By Attorneys, Kelly McCall and Michelle Anderson Fisher & Phillips
Credit card swipe fees have been a thorn in the side of businesses and consumers alike. Businesses, including restaurants, pay credit card networks (such as Visa, AMEX and Mastercard) to allow them to accept credit card payments for purchases. Some businesses choose to pass this fee on to the consumers – a surcharge. Are these surcharges legal? If so, how should your restaurant protect itself while utilizing credit card surcharges?
What is a credit card surcharge?
A credit card surcharge is a way for businesses to have their customers who pay with a credit card cover the processing costs for accepting those credit card transactions. These surcharges typically range from 1.5 to 4 percent of the transaction amount. Credit card surcharges are not the same as convenience fees.
Convenience fees are charges passed on to customers for the privilege of paying for a product or service using an alternative payment method that is not standard for the business. For example, a business that traditionally accepts cash or checks but also offers credit card payments or the use of banking apps (PayPal, Zelle, Venmo) for convenience, might charge an additional fee for that convenience. Another example of a convenience fee is a restaurant offers curbside/take-out or delivery, it charges a convenience fee for these services, that it does not charge for in-person dining. The convenience fee is charged not for using a credit card, but for the privilege of accessing the services for take-out or delivery.
Is it legal?
A United States Supreme Court ruling in 2017 protected surcharges as a form of free speech from merchants. That does not, however, limit states from imposing restrictions. There are at least ten states that prohibit surcharges (and some convenience fees). Louisiana is not presently one of those states.
Businesses can also require a minimum purchase amount when a credit card is used, under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The minimums cannot be more than $10, and the minimum cannot be set higher than what other merchants in the same card network use.
Rules for credit card surcharges
There are rules for businesses to follow when it comes to credit card surcharges. If your restaurant is using credit card surcharges, then you must do the following:
· Check with your credit card network for any requirements or restrictions
· If doing business outside of Louisiana, check state law
· Clearly disclose the fact that there is a surcharge before the transaction
· Display the credit card surcharge on the receipt
· Keep surcharges below 4% of the transaction, or the amount of the fees the merchant pays to the credit card companies, whichever is less
Keep in mind, surcharges are only allowed for credit card purchases – not debit card or preloaded gift card transactions.
Should you use a surcharge?
Accepting credit cards costs restaurants more in comparison to cash. Processing fees and expenses like card readers and point-of-sale systems quickly add up, especially for small business owners. Consumers, however, are becoming overrun with fees. In some instances fees are costing almost as much as the meal itself. Businesses should evaluate the pros and cons and weigh that small profit against the potential profit loss from turning away some customers due to the surcharges. This is particularly true if other establishments in your local area are not including surcharges for accepting credit cards. Evaluate whether there is another way to cover the costs through pricing of your products and services versus having the additional charge on the bill. As with many things in business, just because you can is not necessarily the same answer as whether you should.
For more information contact the authors at Kmccall@fisherphillips.com or Manderson@fisherphillips.com
The theme highlights the key roles all employees play in keeping customers safe
Restaurant employees at every level of an enterprise are essential to making the foods they serve safe. That’s why this year for National Food Safety Month (NFSM), ServSafe’s goal is to help everyone — from frontline food handlers to executives — focus on the skills and knowledge that create a culture of food safety.
Between August 29 and October 2, the experts at ServSafe will curate free content including checklists, white papers, posters, and webinars focused on essential skills at every level. These include:
“The dining public should know that restaurants take food safety training seriously and are some of the safest businesses people frequent. National Food Safety Month is a way to bring that to the forefront for consumers,” said Sherman Brown, executive vice president of Business Services for the National Restaurant Association. “For more than 30 years, ServSafe has been the leader in preparing foodservice workers to deliver safe dining experiences for their guests, while also keeping themselves safe. With this content, we are helping operators and employees fortify their knowledge of food safety, while telling that story in their communities.”
NFSM, held annually in September, was created in 1994 by the National Restaurant Association to heighten awareness about the importance of food safety education. The 2022 NFSM is sponsored by Tork and Ecolab.
