I think that higher prices is a obvious 'inflation surcharge'.
Cost go up, prices go up.

I would hope that the restaurant would tell the customers about the surcharge before getting the bill. Otherwise I'm sure there would be some very unhappy customers.

They've been doing an extra "cheese charge" for months now. I forget how long. I don't eat cheese and I definitely don't eat at Chacho's, since the time they insisted on charging me the cheese upcharge even though I asked for "no cheese."

I guess this is the way they thought up to screw the vegans, too.

@speedwell: In fact, it was this same damn location. Figures!

Our regular local mexican place just bumped their prices, too. It comes out to about a dollar more for the entrees we order at lunch every week. I can understand raising prices, but a surcharge? That's just bull$&*t.

if it's not on the menu or posted conspicuously, you have zero legal obligation to pay it.

So it costs more for Chacho's to pay sales tax is harder during these economic times too? Cause that 7.5% surcharge includes an 18¢ contribution from taxes.

Really this is just screwing over the waiters, who are going to find themselves receiving 7.5% "inflation adjusted" tips from disgruntled diners.

@Michael Belisle: No, the charge does not include the taxes.

However, I don't think that businesses should take pointers on how to deal with a changing economy from the airline industry.

@rmric0: Whoops, right you are. (An annoying editing mistake and fundamental calculation error: not bad for a two sentence post.)

@Crazytree: They do post it conspicuously. It's printed on laminated letter-size signs on the wall behind the cashiers. So it USED TO BE easy to avoid if you didn't like cheese. No more, apparently.

I was ruminating about restaurant inflation today as I ate a diner bacon cheeseburger, fries and iced tea. It cost $10.00 before tip. There's another diner about 3 miles down the road from this one that charges 50¢ more for the same meal. Despite inflation, I wondered what good reason these restaurants have for charging $8 for a pedestrian burger and fries, and another $2 for iced tea.

Even at retail, the cost of the ingredients for my meal would be about $2.00; I expect a restaurant pays less than retail for its groceries. Did all their other costs go up too? The Mexican cook is probably making minimum wage and the waitress less.

The diner had nothing on its menu for less than $7.50, for breakfast, lunch or dinner, with two obvious exceptions: A breakfast bowl of oatmeal for $4, and a grilled cheese for $5. They've decided that if you aren't willing to spend at least $8, they don't want your business. This is a casino town, and the casinos charge less than this. Are the diners unable or merely unwilling to compete with the casino restaurants? (Note that in this market, that casinos don't discount the restaurant food, and the same meal would be about $7 total.)

Is cheese really so expensive that it requires a 7.5% charge on the full bill? Is there cheese in Sprite? A pound of real cheddar is about $4.50 retail. Their actual food cost increase (for cheese) is probably only about a quarter per entree. Why not a 25¢ surcharge for cheese, rather than 7.5% on the total bill?

It is shenanigans like this (charges clearly in excess of increased costs, minimum charges, and the story that Speedwell tells above of being charged for cheese even when it is not ordered), that leads me to believe that a lot of our current inflationary push is nothing more than a money grab.

Wow, small Sprite - $1.49? Could've go to the gas station and got a two liter for that price. Looks like they already added the inflation to the food!

@midwestkel: Good point, I can't help but wonder if the food prices have been raised IN ADDITION to the new "inflation surcharge" in an attempt by the restaurant to boost profits.

@ChuckECheese: Even at retail, the cost of the ingredients for my meal would be about $2.00; I expect a restaurant pays less than retail for its groceries.

Energy is more expensive. Their employees are begging for higher wages because they can't afford to feed their family any more. Their lease is coming up for renewal and that's going up too. Inflation doesn't pick favorites.

That said, an inflation surcharge is stupid. It implies that it's some sort of temporary measure, as if tomorrow inflation will be gone and they'll be able to take the surcharge off. The inflation surcharge will (should) come off one day, but it'll be absorbed in the prices. (Unless Chacho plans to index the inflation surcharge to inflation, so that it'll be a ~30% surcharge by 2015 and the menu will still have 2008 prices.)

