The Mexican restaurant chain Chachos is now charging a 7.5% inflation surcharge on all meals with cheese. Skyrocketing commodity prices present restaurants with a menu of unappetizing choices: raise prices, levy surcharges, reduce portions? How would you like your inflation served? Vote in our poll, after the jump.
Reader Neal’s receipt:
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If I worked there, I’d want a 7.5% “inflation bonus” on my paycheck. Seems only fair, after all.
@speedwell: Damn, that sucks. The neighborhood taquerias over here in San Antonio don’t charge more than $1.89 for a taco and even that I was getting annoyed about the other day. A really cheap, somewhat small taco at the PikNik convenience store only costs $0.69.
The only reason to have an inflation surcharge is because customers will be paying more for the item than they think they are. Straight from page one of the “How to Run a Doomed Airline” book.
What’s going to happen if all businesses start doing this? It will lead to a lot of confusion and customers paying more for items than they expected especially if the business applies the charge to only certain types of items. Imagine a grocery store that says “7.5% inflation surcharge to all diary products”; “5% inflation surcharge for all corn-containing products”, etc. Or a department store that has “5% inflation surcharge for any item containing steel”.
The consumer won’t know how much anything costs until they get their receipt. This has “hey we just figured out a new way to rip off customers” written all over it. Which means stores all over will start doing it before long if consumers don’t revolt.
You get too much food in restaraunts anyways, so smaller portions would be better.
I think calling increased prices “hidden” skews the results somewhat. I think increased prices is the most upfront and obvious way for companies to face escalating manufacturing costs.
Adding an inflation surcharge just seems silly. I’d be curious to see how the restaurant was notifying customers of this surcharge before they placed their orders. I know I’d be peeved if I saw this surcharge on a bill without knowing about it advance.
I actually kind of like this idea. I’d rather they do that than up their menu prices on everything by $0.50. This way you have the comfort of the original pricing and the reflection of our poor economy. Clever.
@Michael Belisle: I have seen most of our utilities go up along with food and gas. I’m still at a loss how the housing slump made our dentist office suddenly need to ramp up their income drastically. They went from very laid back and honest to the dentist running from bay to bay telling everyone if they didn’t get some expensive elective procedure they would die or lose all their teeth. They were also shilling dental credit cards at the desk. The only thing I could guess was the dentist had a ARM mortgage on his house. There are plenty of businesses that you can understand raising prices like restaurants and delivery services. But I am seeing ones that really are not taking a major hit and have larger margins jacking their prices.
Other than increased gas for service trucks our cable provider has no excuse for raising rates $50 a month.
@DeanOfAllTrades: Clever? Maybe. Stupid? Definitely yes.
I am surprised that nobody has yet suggested with a chargeback because of hidden fees (I assumed that it was not disclosed at ordering or at any time. The OP never stated).
But I would been a bit of a jerk, and I would have taken the difference out of their tip. And I would tell them that also because they did not tell me of the surcharge.
But as for the poll, I would prefer either one of two things. Either smaller portions, or a slight increase in price.
@lorddave:
They are only too large for you. I happen to like the portion sizes I am served
This is stupid.
Just because inflation has increased this year and it’s a top story of the major news outlets does not mean it hasn’t been there in the past.
Should restaurants have a billboard to display a CPI increase? How about currency fluctuations?
Restaurants should not change their portion sizes – customers have come to expect a certain product and they will be disappointed with anything less. Consistency is very important in the restaurant business.
Increased cost should be directly reflected in the menu prices. This is where the expectations for the customer have always been set.
Here’s an idea… offer customers a 3% discount if they pay by using cash instead of a credit card. Everyone wins (except the banks)!!
If a restaurant is sophisticated enough to adjust for inflation, they can certainly offer a discount when customers help them avoid transaction fees.
@gmoney: Ah, okay. So I guess an “inflation surcharge” doesn’t really have anything to do with cheese. In that case, higher prices across the board would be the honest option.
But @sven.kirk: I would never routinely deduct a hidden fee out of the server’s tip, unless the server is somehow directly responsible for the hidden fee. I doubt that’s the case very often. Even if the server fails to disclose the fee, it’s probably because the boss told him not to.
