Shanti and Steve Mignogna knew they had to do something.
Costs at Talula’s, their popular Asbury Park pizzeria, were through the roof due to inflation — a plague felt throughout the restaurant industry. Core ingredients like flour, canned tomatoes, cheese, oil and cured meats were all costing 30 to 40% more than usual. Takeout supplies, like pizza boxes, were more expensive, too. Even the price of gas for their pizza oven was up 60%.
“We had to quickly figure out, how do we cover these costs?” Steve Mignogna said. “Because if not, we’re not going to make any money, and you can’t operate a business if it doesn’t make money.”
The Mignognas thought about significantly raising menu prices, but landed on a more novel idea: A 3.5% “kitchen appreciation fee” surcharge tacked on the end of every bill at Talula’s. The policy has been in effect since January, but just recently caught the attention of an Asbury Park Facebook group.
“So when did restaurants in Asbury start charging kitchen appreciation fee of 3.50%” the post asked, including a picture of a recent bill from Talula’s. The thread generated nearly 700 comments, with some calling the fee unfair and others defending Talula’s decision.
The discussion comes at a time when both restaurants and customers alike are feeling the squeeze and frustration of 40-year high inflation and some diners are already reconsidering how often they eat out.
The policy is listed on the Talula’s menu and was announced on the restaurant’s website. Ownership also had conversations with the staff about how to talk to customers about it if they had questions. Talula’s says the policy has not only been a major boon for business, but mostly has well-received by the Cookman Avenue eatery’s customers.
“We really didn’t have any pushback on it. I don’t think really anyone complained,” Steve Mignogna said. “Every once a while someone would just want to know what it was, and we were able to explain it to them.”
Implementing the surcharge has not only kept Talula’s in business. It has allowed the restaurant to give non-tipped employees a raise, which the owners say would not have been possible otherwise. Salaries in the kitchen have gone up an average of 20% thanks to the policy.
“Covering the food costs is one thing, but we also wanted to give everyone in the kitchen a large raise, because they needed it.” Steve Mignogna said. “Living in Asbury has skyrocketed, rent is up 50%.”
Talula’s settled on a surcharge partially because they say it’s cheaper for the customer than raising every menu item as much as the food costs have gone up. They also felt safe imposing the policy because they saw restaurants around Asbury Park and throughout state adding surcharges with a different name — credit card fees.
Credit card companies have always charged restaurants a fee to allow them to take payment via credit. Restaurants typically pick up that fee. But with costs on the rise, more and more around New Jersey are asking customers to cover it.
James Avery, the owner of The Bonney Read and The Black Swan Public House in Asbury Park, said he paid $80,000 last year in credit card fees. He now charges an extra 2.5% if customers pay via credit card, and stands by the policy.
“It’s very simple, 95% of restaurant transactions now are via credit card. When you look at those fees, it’s a salary and a half in most cases,” Avery said. “If you choose a form of payment that comes at a higher cost to me, I’m going to transfer that cost to the people who choose to utilize that for the payment.”
It isn’t just sit-down restaurants that are implementing similar policies either. Jarrett Seltzer, the owner of bagel shop and takeout restaurant Bagels by Jarrett in West Orange, had debated a similar strategy for quite some time. After talking with friends in the industry and realizing he was among the last businesses not charging for credit card payments, he decided to install a 3% fee if paying by card.
“It doesn’t hit the customer that hard, it’s not something that’s 20 bucks going to 25 bucks,” Seltzer said. “I hate to do that because to me it seems cheap and picky, but it’s a way for me to keep my other costs at a reasonable price.”
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Jeremy Schneider may be reached at jschneider@njadvancemedia.com and followed on Twitter at @J_Schneider and on Instagram at @JeremyIsHungryAgain.
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