NYC Council Approves COVID-19 Restaurant ‘Recovery Charge’

Eateries can add up to 10% to diners’ bills if the charge is clearly disclosed on menu and bill.

September 22, 2020

NEW YORK—The city council of New York has OK’d a bill that allows restaurants to add a “COVID-19 Recovery Charge” of up to 10% to diners’ bills, reports Business Insider. The bill is effective immediately.

The COVID-19 pandemic has pummeled the restaurant industry nationwide, and New York City has experienced more than 9,000 restaurant closings since March, according to Yelp. The new surcharge aims to help dining establishments stay afloat. 

For several decades, New York has banned restaurant surcharges. This new measure permits restaurants to charge a fee until 90 days after eateries are allowed to fill dining rooms once again. The measure doesn’t apply to large chains with more than 15 locations or take-out orders, and restaurants must clearly notify customers on the menu and bill.

Per New York Gov. Andrew Cuomo, restaurants will be able to resume indoor dining at 25% capacity starting Sept. 30, but restaurant owners say that move isn’t enough to save the struggling industry, which operates on thin margins that require full or nearly full dining rooms.

New York isn’t the first city to permit a COVID-19 dining surcharge. Restaurants in Denver, San Diego and Springfield, Missouri, have opted to add a surcharge, which is intended to help the businesses pay for outdoor seating, personal protective equipment for employees, single-use paper menus and other expenses since the pandemic began.

While surcharges may help restaurants with their bottom lines, businesses that choose to add the fee can expect to deal with customer complaints. In June, The Doublewide Grill in Pittsburgh added a $2 surcharge per meal after expenses jumped and revenue decreased because of limited dining capacity. The backlash on Facebook was intense, and the restaurant quickly eliminated the fee. 

“Restaurants in New York City have been getting crushed by massively increasing costs over the last five years and their options for increasing revenue have been narrowing,” said Joe Borelli, the New York council member who sponsored the bill. “This new policy is coming as a result of the impact of COVID-19 on our city, but I have every intention of making this change permanent.”

Across the nation, over 26,000 restaurants have closed since March, according to Yelp, and 60% of those closures were permanent.