It is shenanigans like this ... that leads me to believe that a lot of our current inflationary push is nothing more than a money grab.

Stockpile cash while you still can. There's a storm coming. (Not to mention that Greenspan complained about "irrational exuberance" in the mid-90s. We were past due for some sort of a significant correction.)

As usual I did the math, and Chachos avoided the pitfall I thought they would encounter: The sales tax does take the surcharge into account.

But the "cheese" surcharge is applied to all the menu items on the receipt. I'm not sure the last time my Sprite came with cheese!

Lots of restaurants charge extra for cheese, but they do so above board, and they build it into the price of stuff that virtually always comes with cheese. This is questionable at best.

As soon as I closed the tab for this story, something caught my eye on another tab I had open when I Googled to see if this had been addresses elsewhere, the link is at [local.yahoo.com]

Note the post on 8/25/2007. The surcharge -- the 7.5% surcharge -- has been applied for the last 11 months at least?! On 8/25, the average price of gas in the U.S. was about $2.75, versus about $4.08 today.

Raise the Farking Prices.

I am speaking with the voice of experience. It is the wee hours of the morning and I have a big arse spreadsheet open in front of me trying to reconcile my electric bill that increased by $xxxx versus the same month last year.

Either prices are going to increase or I am going to have to lay off employees.

Yo, Rhonda. You are keeping your job. I am going to raise prices.

Anyone care to place a wager on how many of the "adjustments" will go away when oil prices go back down?

Owning a small coffeehouse I can understand the frustration that the restaurant must feel, but I think how they have handled it is as bobpence put it "questionable at best." There seems to be this belief that restaurants make money hand over fist, as demonstrated by ChuckECheese's post, and really nothing could be further from the truth. In the past four months I have seen milk double in price, cheese go up by over 30%, produce by about 15%, paper products 15%, my bakery has raised its prices by 18%, and thats just the beginning. Milk, being one of my core ingredients is expect to continue to rise by about 2-5% a month for the near future. Top that off with most distributors tacking on delivery/fuel charges, energy prices from electric utilities going up and it starts to put you in a difficult situation. This idea that ChuckECheese puts forward that inflation is simply a money grab on our part is simply not true. Right now many of us, just like many people in their personal lives, are just struggling to make ends meet. I know a lot of my counterparts that are just thinking about how to stay alive, the last thing any of us have time to think about is how to try and screw customers out of money.

That's really shady, if not illegal.

The nice warning statement at the bottom also makes me wonder if they tack on a hidden debit card surcharge, and then tries to blame your bank if you notice a discrepency. Or, it could simply scare people away from using their debit cards. Banks get a cut of the transaction total, so I don't see why they'd charge you (unless they LOVE screwing over their customers).

I personally just love the surcharges.

NOT.

There is a place for surcharges. From a business perspective I can justify a fuel surcharge.... up to a point. But when a company resets their prices the company should also reset the fuel surcharge. Granted there is a chance the fuel prices could go down. So maybe the fuel surcharge's starting point should be the lowest price 12 months PRIOR. But that means there is always a small surcharge added for fuel.

That is not exactly fair.

I need a new pair of shoes. I will shop the ads in the Sunday paper, find a pair that I can afford (based upon the ad price) that I might like and go buy the shoes.

Should a shoe store have a fuel surcharge? Yes, they paid a fuel surcharge on the freight to get the shoes to the store, but should there be a separate charge? And why should there be a separate charge? The store had the option of changing their selling price in the ad.

Same thing for a restaurant. Yes, market price for Lobster is fine, IF you actually change the price each and every day. But most restaurants don't change their Lobster prices every day. Hells Bells most restaurants charge the same price for Lobster 365 days out of the year. So why isn't the Lobsters priced on the menu?

