Finance

How this café introduced a weekend surcharge to cover penalty rates without upsetting customers

Broede Carmody /

A café owner in north east Victoria has decided to apply a 20% surcharge to customers’ bills in order to open on public holidays after its weekend surcharge to cover penalty rates was well received by customers.

Eric Bittner, the owner of Café Derailleur in Wangaratta, introduced a 10% surcharge on customers’ weekend bills last year.

Yesterday, the small business owner took to Facebook to say he will be opening on public holidays and applying a surcharge of 20% to ensure he won’t lose money by trading on those days.

Read more: Some cafes may have opened, but Victoria’s new public holiday hurt SMEs

Café Derailleur employees around 13 people and has been operating for nearly five-and-a-half years.

As for how Bittner initially introduced the surcharge without creating a backlash from customers, the small business owner told SmartCompany it’s all about being as transparent as possible.

As a result, Bittner says the response from the community has been fantastic, with many people saying they are happy to pay a little extra in order to support a local business.

“It comes down to being able to manage my expenses and revenue at the same time,” Bittner says.

“I try and maintain a dialogue with my customers to talk about what the issues are that they have and to try and make sure there’s an understanding about what my issues are in the business. It’s about making sure I’m running as sustainably as possible.”

 

 

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Bittner says too many hospitality businesses close their doors after a year or two because they are unable to put money away for tough times and are just trying to stay afloat by managing costs, including penalty rates.

“That’s typical for a lot of businesses, they have a debt to the tax office and that’s what causes them to go under,” he says.

The small business owner acknowledges penalty rates are a “really contentious issue” but  says he hopes he has found a way to move beyond simplistic and divisive arguments.

“If my customers go, ‘Eric, we’re not going to come on a public holiday because you’re charging the surcharge’, that’s fine,” he says.

“I’ll respond accordingly and look at what other ways I can look at staying open on a public holiday. That’s up to me as a hospitality professional to explore what other options I’ve got.”

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Broede Carmody

Broede Carmody is a former senior reporter at SmartCompany. Previously, he was a co-editor of RMIT University's student magazine Catalyst.

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  • Rob Lockhart

    I applaud Eric for having the guts to make the tough decisions. Businesses too often focus on cutting costs when they should really be looking at their pricing.

    If you are running your business efficiently, do not have any excess capacity and your customers love what you do (quality and service) then they have to pay for it.

    Charge your customers a fair price for the value you give them.

    Always remember to sell your value not your price.

  • Charl

    Just a thought. Would’nt it be better if the business recoups the public holiday wages over 365 days and then open public holidays without a surcharge?

    • “Better” is in the eye of the beholder here. Eating out on a public holiday could be seen as a premium. The customers who actually use that public holiday service are the ones to pay for it, rather than the regular weekday customers. User pays.

    • My Accountants

      I agree with Karen on this one. The employees get paid a premium to work on a public holiday so the customers who choose to eat out on a public holiday can pay a premium. The cafe owner doesn’t get the day off like everyone else so why should he subsidise the premium pay packet out of his pocket. If there’s nothing in it for Eric and other then why open at all.

      • Charl

        I fully agree that the business owner should be compensated for opening on a public holiday. It would just make business sense to attract more customers on a public holiday by not charging a surcharge on the actual day but recouping it over a period of time in which case it will not even have a significant effect on the normal daily prices. Many people will not pay a surcharge on a public holiday. Why do you want to loose that business?

  • James

    Wow to be honest, i cannot believe anyone would pay 20% surcharge at a cafe. That if f**king steep, and completely unprecedented. It must be a pretty good place

  • Michael Ratner

    How come the spending public might seem to buck at a 20% surcharge on public holidays but are all in favour of overtime rates.

    • Charl

      Overtime rates are for the business to work out in his business plan and are not the concern of the public. As I see it the public is not there to make your business case. That is the owner’s job. The public is there to pay for the experience/value they receive/expect. Most people go to restaurants over weekends and holidays. They do not complain about the menu price if they enjoyed the experience. To pay a surcharge that is normally sprung as a surprise when you go to pay the bill is tainting the experience.

  • Geoff Hardy

    Here’s a pet hate of mine. Go somewhere to purchase, then they tell you that they have a “minimum spend” then they arbitrarily add a surcharge of 50c. I give back the purchase and go elsewhere. Say that happens 4 times a day x 30 days = $60/month. How much are the fees their bank is charging? Businesses are ripping us off & I refuse to reward poor business performance! Next it will be a share of the electricity and a/c costs. Just increase the range of products sold by 5c and remove the surcharge – Simple.

  • Michael Ratner

    Average pay rate in the hospitality arena I would reckon is about $25 an hour … that’s what they deserve.
    Holiday pay x 2 makes it $50 and hour. 6 Employees at 7 hours is 42 hours wages, that’s about $2K.
    Owner would have to do about $5K turnover to hopefully squeeze a profit.
    I know a lot people think that shops are busier than that.
    Take just a cup of coffee at the exorbitant price of $4 a cup. That’s 1250 cups of coffee.
    It has to be made, delivered, table cleaned, cups washed etc.
    1250 cups of coffee over 7 hours is approx. 180 cups an hour. 60 minutes in an hour that’s 3 cups a minute. Anyone want the job.
    It’s pressure whereas two coffee machines with 12 people working makes it plausible.
    We have to walk in everyone’s shoes.
    20% surcharge on the 1250 cups at $4 would be an extra impost of $1,000 and your great cup of coffee would cost you $4.80 and that’s on a public holiday.
    Stop and think of all the arguments about family time, weekend activities etc which these workers are giving up to get the over time rates.
    Be generous and pay the surcharge … it’s win-win.
    Without the overtime rates, it looks like we have just given an extra 6 people a job as well. Let’s share the love.