@synergy: Nah, it’s OK. It’s not 4.95 for ONE taco, it’s more like two tacos (with meat strips, not the pathetic Taco-Bell-style ground mystery meat), rice, and beans. And lots of people just get ice water, which is usually good because restaurants are legally required to filter the water and a piece of lemon or lime is tossed in pretty much by default. (Did you know that in Houston a restaurant cannot refuse to serve a glass of water to a walk-up who buys nothing, by the way?)
I was going to mention something about the high cost of drinks in Texas… you think 2.00 is bad… I was at a seafood restaurant in San Antonio a couple weeks ago, and they were charging 2.49 for a glass of iced tea (which I did not buy). Now before everyone clutches their pearls and goes into a tailspin, in Texas (as in much of the South) free refills are the norm. Many places just turn the fountain loose and let you get your own refills, even in some decent places. Most sit-down places send the server around to fill glasses, like they do water elsewhere. But 2.49 is still made of abuse.
I’m wondering if Chacho’s “inflation surcharge” isn’t a lefthanded way of covering for the fact that their worthless servers don’t bother to lift a finger to do anything so nobody bothers to leave a tip. You order at a cash register when you walk in. You get your OWN food when they call your ticket number. You get your OWN table and your OWN condiments. If you want any more food, you go back up to the cashier and get it yourself. The drive-thru offers a better service experience.
Is this “surcharge” posted anywhere? If that arrived on my bill, I wouldn’t pay it, and there wouldn’t be a tip either. I don’t “believe” in tipping (yeah, I know…), all prices should be listed, if they want to raise prices to cover tips, that’s fine, but I don’t feel obligated to pay more because society has decided to subsidize their wages with tips.
@Maurs: Chacho’s doesn’t have waiters, it’s a counter-service place, at least the one in Austin is. I haven’t been to the one on Westheimer.
@Ecks: Yeah, I guess the question is that it is made as clear as the menu prices to all customers BEFORE ordering.
I’ve seen this sort of “tack on” game played in my local area, and it really pisses me off to have it “sprung” on me at the final bill. These stupid restaurants are being penny wise and pound foolish – their 2% “surprise” arbitrary fee is assuring I’ll never eat there or recommend anyone else eat there again.
As a great philosopher once said: “fool me once, shame on you. Fool me twice, won’t get fooled again.”
How about a surcharge for eating crap? The poster deserves it.
@GearheadGeek: Well, it has staffpeople walking around. I’d assume they were there to bus tables, except they walk right past dirty tables. I thought they were servers.
Only in Texas (I hope) home of the Whopper… I mean, George Bush! hahahahaha
I’m another objecting to the “hidden” term. Prices always include overhead as well as the cost of goods; that doesn’t become “hidden” just because there are no lines on the bill indicating the amount that went to labor, rent, utilities, etc. It’s not like “inflation” is a separate charge the business owner pays, either, or that it’s a new thing. If it’s not an optional charge, fold it into the prices so that the prices honestly reflect what people will pay. (Yes, you too, hotels.)
I wonder if the business owner was trying to avoid the cost of printing up new menus with new prices. I can see where you might want to do that–one of the most annoying things to me about the grocery shrink ray is that the company had to sink a fair bit of money into the new containers and the changed processing as a result so it’s costing them more money than an honest price hike–but that’s not enough to justify it to me.
I’d rather they reduce the portions, because I hate the practice of giving you a ton of cheap food to make up for how much they charge you to cover the resturant’s overhead. However, I doubt the resturant would be able to recoup its losses by giving its customers 1/4 cup less rice, which comes out to .01 cents.
I called the restaurant and discussed the surcharge with their receptionist. He explained that they did not have the time to change their menu but wanted to increase their prices. Why ever reprint their menu when all they have to do is change the surcharge? It would be cheaper for all restaurants to do this. One can only guess why all restaurants don’t bother updating their menus.
I see this charge is added to the bill AFTER calculating sales tax. This would appear to be a taxable item with the state also profiting from the transaction. I would guess they are not giving the state their share.
This thread is making me want a cheese enchilada.
