When first arriving in New Zealand I was quite taken back by the idea of charging a surcharge on public holidays, however when I took up my position and was faced with having to look at the situation again…I found myself in somewhat of a dilemma.
Being very market focused, it was obvious that it will never be a popular decision to surcharge; however as someone that also has responsibility over the finances of the business it just doesn’t add up, not to.
At one of our outlets, we work on a 32% staffing cost. We don’t have enough staff to only have members of staff that don’t usually work that day, work (Especially when Christmas fell on the weekend!) We want to continue providing a high level of service, so I will not under staff our restaurant, hence we have no real option but to pay the time and half plus a day-in-lieu. Suddenly our staffing cost becomes 80%, leaving no room for our food/beverage cost or our overheads (of which we have many!)
When discussing our stance on this highly controversial issue with my management team, I had a mixed response…some said ‘let’s close,’ others said that we should spread the costs over the year whilst others suggested putting a 20% surcharge in place.
Rather than helping, I felt that this discussion had raised even more problems rather than solutions! As with most other regions, here in Dunedin we have those that choose to surcharge and others that decide not to. I can understand outlets with low staff costs and an increase in business on these day’s choosing not to surcharge, but for us neither is a reality.
Closing is not an option, we are a hotel and must be open for our residents – so why not be open to external guests, providing a service to our regulars and other visitors to the city.
To spread the costs across the year seems most logical, however with eleven public holidays and a number of other dates that are observed adding to the bill…it are a large expense to spread. You also have to ask yourself, is it really fair to add this cost onto the bills of everyone else throughout the year?
With most restaurants and cafés choosing to surcharge, most consumers presume there will be a surcharge. If we made a decision not to surcharge, it then bodes the question how do you let guests know? To those businesses with a high foot traffic simply putting a sign up would probably suffice, but what for the rest of us? Perhaps I could follow in the footsteps of those who choose to advertise the proud fact that they don’t surcharge. To me this seems even barmier as this then adds to your cost of public holidays yet more!
I feel that the decision we made was a fair one, we charge a 15% surcharge on public holidays – not opting to follow the 20% trend of other contemporary dining restaurants. We ensure that any guest that reserves a table is aware of the surcharge from the outset, we display clear signs on our external doors and have a footnote on our menus throughout the year.
This way we are remaining open when many are not, ensuring we fulfill our responsibility to our regulars, residents and tourists. We communicate this to our guests clearly and thus leave it at the discretion of our patrons as to whether they choose to dine.
One year in, yes, we still get those who are unhappy with our stance, however these days tick over nicely and best of all – I have now come to peace with the decision we made to surcharge.