FTC Seeks to Overhaul Restaurant Pricing

The Federal Trade Commission (FTC) is proposing significant changes to restaurant pricing, aiming to eliminate mandatory fees and provide recommendations on tipping and credit card charges. The National Restaurant Association (NRA) is closely monitoring, expressing concerns about perceived overreach. The NRA highlights potential impacts on restaurants, questions the FTC's authority, and emphasizes the need for industry education. Updates for LRA members will be provided as discussions progress.
Here's a brief summary of the proposed changes, NRA concerns, and ongoing efforts to inform the restaurant community.
Proposed Impact on Restaurants:

1. Ban on Mandatory Fees: The elimination of mandatory fees from restaurant receipts could lead to changes in how restaurants structure their pricing. This may affect revenue streams that were previously generated through mandatory fees.
2. Tipping Recommendations: The FTC's recommendation to eliminate mandatory service fees and encourage a return to the traditional tipping model could impact how servers are compensated. Restaurants may need to adjust menu prices to account for this change.
3. "All-In" Pricing for Third-Party Delivery: Requiring third-party delivery apps to list an "all-in" transaction cost could impact how customers perceive pricing. There are concerns that this might lead to confusion and that it may not effectively address existing problems in the industry.

 
Concerns about FTC Overreach from the NRA:
"This proposed rule appears to be a scattershot plan that both attacks the restaurant business model and forces us to raise our prices. Small business restaurant owners create the economic engines of their local economies, which is why it is disappointing that this proposed rule appears to be a one-size-fits-all rule for businesses big and small. We’re still closely reviewing what the FTC has included about restaurants and analyzing the ways in which their proposal will fundamentally change the way restaurants do business so that we can provide appropriate comments on what we expect will be far-reaching impacts." --Sean Kennedy, Executive Vice President of Public Affairs, National Restaurant Association
 Rough Timeline for the FTC Proposed Rule on “Unfair or Deceptive Fees”:

• Oct. 11: FTC proposed rule released.
• Estimated Dec. 18: Comments due to FTC 60 days after rule is published in the federal register (Association/RLC plan to file comments).
• Late 2024: Final rule issued by FTC.
• 2025: Implementation and potential legal challenges.

We appreciate your ongoing attention to this matter and will keep you updated as we delve deeper into the implications of the proposed rule.