PROTECTING THE BOTTOM LINE

Credit card fees are an unavoidable part of conducting business in the modern restaurant industry, often taking away about 3% of each transaction. These fees can vary, with some providers like AMEX charging even higher rates. While these costs may seem like a frustrating drain on profits, it’s essential to approach them strategically to minimize their impact without compromising the customer experience.

For franchisees, franchisors often take on the responsibility of negotiating the lowest possible rates, providing some relief. Independent or small brand operators may also explore options with different credit card processors like Worldpay, which might offer lower rates. However, it’s worth noting that some restaurants are tempted to pass these fees directly to the customer as a surcharge.

While adding a surcharge might seem like an easy way to recoup costs, it can have a detrimental effect on the customer experience. Customers often react negatively to unexpected fees, feeling nickeled and dimed, and such a decision may impact customer loyalty and repeat business.

Instead, a more customer-centric approach is to consider these fees as a standard cost of doing business and incorporate them into the overall pricing strategy. By factoring credit card fees into menu prices, restaurants can absorb these costs without drawing attention to them. This method helps maintain transparency with customers, fosters a sense of trust, and promotes a positive dining experience.

In conclusion, while credit card fees are an unavoidable expense, how a restaurant chooses to manage these costs can significantly affect both the bottom line and customer satisfaction. By integrating these fees into pricing rather than imposing a surcharge, restaurants can keep costs down while maintaining a focus on customer experience and long-term profitability.