Raise the prices already. It’s not like everything else hasn’t gone up.
ChuckECheese: $4 for a bowl of oatmeal?!?! That’s inconceivable!
@Ecks: Traditional social contract theory holds that you assent to the social contract of a society by living within it. Of course this doesn’t rule out seeking government redress, but seeking change in business is best accomplished by voting with your feet and wallet.
Don’t like tipping? Don’t go to restaurants that expect it. For my part, I’m fine tipping at the local diner where I get table service, but I’ll go out of my way to go to the Dunkin’ Donuts that doesn’t have a tip jar.
@tator: Sales tax in Houston is 6.25% state + 1% city + 1% MTA (public transit, I think). If you take the total of food items (include Cheesy Sprite) and the $1.98 “surcharge” and multiply by 8.25%, you get the sales tax charged. Its position is confusing, though, but Austin et al are getting their cut of the surcharge, about 16 cents.
One way for Consumerist readers to protest is to go to Chachos with friends and each person pay separately with a credit card (objecting if they try to impose a minimum purchase requirement!). Typically the fee for a $100 transaction is far less than the total of the fees for ten $10 transactions.
Oh, or you could just choose not to got there.
The fact that it is called an “inflation surcharge” really pisses me off for some reason.
They should just raise their prices and not add idiotic surcharges to the bill.
I simply would not go to a place with an “inflation surcharge”
I double-checked, and Bobpence is correct about the sales tax rate.
But if the sign states the surcharge is for cheese, then they have no legal ground to stand on, if they’re charging customers who only buy a soft drink.
Another question is whether it’s legal under state law to ask a customer to pay tax for a separate food surcharge.
There might be some leeway unfortunately — one of the Comptroller’s lawyers noted that it’s legal to charge hotel/occupancy tax on an energy surcharge, in a memo written back in 2001, [cpastar2.cpa.state.tx.us]
@PricklyPete:
If you raise prices, people buy less. So, this way you get to slap on the cost increase yet still make people think prices have stayed stable.
I guess they are betting on people not noticing because for intelligent consumers, this practice should only work once since most will either buy less or not patronize the place anymore.
@floraposte: Totally agree on the wording of the poll being incorrect. To me, raising the prices on the menus is the most honest, up-front approach.
@Grrrrrrrrr: Absolutely. I HATE all of the extra surcharges & fees. The only exception are taxes. Unlike our EU & Northern neighbors, I want to have the taxes always broken out as separate charges. I wish they’d break it down a bit further, such as the 1/2% sales tax on all goods to pay for the #$%$# football stadium in Tampa and full disclosure of gas taxes (Federal/State/Local).
The airlines & hotels are the worst on this. It also seems like the fancier the hotel, the more fees I see creep onto the bill. Also, why do the most expensive hotels charge for internet while the budget ones don’t? I don’t get it.
@Michael Belisle: If you think an inflationary storm is coming stockpiling cash would rank amoung the worst ways to prepare. The inflation would make your cash stockpile worthless. You’d want to stockpile commodities or some other asset, milk maybe?
Personally I wouldn’t mind if all prices were broken down into their parts, then we could see how much certain inputs contribute to prices and what a store’s profit margins are. Of course the breakdown would have to be honest… so nevermind.
The problem for airlines is that even if they wanted to advertise an all in one price if one of their competitiors didn’t they’d loose out by looking to be more expensive. Sadly this would confuse customers. It’s just human nature to be more interested in a $199 flight to London than a $495 flight even if it works out to be the same price. Classic prisoners dimlemma: airlines would be better off with an all-in-one price (happier customers) but for anyone airline it’s best to adopt the surcharge model (more traffic from ads etc) so all airlines use the surcharge method and the result is suboptimal (confused customers, wasting time searching).
@FLConsumer: why do the most expensive hotels charge for internet while the budget ones don’t?
Because business customers, who tend to book hotels based on location and class of service, or who tend to rely on staff to book rooms, often overlook such a charge, and they’ll pay it without hesitation rather than be out of contact with home and office. They don’t particularly like it, but they pay it anyway because it’s an emergency.
