Trotter on cafes on public holidays
January 9th, 2010 at 2:51 pm by David FarrarChris Trotter writes:
How many times during the holiday period have you seen those irritating notices posted on the doors and windows of restaurants and cafes, informing you that a 15 per cent to 20 per cent “surcharge” will be added to your purchases because of the Holidays Act?
I don’t know about you, but whenever I see such a notice, I turn on my heel and go in search of an alternative eatery. According to the vast majority of restaurateurs and cafe owners who don’t impose these surcharges, it’s what most people do.
I’d like to know Chris’ source for the allegation most cafes don’t charge a surcharge on public holidays. To the contrary I think the overwhelming majority do.
Does the surcharge cover the cost of your lost trade? Probably not.
That is a decision best made by individual owners. Some might advertise no surcharge as an advertising plot, others might need the surcharge to make it worthwhile opening.
The intelligent – and economically rational – course of action for any proprietor in the hospitality industry is obvious. The entirely predictable cost of hiring workers to run a business on statutory holidays can be simply factored into its overall cost structure, and recovered during the course of the financial year.
With no disrespect to Chris, but statements like the above are made by people who I swear have never employed people or tried to run a low margin business like hospitality. They think making a profit is just as simple as factor in overall costs and hey presto.
They just have no idea. Business goes up and down. Staff are rostered on as demand is predicted, but often it can be a mismatch. Your cost of supplies goes up. You need to hire and train more staff. Your cashflow is negative due to tax requirements. so need to borrow.
Only in Neverneverland is it as simple as oh just recover your loss later in the year.
The bottom line is that there is no point in opening a cafe on a public holiday if the marginal cost of doing so is greater than the income for that day. And a 50% hike in staff costs can be the difference between making and losing money. Why would you as a cafe owner spend the day working, to lose money?
I own a polling company. We do not poll on public holidays unless the client will pay the cost of the extra wages. Otherwise I will lose money on the polling done that day, and if I was a cafe owner instead of a pollster, I don’t need Chris Trotter telling me I should just have made more money earlier in the year. It does not work like that.
Now people are quite free to refuse to dine at a cafe with a surcharge on a public holiday – good on them. But you have no right to expect them not to impose a surcharge, if that is the only way they will make a profit from opening that day.
Related posts:
- Whining about surcharges
- Independent Financial Review on Public Holidays
- Mondayising holidays
- Holiday Pay
January 9th, 2010 at 2:57 pm
I don’t understand why people advertise a surcharge ?
Increase the price by all means but don’t go advertising the fact. Stat Holidays are usually usually the busiest times for cafes and as long as punters are prepared to pay, then so what about a surcharge ?
Easy supply/demand
January 9th, 2010 at 3:20 pm
Chris Trotter should go on a diet.
January 9th, 2010 at 3:27 pm
“The intelligent – and economically rational – course of action for any proprietor in the hospitality industry is obvious”
There’s the Labour we know better mantra in a nutshell.
January 9th, 2010 at 3:33 pm
A letter of mine that got published in the Herald after Christmas:
“It appears chardonnay socialism is alive and well in Epsom with your correspondent (“Holiday Surcharge, 28/12/09) advocating the Government legislate to make the “primitive practice” of cafe surcharges on public holidays illegal. Why stop at just public holidays? Let’s also make it illegal for cafes to increase prices on any other day. And let’s not just stop at cafes as it should be illegal for any business to increase their prices! Sadly Boxing Day sales would also be banned because if increasing prices on any given day is illegal, surely businesses reducing prices as they see fit would be illegal as well?
Taking the suggestion to its logical conclusion, all prices should be determined centrally as business owners are clearly too stupid to set their own prices, and consumers are too stupid to choose the product that best suits their needs. Centrally controlled prices are a hallmark of communism, whereas economic freedom, as evidenced by cafe surcharges and Boxing Day sales, is a hallmark of capitalism. I know the system I prefer to live within.”
The argument to spread your costs across the year is completely bogus. Imagine telling a retailer that they shouldn’t give us a discount in the boxing day sales and instead spread the reduction evenly across the rest of the year! Preposterous but effectively what Trotter is advocating.
January 9th, 2010 at 3:56 pm
The rotund Trotter conveniently forgets it was his beloved Clark’s Labour government which passed this law. The hospitality industry opposed it fiercely to no avail.
January 9th, 2010 at 4:18 pm
Chris Trotter should do what I do on a public holiday if I don’t want to cook food at home since I want to go and eat out. The choices are, the local chinese takeaway shop, local KFC, nearest Mc Donald, Burger King, Wendy’s, etc. These fast food restaurants don’t have 15 or 20% surcharges at all, besides the food is tasty & filling.
