Diners around the country are noticing a sneaky trend when they go out to eat these days.  Although prices on the menu have stayed the same, the overall cost at the end of the meal has suddenly spiked.

In San Francisco, John Savage took a closer look at his restaurant bill.  On top of the normal amount, he was being charged a 20% mandatory tip, a 5% San Francisco health care tax and an $8.625 sales tax.  That is 33% on top of the bill.

Restaurants in Michigan have toyed with the idea of adding surcharges to bills to cover increased costs of labor, food, gas, etc. instead of just raising menu prices.  A few months ago, restaurants were looking at a 33% increase in minimum wage and that spurred conversations about a surcharge.  (Michigan courts overturned that disaster)

Is it a good idea to add a surcharge or is it better to just raise prices? 

That is a hard question to answer.  Restaurateurs have different thoughts about it.  My feeling is first you have to know your customer.  Will your customer base tolerate a surcharge or think it is just a sneaky way to increase the bill?  Another question to consider is how much are we talking about?  Is it an amount that can be absorbed in a price increase?  For instance, would even a 10% increase in menu prices alienate your customer base?  Is a surcharge due to some temporary or unexpected and unavoidable cost increase such as a new law or a huge jump in oil prices?

I don’t think there are any studies out there that can give us a good answer.  My personal opinion is the least annoying to customers is a simple menu price increase.  This allows you to also do a menu analysis to determine if some menu items can be increased more than others.