'COVID-19 surcharge': What it means and why restaurants are adopting it

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Though businesses around the country are getting the green light to partially return to service, the coronavirus pandemic has crippled the restaurant industry in many ways.

The forced closures of dining rooms resulted in incredible financial losses for restaurants, which had to rely on delivery and takeout to pay bills during the last couple of months.

The surcharge seems to be here to stay, as other states are adopting it to offset the rising costs of suppliers.

The surcharge seems to be here to stay, as other states are adopting it to offset the rising costs of suppliers. (iStock)

However, forcing businesses to reduce service has not been the only negative impact facing the restaurant industry. Meat shortages and food supply issues have caused distributors to raise prices.

This, in turn, as forced restaurants to adopt new practices.

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Kiko Japanese Steakhouse & Sushi Lounge, a restaurant in West Plains, Mo., was one of several in the area to respond to the increase in supplier costs by implementing a COVID-19 surcharge of 5 percent.

Instead of us raising prices across the board, we are doing this surcharge of 5 percent.

— Billy Yuzar, owner of Kiko Japanese Steakhouse & Sushi Lounge

The restaurant's owner, Billy Yuzar, tells Fox News that the surcharge is advertised online, on the restaurant’s front door, and at the register, so customers are well aware of the charge.

“We have been transparent about it. Right when you walk into our restaurant, it’s there,” he said. “I made our notice so people read it, making it bold. 'Please Read Me.’ And then I put some emoticon.”

The move, Yuzar says, is an attempt to keep his business afloat and staff employed during the pandemic.

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“I am at the bottom of the supply chain. I buy my food from U.S. Food, their prices go up. Now, starting last week, the prices went up, my margin is negative. So I have to do this to survive,” Yuzar said in an interview with Fox News.

Billy Yuzar posted this notice on the door and register of his restaurant, to inform his customers of the surcharge.

Billy Yuzar posted this notice on the door and register of his restaurant, to inform his customers of the surcharge. (Billy Yuzar)

“Instead of us raising prices across the board, we are doing this surcharge of 5 percent,” he added. “Hopefully… we can adjust it weekly. Lower the cost as things change.”

Yuzar began using the surcharge on May 6, and he says the response from customers has been largely positive despite recent backlash the business received after a photo of a receipt, complete with the new surcharge, was shared online.

The picture, he says, was shared by a third party, and not the customer who received it.

“That receipt is actually from our actual customer and she understands and is still supporting us,” Yuzar said. (The person who shared the photo to Twitter is seemingly from California, according to her account.)

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Yuzar is now worried for his employees — and his restaurant’s reputation, which he believes is being tarnished with negative reviews from people in Canada and Texas, who had never even visited the location, but merely saw the viral photo on Twitter.

“Actual employees are getting it worse. They are being called stupid on the phone. But they only work here, they don’t make these decisions,” he said, noting another local business, Bootleggers, was “getting it much worse” from “keyboard warriors” outside of the state.

“They don’t have the facts, but are responding to this [picture on social media],” he said.

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Despite the feedback, Yuzar said he’s far from the only local business to institute the surcharge.

“Basically all of the restaurants in West Plain, we’re getting the same supply through the same supplier. U.S. Foods' price is going up,” he said. “The name ‘COVID-19 surcharge’ actually came from [local] Ozark Café who named it that. We agreed to use it.”

The surcharge, however, seems to be here to stay, as other states appear to be adopting it to offset the rising costs from suppliers — and not as a way to pay employee healthcare, which has been suggested online.

San Diego, Calif., and restaurants in Michigan have also added similar coronavirus surcharges to their bills.