Vote:January 9th, 2010 at 4:43 pm
Perhaps Trotter should open a cafe and put his business proposals to good use. If he’s so confident in the idea let us see him put his money where his mouth is. I’d be fascinated to see the outcome.
January 9th, 2010 at 4:53 pm
Spider_Pig – And at the same time, charging for ‘corkage’ for breast feeding babies should also be outlawed (whether that Vivian St cafe ever actually charges this $1 ‘corkage’ I do not know).
Vote:January 9th, 2010 at 5:33 pm
Presumably meat and veg should cost the same year-round too – as the off-season storage costs can be simply factored in. New release DVDs and movies shouldn’t be any more expensive either. And the World Cup Final should cost the same as NPC matches because Eden Park can just spread the costs around.
The “economically rational” thing for cafes and restaurants to do would actually be to charge more on any day (or hour) where there is increased demand, even if there were no extra costs. We should be praising them for not doing so, not slamming them for just trying to stay open.
Vote:January 9th, 2010 at 5:51 pm
Here’s where Chris shows some economic illiteracy.
He suggests that if it is uneconomic to open a hospitality business on a public holiday they should put their prices up during the rest of the year (he obviously thinks this would have no effect on demand during the rest of the year) to cover public holidays.
If this were true, what would an economically rational hospitality business owner do?
- Put prices up during the rest of the year, and close on public holidays.
January 9th, 2010 at 6:13 pm
‘Only in Neverland is it as simple as oh just recover those costs throughout the year’ – over egging the pudding there DPF. The service industry demonstrates its ability to deal with employing staff to cover sickness and annual leave without temporarily increasing prices to cover the cost – yet you claim that paying staff one day of 1.5 is too big a hurdle?
You don’t credit nz business owners with much nous do you?
January 9th, 2010 at 6:22 pm
Give the intellectually challenged socialist dim-bulb a bit of wiggle room on this one. Trotter is of that special group of people who thinks the minimum wage and the maximum wage should be set exactly the same and he is also completely unable to understand simple concepts like fiscal drag. See in the minds of simpletons like Trotter cafe’s and restaurants making a profit is bad because… well because private profit is bad.
If trotter had his way all cafe’s and restaurants would be run by the state and all serve exactly the same thing for exactly the same cost.
January 9th, 2010 at 6:32 pm
burt suggests:
Surely he wouldn’t be that cruel? I’m still trying to pass a Radio New Zealand cafeteria sausage roll I consumed in 1981.
Having said that yes, cafe owners have a right to do whatever they want and Trotter has a right to say he thinks some of them are daft for the choices they make. He’s not advocating the cold, dead hand of the state stop them so doing, so what’s the problem?
Vote:January 9th, 2010 at 6:33 pm
Poor old Trotts, it’s just not cricket, you all know how socialists hate opening their wallets, all those bloody cobwebs, my God it goes against everything they believe in. Surely there must be a state run soup kitchen or something similar where a tied old socialist can grab a free feed.
January 9th, 2010 at 7:29 pm
Why hasn’t this useless National government proposed putting the holiday laws back to how they used to be to stop this ridiculous increase in costs. I know one cafe where the owner just refuses to open on stat days because of the extra cost – so her staff don’t get the opportunity to earn any extra money. I mentioned before how our gym club makes the coaches self employed on stat days and we all have to bring extra cash to pay them if there is training on a stat day.
Vote:January 9th, 2010 at 7:37 pm
Chris Trotter’s concern probably has more to do with customer perceptions of the trade union movement and Labour than perceptions of the cafe owner when presented with a bill showing the surcharge. So the obvious way is to lobby for then to average their pricing and not to apply a suecharge. He forgets however this then gives the ones that close on public holidays a competitive advantage at other times.
Vote:January 9th, 2010 at 7:41 pm
Well I jolly well expect them not to impose a surcharge. If the only way they can make a profit from opening that day is with a surcharge, then there is something wrong with their business model. I live in Singapore and there is no such thing as a public holiday surcharge here. Either the place is open or it isn’t – and its almost always open, since the owner doesn’t make money if its closed. When I visit NZ and see that notice, I walk on.
January 9th, 2010 at 7:54 pm
I thought a Statutory Holiday was a statutory, er, holiday.
So the cafes should close. And we can do without our frappe, chocolate whatsits (decaffed and trim, of course) for a day.
Vote:January 9th, 2010 at 8:40 pm
Trotter just wants the double and triple time slashed so he can say “I told you so – you are better off with Labour”.
Vote:January 9th, 2010 at 8:44 pm
Rex Widerstrom
The problem I have with Trotter is that he wants to see staff paid more on public holidays etc but he thinks the cafe should suck up the bill. See Trotter can’t connect the dots between increasing the costs of producing/running something and that having an effect on the price paid by the consumer.