My local fav dive has a Saturday Night Special. The specials are printed on plain paper and stuck in the regular menu. Steak goes up in price, next week there will be a new Saturday Night Special menu with new higher prices. Pretty simple concept. Why should any restaurant be allowed to have an energy, inflation or whatever surcharge? If things get really bad, just Sharpie out the price in the menu and scratch in a new price.

There is too much goofy inflationary stuff happening. Most of it is energy (fuel, electricity etc) related. The trickle down effect is being felt across the board.

Everybody needs to encourage their fav places to raise prices. Go ahead and charge me $0.50 extra for my meal. Raise the price of shoes by a buck. DO IT, don't play games with hidden fees and surcharges.

I'm sorry, but it seems to me that raising the menu prices is NOT hiding it, adding surcharges to the final bill (that are probably not disclosed) is hiding it.

I voted for menu price increase, because it's LEAST hidden, and when I open the menu I can make an accurate decision on what I want to afford based on that price that is displayed.

@renegadebarista:

Yep. I understand your pain.

The ice cream stand up the road from me has an electric bill that is $228 and some change higher than last year at this time. I was in there about a week ago and he was really crying the blues.

$228 x 12 = $2700 + per year that the owner of that ice cream stand must either absorb out of his profits (which is most likely only what he pays himself as salary) or pass onto customers. He was crying the blues because I doubt he makes big enough bucks to absorb that $ out of his salary.

Nice classic Catch-22 for the small business owner.

And next month the cost of ice cream will go up for no other reason that just because the ice cream plant is paying more in electricity.

@Corporate-Shill:

It gets better the one that I forgot to talk about in my first post is the base charge that Visa and MC charge merchants, it went up earlier this year and Visa is talking about raising it yet again, and in this day and age, where at my cafe at least 50% of my transactions use a card, simply not taking them is not an option, and I'm not even going to think about doing all that discount for cash crap.

I voted 'hidden' but I strongly disagree with how the choices are labeled.

'Blatantly Obvious' vs 'Hidden' - Blatantly obvious would be noting that a dish that formerly cost $7.95 now costs $8.65... and it's also the most honest and forthright option for the restaurant. When the price goes up, it's obvious the buying power of each individual dollar has gone down. What's not so obvious is some dubious 'surcharge' that may or may not surprise me at the end of a meal that I expect to pay the same price for that I paid three months ago.

Yes. Raise the prices. Keep the doors open. Keep our jobs going. Raise prices fairly and honestly. Reflect reality in what things cost.

Consumers understand the rising costs of goods. We know what it means. We don't understand arbitrary codes and surcharges. We don't know what the economy is like unless we can read it from the general trend of price vectors.

Carey,

Can you explain your choice of wording for the labels on the poll?

"Hidden" seems to imply that restaurants who do price increases are trying to put one over on patrons, which as I touched on before is simply not the case. Like I said before many of us are just trying to survive.

One last thing before I go to bed:

Folks who don't know or remember how Chacho's operates: You walk in and stand in line to order. You pick up a menu and look at it. When you get up to the head of the line, you order from a cashier. The sign about the surcharge was on the wall right behind the cashier's head last time I was there, and I would count that as conspicuous. I don't remember there being a note on the menu, and it should be there in screaming red letters, really.

I have no beef about the sign. I just think their policy is muy retarded.

Seeing how most resturaunts serve portions far too large as it is, that is definitely the choice here.

I truly don't have a problem as long as it is clarified up front. It probably saves the restaurant from having to reprint menus every week when their costs change. They can just post a different percentage. But I would agree this is going to strong discourage tipping. But tips are supposed to be optional, so that isn't that big of a deal.

@ChuckECheese: They're not in it for your health, you know.

@renegadebarista:

50% ?

Only 50% ?

I got a cousin working in a highend dress shop. They are running close to 100%.

My business was 50% just two years ago. The last quarterly report was 81%.

I feel your pain at 50%. But just wait, the % is going to increase as more and more consumers opt for CC for even small purchases.