To join the NFSM conversation, follow ServSafe on Facebook and Twitter and use the hashtag #NFSM2022. For more information and the weekly resources, visit FoodSafetyFocus.com.
PJ’s Coffee of New Orleans joins the event as official coffee and food vendor
Beignet Fest returns September 24 to New Orleans City Park with an array of vendors doing their take on the iconic beignet. Leading the way, PJ’s Coffee joins the event this year serving its famous coffee, as well as beignets, which the brand introduced in their coffee shops last year.
“There’s nothing more New Orleans than coffee and beignets,” said Leslie Monson, CMO of Ballard Brands, parent company for PJ’s Coffee. “We received a tremendous response to serving beignets in our stores, and we’re excited to bring our coffee and beignets to the Beignet Fest.”
PJ’s Coffee joins long-time favorites including Loretta’s Authentic Pralines, widely known for its praline beignet and crabmeat beignet, as well as The Vintage, Old School Eats, The Howlin’ Wolf and more. Other new vendors of note include Stuph’d Beignets and Burgers, which will offer a creole crawfish beignet and bananas foster beignet, as well as the Delgado Culinary & Hospitality Club doing King Cake beignets.
The full menu includes:
PJ’s Coffee: Traditional Beignets, Pumpkin Spice-Filled Beignets, Chocolate Bavarian Cream-Filled Beignets
Loretta’s Authentic Pralines: Praline Beignet, Chocolate Praline Beignet, The Famous Crabmeat Beignet, Burger Beignet, Peanut Butter and Jelly Beignet
The Vintage: Traditional Beignets, Crawfish Beignets, Raspberry Beignets, Parmesan Truffle Fries
Old School Eats: Blackberry Cloud Beignets, No Brainer Beignets, Beignet Ole’, Trinity (sampler)
The Howlin’ Wolf: Award Winning Cheddar Bacon Beignets with Chipotle Crema
Oh, Taste and See: Beignet Bread Pudding, Shrimp Pasta, Gumbo
Any O’ Cajun: Crawfish and Corn Beignets, Crab Slider
Sweet Legacy: Fried Chicken & Beignets, Honey Pecan Beignets, Low Down Dirty Beignets
Afrodisiac: Jerk Chicken Beignet, Jamaican Beef Patty Beignet, Spinach and Artichoke Stuffed Beignet
Stuph’d Beignets and Burgers: Creole Crawfish Beignet, Bananas Foster Beignets
Café Beignet: Traditional Beignets
Cocoa and Cream Catering: Fig & Cream Cheese Mardi Gras Beignet, Smoked Pulled Pork Beignet, Monte Cristo Beignet, Sampler Plate, Seafood Nachos
Delgado Culinary & Hospitality Club: King Cake Beignets
Dirty Dishes: Hot Sausage Stuffed Beignets, Dirty Mac
Jambalaya Girl: Chicken & Sausage Jambalaya, Jamburrito
Big O’s Original Pops: Cafe au Lait + Beignets Pop, Strawberry Lemonade Pop, Pralines ‘n Cream Pop, “Popsicle Po-Boy”
Valerie’s Creole Sneaux Catering: Snoballs, Natural Flavored Snoballs, Fruit Cup
Beignet Fest will feature a PJ’s Coffee Café as well as an Abita Beer Garden for folks to enjoy as they listen to live music throughout the day on two stages. Through a partnership with Children’s Hospital New Orleans, there will be a fully activated, sensory friendly Kids Village in keeping with the event’s charitable mission to support children with autism and related developmental challenges. There will also be an Artist Market with local artists offering a variety of artwork, handmade clothes and other crafts for sale. The 2022 Beignet Fest will take place from 10 a.m. to 6 p.m. at the Festival Grounds in New Orleans City Park. Admission is $20 per person. Children 12 and under are free with a paid adult. Advanced tickets are on sale now and highly encouraged. PJ’s Coffee customers can get $15 tickets with a discount code offered at all their coffee shops through September 20. More information on the 2022 Beignet Fest and the full menu with descriptions can be found at www.beignetfest.com or by following @beignetfest on Facebook and Instagram.