January 9th, 2010 at 8:47 pm
Has Trotter ever noticed that vending machines don’t have a public holiday surcharge on them?
Vote:January 9th, 2010 at 9:26 pm
The cost of labour for supplying a cafe or restaurants goods increase 15-25% on statutory holidays in NZ. No business model has that much fat in it in that industry.
Vote:January 9th, 2010 at 9:48 pm
Slow news day. Only thing he could conjure up to earn his surcharged cash to spend.
Vote:Why would anyone bother to take notice of this slug?
January 9th, 2010 at 9:50 pm
A cafe run by the state?
Now there is a great idea – it would be horrendously expensive with fucken shit service and you would be guaranteed to get served by a fuckwit, who serves you, not for being first in line, but because of who you are and what you can do for them.
Vote:January 9th, 2010 at 10:08 pm
Ha ha, you’re so right.
Trotter has no clue about razor thin margins or competition.
If a cafe did boost it’s prices to compensate for holiday staff costs, then they may well lose business to those that don’t.
End result, out of business.
Vote:January 9th, 2010 at 10:34 pm
Excuse my French, but Jesus H Christ. I presume Trotter is all for government overring private contracts and forcing employers to pay staff 2.5 times their normal wages on public holidays. So what – he expects none of this substantial tax to not be passed on to customers? Does he think the world owes him a favour? Or does Trotter think restaurant owners are made of money?
The real problem with the Holidays Act is not that you have to pay 15% more, it is all the cafes and restaurants that don’t open at all – the effective tax on labour is so steep as to not make it worthwhile for them.
I’m sorry to generalise but I HATE the Left. It is the combination of disrespect for private contract, disrespect for dissenting views, a persistent victimhood that means the world owes them something, and resistance to reason that makes me want to go wherever it is that is out of reach of their evil. What a blight they are.
Vote:January 9th, 2010 at 10:36 pm
“The cost of labour for supplying a cafe or restaurants goods increase 15-25% on statutory holidays in NZ. No business model has that much fat in it in that industry.”
Well, clearly some do, since they don’t impose a surcharge.
Vote:January 9th, 2010 at 10:43 pm
Trotter may be well read but one suspects he does not know enough to realise how little he knows about business when he writes this:
The intelligent – and economically rational – course of action for any proprietor in the hospitality industry is obvious. The entirely predictable cost of hiring workers to run a business on statutory holidays can be simply factored into its overall cost structure, and recovered during the course of the financial year.
That is a statement of pure unadulterated ignorance or arrogance – take your pick. Dining is surely among the most competitive of all industries – yet Trotter serves up hubris in spades by saying they’re all wrong and he’s worked out the answer from his armchair. Trotter’s doesn’t realise that one size doesn’t fit all – the rational answer for one business and its clientele is surely not the rational answer for another. Doesn’t Trotter realise that people at these cafes know their business and their customers and think about little else except how to keep their customers coming back. How could ANYBODY so misunderstand what other people do. Trotter doesn’t understand how little he knows about the world.
Vote:January 9th, 2010 at 10:46 pm
Well, clearly some do, since they don’t impose a surcharge.
Lack of surcharge does not imply fat on the other days. All that’s required is a price sensitive clientele that keep things busy enough on the holiday to cover the additional cost. Or the owners could run the business at a loss for that day as an investment in reputation. Or it could run the business understaffed that day. Or any of a number of other things. The point is that in a competitive business these owners are in a much much better position that outsiders, even really clever ones like Chris Trotter, to understand what is best for their business.
Vote:January 9th, 2010 at 10:55 pm
He’s not advocating the cold, dead hand of the state stop them so doing, so what’s the problem?
Of course Trotter has the right to say what he wants. But the thinking is dangerous. Trotter thinks what cafes do now is irrational, which implies room for the state to come in and make things better. And there’s the danger. You see the same argument behind a great deal of regulation, be it alcohol, smoking, securities and finance. Trotter has made 90% of the case for regulation without taking the last step and saying it., And in New Zealand private property is so disrespected that there is no barrier preventing government from passing regulation of the sort that would fix the problem Trotter imagines. And indeed there is appetite for that sort of regulation.
Vote:January 9th, 2010 at 11:56 pm
Dirty Rat – You advertise a surcharge, because you dont want to reprint all your menus for public holidays. And to not amend your prices, and charge more, is false advertising.
Not necessarily. Some business may have greater turnover by not charging a surcharge than not (that is true) but they may not make any money on the day.
The options for a hospitality business on a public holday are esentially this:
- 1. Open. Pay staff 2.5 x wages. Charge normal prices.
- 2. Open. Pay staff 2.5 x wages. Charge normal prices + surcharge.
