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PO Box 7577, Columbia, SC 29202
JULY 2022
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a new era of fees for restaurants... do you raise menu prices or add a service charge?
SEPTEMBER 12
HOSPITALITY LEADERS
A not-so-new trend of adding service charges in restaurants is emerging more widespread these days. The question remains... should you directly charge the guest in the form of a fee for business operations (i.e. rising food prices, increasing the minimum wage, etc.)? Or, should you just raise your menu prices?
GOLF TOURNAMENT
WACHESAW PLANTATION CLUB • MURRELLS INLET, SC
In an interview with NBC’s Today show, Michelle Korsmo, President and CEO of the National Restaurant Association, recognizes that we are in a competitive industry— when customers decide where to eat, price factors into their choices.
Event Spotlight REGISTER TODAY & RAISE SCHOLARSHIP FUNDS FOR HOSPITALITY STUDENTS! The South Carolina Restaurant and Lodging Association invites you to participate in the 2022 Hospitality Leaders Golf Tournament, presented by US Foods, at the Wachesaw Plantation Club in Murrells Inlet on Monday, September 12. Crafted by internationally acclaimed Tom Fazio, Wachesaw was designed to take advantage of the site’s inherent beauty and interesting elevation changes not typically found in the Carolina Low Country. The unexpected rolling fairways are thoughtfully designed to weave through the giant oaks strategically placed on the course. This unique setup provides golfers of varying skill a memorable and challenging, yet enjoyable experience. All proceeds from the tournament benefit the South Carolina Restaurant and Lodging Foundation, the only charitable foundation in the state dedicated to building a strong, committed workforce for our industry through scholarships, school-to-career programs and professional development. There are a variety of ways to get involved with this exciting event. From diverse sponsorship opportunities available to playing in the tournament yourself, we hope to see you there! Learn more about the Hospitality Leaders Golf Tournament at and register today at SCRLA.org/events.
Scan the QR code to register and/or sponsor today!
impact on the bottom-line long term. “Restaurants’ total food costs as a percentage of sales are higher than they were prior to the initial COVID outbreak in 2020,” says Hudson Riehle, Senior Vice President of Research at the National Restaurant Association. Wholesale food prices have gone up nearly 18% in the past 12 months, the largest yearly increase in nearly five decades. Though, menu prices have only risen 7.2%, according to data from the Association.
As the restaurant industry embarks on adding service charges, some are concerned that it will adversely affect the server’s tip. However, we have found that in most cases where restaurants are adding services charges, the customer still adds a tip.
Careful consideration is important when looking at this issue; it needs to be addressed to ensure the viability and profitability of your food service operation. Consider all options, and talk with your staff, vendors, and key customers about your options. A knee-jerk reaction may have fatal consequences.
There are several factors why restaurants need to consider adding a temporary service fee. The most obvious is the rising food cost. Every time a food delivery comes to your restaurant, costs go up. A lot of restaurant owners are hesitant to raise menu prices, so a service charge becomes the quick fix solution.
Once your decision has been made, train your managers and staff on why you decided to either raise menu prices or add a temporary service fee. Craft an honest and consistent statement when communicating it to your customers, and consider adding a statement to your website or menu informing your guests in advance.
In some cases, the rising costs are not temporary, such as health insurance, or other employee benefits, higher wages due to higher minimum wage that entry-level employees are demanding due to the low unemployment rate and lack of available workers. For these costs, increasing menu prices would be a more sustainable approach. This increases costs for operators across the board and has a drastic
Lastly, in South Carolina, service fees are taxable for state and local option taxes. This does not include the additional hospitality tax if your local community has imposed the “prepared food” tax. Be sure to program your POS system to appropriately charge the correct tax on the check.
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what are alcohol service laws?
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It would be impossible for federal, state, and local governments to monitor the service of alcohol at every restaurant or bar. Instead, the responsibility is placed on restaurant owners, meaning it’s up to you and your staff to safely monitor the service of alcohol. When your restaurant obtains a license to serve alcohol, it’s agreeing to abide by the rights, responsibilities, and liabilities put forth by your state’s local liquor authority. Alcohol service laws are intended to help keep your customers safe and your business operating to its full potential. Each law falls under the three categories outlined by the local liquor authorities. What Are Your Rights? Rights are actions that your restaurant can choose to take to responsibly run your business. Many of them are specified in the law. For example, you have the right to refuse service to an individual who fails to show proper age identification or if you suspect they are using a fake or altered ID.
Visit www.scrla.org/InsuranceCenter to learn more.