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About Beignet Fest: Beignet Fest is a premier food festival in Louisiana that celebrates one of New Orleans’s most iconic treats: the beignet. From traditional sweet flavors to savory options with seafood, cheese and more, Beignet Fest serves up the best beignets in the South all in one place on one day. Proceeds from Beignet Fest benefit the Beignet Fest Foundation, which helps support autism programs for children and their families.
About PJ’s Coffee: Since its inception in 1978, PJ’s Coffee has set out to show that its coffee is the best in the business. Founded by Phyllis Jordan, a pioneer in the coffee industry, and owned and operated by New Orleans natives and brothers, Paul, Steven, and Scott Ballard since 2008, the company has stuck true to that mission and its New Orleans roots. So why is PJ’s Coffee better? Because its coffee comes from the top Arabica beans available, made using superior roasting techniques in small batches and everyone at PJ’s is passionate about the art of coffeemaking. From its roasters to baristas to bakers, everyone understands that the ‘Soul of Coffee’ is how it brings people together. It’s why PJ’s Coffee serves a wide variety of hot, iced and frozen coffee beverages, as well as organic tea and fresh breakfast pastries, including its New Orleans-style beignets. PJ’s Original Cold Brew™ Ice Coffee is brewed daily using a special cold-drip process that protects the flavor and strength of the beans, while producing a coffee that is two-thirds less acidic. PJ’s Velvet Ice® and Granita’s are frozen and blended beverage options that capture the distinct flavors of coffee or tea in a cold, smooth drink. And all of PJ’s flavored coffees offer no additional calories thanks to carefully selected flavor ingredients and techniques. The diverse menu comes together with a simple goal – to help people connect over a coffee, tea or beignet and get a distinct taste of New Orleans! With more than 145 operating stores, including four international locations, PJ’s Coffee continues to grow in the U.S. and abroad. For more information or to purchase your favorite flavor, visit pjscoffee.com or follow PJ’s Coffee on Facebook, Instagram or Twitter.
Soaring costs across all parts of the business are creating challenges for restaurant operators
Restaurant operators expect business conditions to remain challenging
Profitability is down from pre-pandemic levels
Majority of Louisiana restaurants are understaffed and actively seeking to fill positions
Source: National Restaurant Association, national survey of 4,200 restaurant operators conducted between July 14 and August 5, 2022
Chef Pat Gallagher and Hotel Owner Lisa Condrey Ward partake in a discussion about the current state of the hospitality industry on the Northshore with "It's New Orleans Out to Lunch" host Peter Ricchiuti.
The podcast is recorded and broadcasted live from The NOLA Pizza Room at NOLA Brewing Company. Ricchiuti is a Senior Professor of Practice at Tulane University's Freeman School of Business.
This episode, the host chats with Chef Gallagher and Condrey Ward on topics including the short, but vast difference between the Northshore and the Southshore and how it isn't so different in the grand scheme of things. Also hot current topics like restaurant profit margins, supply chain issues, menu costs and catering to the current diner's appetite.
Chef Pat Gallagher is known statewide for his first restaurant The Winners Circle, which opened in Folsom, La in 1978. People from all over, especially the Southshore, would make the drive to dine on his culinary creations each weekend. Today, he owns four restaurants under his restaurant group, The Gallagher Restaurant Group.
Pat's Rest Awhile, Gallagher's on Front Street, Pat Gallagher's 527 Restaurant & Bar and Gallagher's Grill are all popular restaurants in the Northshore community. The Covington native has heavily invested in his community, and it has paid off, but it is never easy.
"During these times, that razor thin margin that you're talking about has gotten tighter than it was before," said Chef Pat Gallagher. "Because of cost of goods."