- 3. Close. Pay staff 1 x wages. No money earned
All three of these options may lose a hospitality business money for the day. Two of them may make them money. In many cases the owner will simply be aiming for the option that loses them the least money for the day. In many cases that will be 3.
On the flipside, at least hospitality businesses have the option of the surcharge. Your local petrol station doesn’t.
Vote:January 10th, 2010 at 3:44 am
you mean the price of pushing “print” on the computer is too much ?
Vote:January 10th, 2010 at 8:38 am
They have, and it will likely be changed this year.
It’s common for a lot of businesses to adjust prices due to costs and demand. Hotels/motels are a good example.
It’s very common for cafes and restaurants (and a lot of other businesses) to risk running at a loss, especially times like mid week in winter. Most have regular days to open becasue presumably it is better for business overall.
They just have to make a decisions about public public holidays – whether to open, and if they do open, if a surcharge (and possibly less custom) will be more or less likely to make them more than no surcharge and potentially more custom (due to closed and surcharging competitors).
I will usually avoid going somewhere that surcharges.
Vote:January 10th, 2010 at 8:39 am
“Why hasn’t this useless National government proposed putting the holiday laws back to how they used to be..”
Simple. Because the current government is determined to keep us on the bankrupt socialist path, only tinkering at the fringes while making no fundamental changes to the direction set by the corrupt Clark regime.
It should be relatively easy to repel this legislation, but no, the spineless Tories will not do it.
Vote:January 10th, 2010 at 8:50 am
I think Chris is being entirely consistent with his past behaviour. He’d like to be able to have lunch on stat holidays, and he’d like not to pay more. Therefore, logically the govt should legislate to subsidise him by making the rest of us pay more the rest of the year. Obviously whatever is good for Chris is good for the rest of the country.
Vote:January 10th, 2010 at 8:51 am
Read what I said Manolo, they are proposing doing something about it, soon. It has been discussed here recently:
http://www.kiwiblog.co.nz/2009/12/constructive_work_on_holidays.html
Dirty Rat is right about re-printing menus, some places reprint them frequently, some daily (with daily specials listed). It would be simple to print them for public holidays without saying they are surcharging.
Vote:January 10th, 2010 at 9:11 am
Pete / Dirty Rat: if having a surcharge is a political protest, then hiding it would take away the protest element. If it is purely a business choice, then it is possible that printing a special holiday surcharge menu would keep more customers than having a sign saying “surcharge” would.
Vote:January 10th, 2010 at 11:19 am
Pete George, those changes merely appear to clarify and simply the intent of the law change made by Labour – not put the holiday law back to how it was only several years ago when it didn’t cost 2.5x to employ people on a stat day.
Vote:January 10th, 2010 at 12:02 pm
Anthony, we don’t know yet what changes will actually be implemented.
One of the recommendations is to allow for transferring a public holiday to an alternate day – if agreed on this will remove the 2.5x cost. This already happens informally, especially for Anniversary Days.
199 The option of transferring public holidays is potentially less of a financial liability for employers when compared with the requirement to pay employees time and a half for working on the public holiday.
R7: The Group recommends the ability for employers and employees to agree to transfer public holidays should be restored, with conditions…
http://dol.govt.nz/publications/research/holidays-act-review-2009/holidays-act-review_07.asp
Vote:January 10th, 2010 at 12:10 pm
Great. A debate between two blog commeters about how cafes should be running their business.
Let me give you a hint, Pete and Rat. As outsiders we do not have the first clue about what it takes to run these businesses. The use of surcharges is widespread, so it is certain there are good reasons for that, and it is likely there is more than one reason.
Here’s a possibility: reprinting the menus may give the impression holiday charges are their usual charges, discouraging return visits. Here’s another possibility: it costs time and money to reprint and distribute menus for a single day, the chance of mistakes in the new menu is high, and the chance of missing a menu and leaving the wrong one out – either for the holiday or the day after – in the place is also high, which hurts the business.
I’m still blown away by Trotter’s column. He does not understand how little he knows.
Vote:January 10th, 2010 at 1:17 pm
What gets me is it’s advertised as a ‘Public Holiday’ surcharge, and then charge it on days that are not public holidays like Saturday January 2nd. They should advertise it correctly as a “Holidays Amendment Act 2004″ surcharge and then people won’t get confused as to what day it falls on.
Vote:January 10th, 2010 at 3:04 pm
Pete George/Dirty Rat, do you guys know, or want to have a guess at, what percentage of turnover would normally go toward paying wage cost for your average cafe/restuarant on an average day?
Vote:January 10th, 2010 at 3:06 pm
Michael E – Sat Jan 2nd was officially a public holdiday
Vote:January 12th, 2010 at 10:43 am
Trotter is an idiot. We know that. Who is surprised by anything he writes? In fact why bother to read it?
Vote: