Washington, D.C. (April 24, 2024) – Today, the Federal Trade Commission held an informal hearing on its recently proposed ban on so-called “junk fees.” The proposed rule has sparked concerns within the restaurant industry, with operators fearing potential price hikes and a shake-up in service practices.
"If the FTC bans delivery fees, we will again be forced to raise our prices to absorb the cost of offering delivery to our customers," expressed Michael P. LaMarca, owner and CEO of the Master Pizza Franchise Group in Cleveland. LaMarca emphasized the importance of these fees, stating that customers appreciate the service provided.
Jeffrey Gosnear, president of Grotto Pizza, echoed these sentiments, highlighting the potential consequences of eliminating delivery fees. He stated, "If we have to put the cost of delivery in the menu price, when you order more, you're going to be paying way more than if we just charged a delivery fee."
Gosnear also addressed the impact on service staff, noting, "When we have large parties, we dedicate at least one server to the table, and that means for part of their shift, that server is giving up other tables where they could be increasing their tip opportunities."
Sean Kennedy, executive vice president of Public Affairs at the National Restaurant Association, described the industry's reaction to the proposed rule as one of shock. Kennedy emphasized the need to find a workable solution that considers the concerns of restaurant operators and customers alike.
The FTC's estimate that implementing the rule could cost operators up to $3.5 billion has raised alarms within the industry. For small independent operators, this cost could amount to approximately 10% of their total income, posing a significant financial burden.
In response to these challenges, the National Restaurant Association has been actively engaging with its membership, Congress, and the FTC to address the potential repercussions of the proposed ban on surcharges. The industry remains committed to finding a solution that balances the interests of all stakeholders involved.
