A price tag is more than just a number on a piece of paper. The cost of an item on a menu isn’t pulled out of a hat.
At least, it isn’t if a business wants to stay in business. It’s a complicated dance of expenses and projected revenues, all designed to keep the doors open.
Let’s look at a simple sandwich. There is the cost of the bread and the cheese and the meat. Add the lettuce and tomato, a little mustard inside and a little butter to grill it. You could buy those pieces for – let’s ballpark it at $2.
So why does it cost $8 on the menu?
Because the price also includes rent, electricity, the gas that fires up the grill, business licenses and insurance, and that’s before we mention even one employee and, oh yeah, like six different kinds of taxes. The ham in your ham sandwich is probably the smallest part of that cost.
That is why covid-19 surcharges are fairly unsurprising. They aren’t happening everywhere, but they aren’t being received well when they do. But if more customers appreciated what restaurant operators are facing, they might be more understanding.
Since coronavirus pandemic lockdowns and quarantine measures started in March, the story of impact on business has been second only to the coverage of the health hit of the disease.
Restaurants – one of the most common types of small business in America – are among the most hard-hit by the pandemic. Some estimates say one in five could close permanently. Others have gone as high as 75 percent. The truth is we just won’t know until the dust settles and the disease is under control.
What we do know is the cost of doing business is higher than it used to be.
Today, that sandwich has to make up for all the other things that aren’t being sold the way they were a few months ago, including the bar business and upsells like appetizers and dessert that have higher margins.
The rent, the utilities, the insurance and taxes? All still have to be paid. The price of the food went up. But on top of that, there are the costs of take-out containers, the fees to participate in delivery services like DoorDash or GrubHub or the cost of in-house delivery staff and vehicles.
If a restaurant is reopening its dining room as the state transitions to fewer restrictions, there are the costs of disposable menus, masks for the staff, intense and frequent cleaning and sometimes physical boundaries like plexiglass. All of that is on top of the state’s mandate restaurants operate at only 50 percent capacity in order to accommodate social distancing.
And that’s assuming nothing else happens. When restaurants have someone test positive, there is a new wrench thrown in the works. Closed doors. More deep cleaning. Waiting to see if anyone else is affected before trying it all again.
That’s a lot of pressure to put on an $8 sandwich.
A specified surcharge may be the more open way to address the situation. Not every restaurant — or other business — is being so transparent about their costs. There is an unfortunate but refreshing honesty to a small disclaimer that tells people up front, “We didn’t want to charge more. We wish we weren’t being hit with extra costs, too. But this is what is happening, and we just want you to know because our customers are important to us.”
Because the costs will have to be absorbed somewhere. Maybe the sandwich becomes $9. Maybe there are fewer employees. Maybe costs are cut elsewhere. But if opening the doors costs more money than it used to, the only way for the doors to stay open is to pass that fee along.
But sometimes that’s just the cost of doing business.
— Pittsburgh Tribune-Review