Businesses ditch unpopular surcharge

Public holiday surcharges in Western Bay restaurants and cafes are becoming increasingly unpopular after a public backlash and increased competition.
In a survey of Western Bay eateries, the Bay of Plenty Times Weekend found more than half would not add a surcharge over the Easter public holidays.
The extra charges are becoming less common nationally because of a public backlash and increased competition.
Alan Sciascia, the Bay of Plenty regional manager for the Hospitality Association of New Zealand, said the decision to add a surcharge or not was up to each business.
"Some will and some won't. It's effectively the choice of the business to make a marketing decision as to whether they are going to get enough business to cover the cost that they are incurring.
Under the Holidays Act 2003, employees must be paid time-and-a-half and receive time off in lieu when they work a public holiday.
To compensate for this, some restaurants and cafes impose a "surcharge" on prices on public holidays.
According to the Commerce Commission, an employer may be entitled to impose a surcharge on any day where they have to pay their employees more than a normal working day.
Businesses are free to determine the retail price for goods and services.
But if businesses use public holidays as a reason for applying a surcharge, that surcharge needed to accurately reflect their costs of opening to avoid the potential of misleading customers.
Mr Sciascia said staff costs were 30-40 per cent of running a restaurant, which meant costs were "significantly higher" on public holidays.
"They need to recover the costs."
Syndicate Bar & Bistro owner Riki Walls said public holiday surcharges were necessary to make money in tough economic times. But Mr Walls was not yet sure whether he would add the surcharge. "I'll see what the street is doing. If everyone else doesn't do it, then I can't, I'm stuffed.
"From a business point of view, on a public holiday you are paying time and a half plus a lieu day - that's 2 times the normal wage.
"If I'm paying 10 staff 2 times the normal hourly wage and still trying to make money, it's extremely hard on the business.
"We are all doing it really tough. That's why some people are [adding a surcharge], and why we've stuck to it for so long.
"We need a surcharge to help us through, otherwise we have got nothing left."
Michael McLennan, owner of Gana Cafe in Papamoa, said it was not worth opening on public holidays without the surcharge.
A "handful" of people were put off by it but most people accepted the surcharge, he said.
"We have a sign in the window and on the counter, they have more than enough opportunity to make their decision before they come in."
Dave Mitchell, owner of Flip'n Bear Cafe in Katikati, also said a 15 per cent surcharge was necessary to cover the cost of extra wages.
"We haven't [added the cost of extra] GST, so we can't keep absorbing costs, that's our angle on it.
"It's one of those nasties - when we go out, if we ever get a chance, we pay it, too."
At Rain Bar & Restaurant in Papamoa, a 15 per cent public holiday surcharge is added on food but not drinks, owner Ryan Dippie said.
"We have to pay our staff time and a half and it's hard enough to make a buck in this industry as it is.
"The majority of customers are pretty good about it, they know they are getting a good product."
A surcharge was a better option than putting prices up year-round to compensate, Mr Dippie said.
But an increasing number of businesses are choosing not to add the surcharge, in order to attract customers. Flor Artus, owner of Ambrosia Cafe & Restaurant in Mount Maunganui, said she would not be charging a surcharge this Easter.
"The last couple of holidays we have decided not to, mainly because of the economic situation and just to encourage people to come out.
"There's nothing worse if they all say we are not going to go out anymore because everyone is charging surcharges."
Previously, the cafe had charged a 10 per cent surcharge.
Mrs Artus said a sign outside advertised the lack of surcharge. Customers appreciated it, she said.
"If you don't have a sign they will come in and ask. If you say 'yes', they say 'thank you', and it's very obvious that they aren't willing to pay extra."
Volantis manager Jason Wagener said the Mount Maunganui cafe had abandoned a surcharge as "it seems that you get a lot more customers not doing it".
Naked Grape manager Lance Milne said the restaurant would not be adding a surcharge this Easter. "We think it turns people away if they have to pay more and we don't want to lose customers."
Sharon Dickison, owner of The Back Porch Cafe in Mount Maunganui, said she would rather close than add the surcharge.
"[A surcharge] just makes it so unaffordable for people.
"You probably could exploit it, and most of our locals are quite happy to pay it, but we just feel realistically it doesn't really work for our business.
"You end up paying nearly $6 for a coffee. It's just getting ridiculous."
Ryan Halbert, owner of Sol Shack on Maunganui Rd, said the cafe's policy was not to add a surcharge.
"I just never thought it was a fair thing to do. There's more creative ways you can do it.
"We always bank on attracting a few more people simply by being a little different."
Mr Halbert said customers appreciated the gesture.
"We do get a few people come in and say 'I went to the place down the road, and I came here because you guys didn't' [have a surcharge].
"[But] some people don't mind paying a little extra."