,000 New Yorkers, told the Post that restaurateurs would rather use the diner surcharge as a revenue generator instead of raising menu prices because the latter could potentially keep customers from dining at their establishment.

“It’s a consumer perception issue,” he said.

The issue is reaching a critical mass for restaurant owners as Gov. Andrew Cuomo mulls a potential minimum wage increase to $15 per hour for tipped employees, who currently make $8.65. 

“We have been waiting in good faith, for two years, for our city to allow us to use a clearly disclosed surcharge. During that time, our business have been further damaged,” the coalition’s letter concluded.