What Are Your Responsibilities? Responsibilities are actions that you must take under specified circumstances. Again, many of them are already spelled out in the law, such as ensuring an intoxicated guest does not get behind the wheel of a vehicle. What Liabilities Could You Face? Liability occurs when you are held responsible for injury and damage that either occurs to your patrons or is caused by them. The liability of licensees and their employees falls into three areas of law: criminal, administrative, and civil. One situation that could potentially result in all three types of liability is the sale of alcohol to a minor. Your establishment can be held liable for any alcohol-related incident that occurs after serving an already intoxicated guest.
The 12 Alcohol Service Laws You Need to Know 1. 2.
Patrons must be 21 years of age to buy, possess, or drink alcohol in South Carolina It is illegal to sell or supply alcohol to patrons under the age of 21, regardless of how they get it. This also applies to any patron who may pass a drink to someone under the age of 21. It is the restaurant’s responsibility to step in and either remove the alcohol, patrons, or both.
8.
Discrimination against guests. Owners and operators are held liable if their employees discriminate against guests due to race, color, gender (including pregnant women), sexual orientation, age, disability, and religion or creed.
9.
Drinking alcohol on the job. Lots of areas prohibit drinking on the job. Even if it is not specifically illegal in our state, a restaurant has the right to impose a policy against it.
3.
The use of fake or altered IDs is illegal. It is the responsibility of the restaurant to carefully check IDs to make sure they are genuine.
4.
Minimum age to enter a bar. A restaurant has the right to set a minimum age to enter the bar area.
10. Games and contests that encourage binge drinking. It is illegal in South Carolina a bar or restaurant with a alcohol permit may not knowingly conduct, operate, organize, promote, advertise, run, or participate in a “drinking contest” or “drinking game”.
5.
Minimum age for servers and bartenders. In some states, the minimum age for bartenders (people who open and dispense) is 21. Servers can be 18 or older to deliver or serve alcohol.
6.
Selling or serving intoxicated guests. It is the responsibility of the restaurant to halt service to guests who are visibly intoxicated and can potentially cause harm to themselves or other guests.
11. The sale and service of alcohol is prohibited beyond the legal hours listed on the establishment’s license. These hours apply to both guest and employees and must strictly be followed.
7.
Illegal activities or drugs on the premises. You can be liable if you knowingly permit illegal activities such as gambling, prostitution, and drug use.
12. Discounting has very strict rules. Licensees may not offer two-or-more-for-the-price-of-one drink specials and may not give free mixed drinks, beer or wine. Regular drink prices may be reduced between 4:00pm and 8:00pm only
Type of Liability
Arena
Potential Penalty
Criminal
Court
Fine, Community Service, Jail
Administrative
Local Liquor Authority
Fine, Suspension, Revocation
Civil
Lawsuite
Money Judgement
U.S. HOTEL RECOVERY CONTINUES AS EXPECTATIONS RISE The latest edition of the Duetto Pulse Report, which compared hotel performance data from May 2022 with April 2022 and cross-referenced this with previous years’ performance, shows that while the recovery is still going strong, pick-up and web traffic are up across the Americas, guests are now expecting more, and so review scores are dropping.
WE’VE GOT YOUR BACK. AND FRONT OF HOUSE.
“One of the hotel industry’s shifting landscapes pertains to the diverging trajectory of guest satisfaction and RevPAR recovery trends. Lodging demand and pricing are moving in a positive direction, while guest review scores are sequentially declining due to numerous operating headwinds,” said Lloyd Biddle, director of product marketing, Duetto. Biddle added, “There is an old saying in the hospitality industry that ‘today’s booking pace is tomorrow’s RevPAR result.’ While still true, the post-pandemic commercial strategy evolution broadens these parameters to a refreshed industry adage that ‘today’s consumer searches are tomorrow’s guest reviews.’” U.S. Recovery Continues... The picture is bright in the United States, with RevPAR exceeding its 2019 benchmark for the third month in May. Month-over-month booking pace trends are still highlighting the strengthening of demand. However, lower ADRs on more recent bookings suggest a return to the practice of discounting closer to the arrival date to fill rooms (rate erosion) which was common practice before the pandemic.
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U.S. web traffic shows a 31% month-over-month gain for stay dates across the rest of 2022, with an impressive 51% jump for July. The turndown ratio of regrets and denials was the lowest globally at 18% in May, and the ratio of the number of bookings divided by the total number of visitors (web conversion rate), stayed at a healthy 5%. heartland.us/restaurant
July 2022 • SCRLA.org
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