Chef Gallagher says they only recently raised prices on their menus, and customers have not complained. They understand it has to be done, and diners enjoy temporarily escaping their home life. With the rising cost of groceries, many patrons are eating out more to avoid waste, and time in the store.
Owner of the Southern Hotel in Covington is Lisa Condrey Ward. She and her husband bought the historic building with other family members, in 2011, after it sat vacant and depreciated since 1983. As a lawyer and preservationist, Condrey Ward put the hotel through a much needed $8 million renovation and opened it in 2014 with 40 guest rooms.
"When we stared, I anticipated our market was basically a 3-hour driving range, and that's probably predominantly true," said Condrey Ward. "One big surprise we had is the depth of business here on the Northshore, and the diversity of business was much greater than I thought. Some of the very first guests at the hotel, within the first week were from Europe."
The New Orleans Culinary and Hospitality Institute (NOCHI) presents Cooking for a Cause, a fundraising extravaganza in the name of food.
Starting September 7, running through September 21, the online auction event will offer culinary packages like private cooking classes, weekend getaways and dinner parties, hosted by the biggest names in the New Orleans Culinary Industry.
Bid on private cooking classes with Chef Alon Shaya, The Chase Family, Chef Susan Spicer, Poppy Tooker and Ti Martin. Gourmet getaways include stays at the Hotel Saint Vincent, Four Seasons New Orleans and a weekend with Dickie Brennan and Friends.
For more details on Cooking for a Cause, visit their website. All graphics courtesy of New Orleans Culinary and Hospitality Institute.
Fall specials have arrived on menus at all Ruby Slipper locations. The popular brunch cafe serves brunch all day long, across seven locations in the Greater New Orleans area, and restaurants in Baton Rouge, the Gulf Coast Alabama and Florida region.
Fall inspired flavors like Abita Braised Beef Benedict (above) sit on the menu along side Apple Pie Seasonal Beignets, Apple Pie Cheesecake Stuffed French Toast and Red Velvet Pancakes.
Visit their website to learn more about their locations and special menu offerings.
Now through August 28, all teachers will receive a 10% discount on their order with their school ID. Visit their website for more information, and to check out their locations and menus.
New National Restaurant Association survey finds the economy is disrupting service across the industry
Running a restaurant right now is a daily turn at Jenga®, with operators carefully pulling from the foundation of their operating plans to prop up new supports in a changing economy.
The costs of goods restaurateurs need most have continued to accelerate, and according to a new survey released today by the National Restaurant Association, 46% of operators say business conditions are worse now than they were three months ago.
This finding follows a prior survey in which 43% of operators said they think conditions will worsen in the next six months, which was the highest level of pessimism since 2008.
“Running a restaurant is a balancing act requiring adaptation and innovation, two areas where restaurateurs excel,” said Michelle Korsmo, President & CEO of the National Restaurant Association. “And while operators are more pessimistic about the economy, they are working hard to continue to provide quality and value for customers. Serving great food, providing exceptional service, and creating a memorable experience remains the foundation of every restaurant.”
Findings from the new survey highlight how current economic conditions are disrupting the industry.
Soaring costs are limiting restaurant operations
Approximately 95% of a restaurant’s sales dollars go to food, labor, and operating costs — all of which are increasing each month. While wholesale food prices have increased 16.3% in the last 12 months, menu prices have only risen 7.6% in the same period and only 16% of operators report adding fees or surcharges to customer checks. The result: Profits are suffering. 85% of operators say their restaurant is less profitable than it was in 2019.
• In the new survey, 88% of operators said their total food and beverage costs are higher than 2019 and across the board, many other costs are up.
o 65% of operators say their total occupancy costs are higher than 2019
o 80% of operators say their total utility costs are higher than 2019
o 94% of operators say their other operating costs (supplies, G&A, etc.) are higher than 2019
“Consumers are watching prices rise faster in grocery stores than they are in restaurants and see an increased value in spending their food dollars in restaurants. However, the moderate menu price increases aren’t balancing the surging input costs and this is forcing operators to cut hours, change their menus, postpone expansions, and reduce third-party delivery,” said Korsmo.