I'd bet the reason for this is just that some VP at corporate doesn't want to pay to have all the menus reprinted again because he's afraid it will affect his bonus.

@Canino:

Office Depot has a special on Sharpie's. IF you miss the OD special, I am sure Staples will have one next week.

In other words, tell the cheap sonofabytch to grab a handful of Sharpie's and do himself proud.

If it's 1/2 cheese, shouldn't be it 1/2 surcharge?

Also.. $9 for Mexican?!?! What is this world coming to?

@FLConsumer: Neighborhood taquerias that charge 4.95 for tacos al pastor and 6.95 for fajitas. It's not like Houston has a shortage of restaurants, oh, my, no.

@akalish: This isn't about me or my health. I'm responding thoughtfully to the issue raised in this post, unlike you. Clearly others have a problem with Chachos charging a 7.5% cheese fee. I have a degree in hotel management, and I have worked in restaurants, so I notice these things. If your restaurant is charging $10 for a hamburger and soft drink in a town where the minimum wage is $6 and there are no high-wage paying industries, you should expect to see a drop in business.

I am sympathetic to restaurateurs and business owners. But charging 7.5% "cheese tax" on the entire order--including the Sprite--looks like a money grab, not a legitimate attempt at recouping an increased cost. And it reduces my sympathy. As does charging $2 for iced tea. If you complain to me that people aren't in your restaurant and you're charging $2 for a plastic tumbler of tea, then I will laugh derisively.

Let's discuss the costs that @Michael Belisle: mentions. Employers aren't handing out raises these days. The threat of losing a job in this weak employment market is enough to keep most menial workers quiet, at least for now. The typical American worker hasn't really had a raise since about 1973 anyway. Electricity costs in this region have actually gone down in the past three years, and are about 1/3 lower than Texas's. The real-estate market here is in the crapper, as bad as California, and I doubt landlords have the cojones to raise rents at a time like this, as there are vacancies all over town. The pressure my example restaurant is experiencing is in food costs. Chachos' details may be different.

Say food costs are 25% of the menu price. Then say all your food went up by an average of 20% (an exaggeration, but anyway). The amount of your actual menu price increase is .25 x .20, which is .05, or 5% to break even. Actually, I hope a greasy spoon's food costs aren't 25%. And I doubt their wholesale food prices went up 20% across the board.

I don't think restaurants make money hand over fist as @renegadebarista: claims I do. I realize restaurant margins are rather slim and that the work is hard. HOWEVER, you get and keep customers by offering what is called "value": The patron must feel s/he is getting her/his money's worth. RE coffee shops: They have a different product mix than a restaurant, and must do volume in order to make money. I imagine it's a harder business to make pay than a restaurant.

Back to value. Add-on fees are the opposite of value. Paying the restaurant 7.5% and getting nothing in return is not value. That's what sticks in people's minds, that they're being charged an extra 7.5% and getting nothing back. Blaming it on cheese is demonstrably false, which only adds insult and lies to injury. In my example, $1 will buy you 100 tea bags, which can make about 12 gallons of iced tea and serve about 40 patrons. So people know that a $1.49 small Sprite or a $2 tea is not "value;" it seems greedy and unfair.

I have two more related ideas that I will bring up in a subsequent post.

Unless they're telling you up front, before you order anything, and preferably before you even set foot in the door (many restaurants post menus outside, particularly in areas that get a lot of foot traffic and have a lot of other restaurants) that there is a surcharge, and how much it is, the surcharge is the "hidden" increase. Changing the prices is the most honest method.

After restaurating I became a shrink. There's a psychological affliction that besets business owners during a downturn called "narcissistic injury." This means that all the dreams the restaurateur had about her/his business aren't coming true, and they become bitter. E.G., People won't buy the food that is for sale, or they won't pay the asking price.