@speedwell: It’s not only the internet charges, but also the “resort charge” and other rubbish charges. These hotels are supposedly upper crust and claim to provide a high level of service.
With regards to the companies which don’t check their bills closely (many NYC lawfirms would qualify), such companies deserve every penny they pay hotel internet/phone charges then.
At my company they issue Blackberries w/EVDO tethering capabilities and laptops with EVDO modems to anyone who travels regularly. One single trip a month easily pays for the extra cost of mobile internet for everyone.
This kind of practice is incredibly immoral and should be stamped on before it becomes popular.
An ‘inflation surcharge’ if carried out by lots of chains will serve only to cause inflation to spiral out of control. People see prices everywhere rise very visibly by 7.5%, they go to their bosses and demand a payrise on those levels. Inflation goes up as a result, the surcharge rises to 9%…
It’s a chain trying to take advantage of the situation at the expense of everyone else.
@ChuckECheese: Here’s a simple solution. If you think they charge too much, don’t eat there.
When it comes to restaurants, I’d rather have meals resized. They often already serve more than I should really eat, and I often end up eating it all just because it’s on the plate. If things shrunk, I don’t think my stomach would really notice.
I don’t like the idea of a surcharge on food – particularly if they’re not upfront about it. The price listed should be what you pay.
I live 5 minutes from this Chacho’s, and I can assure you that this bullshit has ensured that I will never eat there again.
I haven’t see this happen at any places I’ve eaten out at here (SF Bay Area) yet…and we’ve been eating out a lot during our kitchen remodel. Once it’s done (1 week) we’ll be cooking more and eating out less. I hate paying $8-$10 for a burger and fries someplace when I can make one just as good (or better) at home.
Raise prices, of course.
Then, fix the Consumerist’s style sheet for poll results
If portions are too big (here, they are for every Tex-mex place, but not Mexican), then that is a separate issue to be dealt with. If the portions were resized, that would just mean you pay an extra 7.5% of a smaller number.
@abigsmurf: Are you saying an inflation surcharge causes further inflation but simply increasing the price of goods will not lead to a wage-price spiral and therefore we should make inflation less noticeable so that consumers pay higher prices without asking for higher wages? Who’s side are you on?
In Ontario, where I live, it’s illegal for businesses to include a charge that isn’t for it’s stated purpose, try checking the law for your state if it really bugs you.
The Consumer Protection Act guidlines state:
>All charges in a contract must be what they say they are. For example, a business may not add a $20 surcharge for a “tax” that is not really for tax. Make sure you understand what each charge is for and that it’s valid.<
Unless the “inflation surcharge” was clearly disclosed on the menu (or wherever prices are listed) I would flat out refuse to pay it. Also I heard on the radio last week that inflation is 5%.
Wait, nearly 25% of poll respondents are saying that the shrink ray should visit restaurants but complain when stores/manufacturers do this on products they buy?
Interesting…
Well, seeing how inflation is just another tax, I think this is great. It’s better to be out in plain site as much as possible – listed with other taxes.
The Federal Reserve has caused this whole mess. We’ve inflated to pay for the wars, and have created this housing bubble in order to spur consumer spending as the fundamentals of our economy have collapsed.
Now, as the housing bubble pops, the last great bubble – the housing bubble – is popping. The Fed is going to inflate it’s way out of this one, too, but it’s not gonna work. Batten down the hatches, it’s going to be a doozy.
What they really need to do is REDUCE the prices… like this:
$ 1.00 – Beef Fajita Plate – Stkhs
$ 0.15 – Small Sprite
$ 0.90 – Pasto Tacos Plate
$ 0.60 – PHShred Beef Nachos 1/2 Yellow Cheese
$ 2.65 – Sub Total
$ 0.24 – Tax
$ 25.78 – 973% Inflation Srchg
$ 28.67 – Order. Total
Yeah, they make 1 less penny, but they can take that out of the dishwasher’s paycheck.
@Karl: I always understood that banks were more likely to charge consumers when they use their debit cards AS as debit card than when we use them as credit cards, which entail a processing fee for the store.
Apparently this is one more way Chachos screws their customers: Scaring them into using their card the way that costs Chachos less, regardless of whether it costs customers more.