Pandemic debt has come due, and operators can’t pay
During the first two years of the pandemic, 65% of restaurants took on new loan debt to adjust business models and continue operating. According to the new survey, the loans were a mix of forgivable government loans, government disaster loans, and private-sector loans.
• Paycheck Protection Program (PPP) loans were the most common — taken on by 59% of operators.
• 48% of operators took on an Economic Injury Disaster Loan (EIDL) issued by the U.S. Small Business Administration or lending partner.
• 31% took on a private-sector loan from a bank, credit card or other entity.
“For many operators who received EIDL loans, the deferment period for payment will soon end and it will be an overwhelming challenge for a majority of them to begin repayment right now,” said Korsmo. “According to our latest survey, of the operators who have not begun loan repayment, only 23% say they will be able to make principal and interest payments. Another 46% expect to be able to pay the principal, but not 30 months of accrued interest.”
Restaurants are slowly adding jobs to get back to pre-pandemic employment levels
A strong majority of restaurants are still actively seeking to fill positions — even as they face building headwinds of a slowing economy. Despite adding 74,000 jobs in July, in the new survey, 65% of operators report not having enough employees to support customer demand and 84% of operators say they will likely hire additional employees during the next six months.
• 19% of fullservice operators say their restaurant is currently more than 20% below necessary staffing levels.
• 21% of limited-service operators say their restaurant is more than 20% below required staffing levels.
• 81% of operators say their restaurant currently has job openings that are difficult to fill.
“Diners choose restaurants for the hospitality and experiences they get at our tables, and we hire talented people to create that atmosphere. While many industries are beginning to slow their hiring, ours continues to rebuild our workforce. The restaurant industry has good-paying jobs available at every experience level for people from every background. And these jobs provide the skills necessary to be successful in any career, and in life,” said Korsmo.
The National Restaurant Association Research Group conducted the new operator survey of 4,200 restaurant operators July 14- Aug. 5, 2022. Find a report of key findings here.
Restoring depreciation, amortization to interest expense calculation gives operators financial flexibility.
The number of challenges restaurants are struggling with continues to grow. If it’s not inflation, supply chain disruptions, or the labor shortage, restaurants now are grappling with gaining access to capital and the cost of debt financing.
A bipartisan manufacturing bill in Congress that aims to change the U.S. tax code could change that.
Introduced by Sen. Roy Blunt (R-MO) and Reps. Joseph Morelle (D-NY) and Adrian Smith (R-NE), the Permanently Preserving America’s Investment in Manufacturing Act (S. 1077/H.R. 5371) would restore depreciation and amortization to the calculation for capping business interest expenses.
Depreciation is the reduction in value of an asset over time. Amortization is a process used to lower the value of a loan or asset over a specified period of time.
Prior to 2022, the total amount of interest a business could deduct in a given year was limited to 30% of its “earnings before interest, taxes, depreciation, and amortization (EBITDA).
Beginning this year however, the maximum interest deduction was scaled back when depreciation and amortization were no longer allowed to be factored into the calculation. In other words, what once was EBITDA became “earnings before interest and taxes” or EBIT.
That change had a disproportionate impact on restaurants, which were often required to take out loans to finance large capital investments in their facilities and equipment. In fact, the Coalition for America’s Interest released a report(Opens in a new window) showing that businesses affected by the shift to the EBIT-based limitation, will on average see nearly a three-fold increase in incremental tax obligations.
Returning depreciation and amortization to the formula would allow for restaurant owners to invest money back into their businesses to expand operations, finance equipment and refurbishing expenses, and rebuild their workforce.
It would also help the U.S. compete on the global stage. Due to the current EBIT standard, the U.S. is seen as an outlier among its peers in the Organisation for Economic Co-operation and Development (OECD).
The Association strongly supports the bill and will lead a webinar “Depreciation & Amortization: How Congress Could Help Restaurants Expand & Rebuild” on August 31 at p.m. Central. Register here.