If you're practical-minded like me, you'd say, "Well then change the food mix or the prices." But somebody who is experiencing narcissistic injury thinks that changing recipes or prices is like committing suicide (they over-identify with the way they do things, equating it with their very identity and existence), and no matter what, they won't change. In fact, they'll get angry (anger/rage is the primary symptom of an active narcissistic injury), and they'll take this anger out on the customers, by complaining about them, or passively-aggressively charging cheese tax, or stiffing them on the french fries (as my restaurant did today).

Similar idea: Last week a friend reported that although he wants to buy a brand-new car, the car places treat him like crap and aren't even trying. Now he's just going to buy it online and cut out the salespeople. The fact that these places aren't selling cars doesn't make salespeople try harder to sell cars, it makes them angry and resentful towards the public that is not buying them, and this resentment is dumped upon salespeoples' family, friends, and even car buyers. Rational economy? I don't think so.

Final point, back to value. I think there is restaurant money to be made in this economy, but you will have to be able to make inexpensive food that tastes good, and feed it to people at a price that they know is a deal compared with other places. You will make your money on volume and repeat business, not the 80X markup on your tea. If cheese is too expensive, make food without cheese. But narcissists don't like to do cheap food, serve poor people, or be controlled by market forces--they tend to see their businesses as doing the world a favor, expecting people to fall over in gratitude for their brilliance, rather than managing a business serving real people. So my suggestion is not one for narcissists.

I love the restaurant's math - or their interpretation of the "meals including cheese".

The surcharge includes 7.5% on the small sprite. I don't know about this place but the one down the street from me doesn't put cheese in the soft drinks.

I see decreasing portion sizes more hidden than increasing menu price. The surcharge on the bill? It is a little sneaky, some people don't eye their bill as closely as others do.

I'm glad that I moved from Houston to Dallas.

For all you readers from Houston... y'all know of a place called Agora on Westheimer? Great coffee shop. It's expensive (makes Starbucks look cheap, both in price and quality)... but you really do know what you're paying for. The atmosphere is amazing, the coffee is delicious, and the patrons just add to the experience. Unfortunately there's not a place like that in Dallas. Agora is the only real thing I miss about Houston. Someday, I will open up a coffee shop just as popular up here... someday.

As to the Chacho's bit... I tend to stay away from restaurants that do this. I know prices are going up. Just raise your damn prices.

I'm within dining-distance of Chacho's, and I have no intention of ever going there. Based on other comments here, they are overcharging the public for soft drinks when they do this. I'm hoping a Texas official will see this article and fine Chacho's for defrauding the public. It would have been a lot easier for them to add a "25¢ cheese surcharge" key to their cash registers (or change the damn menus, cheapskates!)

@Jim (The Canuck One):

Go in there and DEMAND the cheese on your sprite, the cheese that you are PAYING for.

It's kind of funny how the people who come up with policies like this have very little knowledge of how PR works. You raise prices, people grumble, maybe a few leave, but in the end most people understand and get over it.

However, when you slap surcharge on the bill and it gets out via sites like consumerist.com, well, you've just created a firestorm of negative opinion.

I don't live near a Chachos, but if I'm ever near one and consider dining there, I'm afraid this thread is going to stay branded into my mind for a long time - long after any reversals of such policies.

Rather than raising restaurant prices -- whether with sneaky surcharges or otherwise -- why not leave prices the same and just make gargantuan portion sizes a little smaller? Eating out would cost the same, profit margins could stay the same, and maybe we wouldn't waste so much food. It would be healthier, and totally above-board as long as it's announced on the menu: "New! Slightly smaller portions for less waste."

@TexasBelle: The reason is that food is one of the smallest, if not the smallest, cost issues for the restaurants. It's all about labor and overhead (and that's what your meal price increases are covering) and heaping on food is one way they can please you without breaking them. So by the same token, reducing your portion won't help the bottom line so much. That said, I'm sure some of this is being done.

@gmoney: Exactly what I was going to say. They'd have to cut portions in half or more to really realize much of a difference on the bottom line.