Companies from major retailers and package carriers to local restaurants and hair salons are awakening to a new economic reality in the age of the new coronavirus: Being open for business is almost as hard as being closed. Facing higher costs to keep workers and customers safe and an indefinite period of suppressed demand, businesses are navigating an ever-narrower path to profitability. To make the math work, some businesses are cutting services and jobs. Others are raising prices, including imposing coronavirus-related fees aimed at getting customers to share some of the expenses.

Among the many changes that returning customers to Hatz Hair Studio in North Vancouver may notice is a $5 charge on their bill to help offset costs associated with operating during the coronavirus. Part of the reopening conversation for Shaun Mitha, owner of Hatz Hair Studio, and his team was how to cover these additional costs. They considered raising service prices, but decided a flat $5 charge worked better. Other hair and nail salons in the area apply a similar COVID-19 charge.

When the time comes to reopen his Toronto seafood restaurant and other dining establishments safely, Malcolm Smeaton hopes restaurateurs will band together to add a COVID-19 surcharge to customers’ bills. He envisions a percentage — say 10% — added to the bill to help offset added costs, as well as the expected lost revenue with dining-room capacity restrictions. When eateries in Ontario eventually reopen, Smeaton expects government will mandate dining rooms slash their capacity in half and enforce strict physical distancing measures. For Smeaton’s 44-seat Stamp’s Lane that would most likely mean he’d be down to 35% occupancy.

Meanwhile, his bills won’t be reduced by 65%. An industry-wide surcharge would help prevent eateries from having to raise prices, he said. “To some degree, this is a way also of drawing attention to the problem,” of operating at a reduced capacity when people don’t want to pay, for example, $45 for a salmon dinner that pre-pandemic cost them $22, he said. But the system only works with a critical mass and not many restaurateurs are jumping on board. When Smeaton suggested the surcharge in a Facebook group for food-industry professionals, many balked at the idea.

“Everyone is struggling during these times. The average person is looking at their own financial stresses and to be hit with something that’s called a service fee, I think, is not the way to go,” said Pam Fanjoy, who owns a 30-seat restaurant in Hillsburgh, Ont. She plans to reopen her dining room when permitted, but will focus on special events and switch to a fixed-price menu with limited seating. “It allows you to have predictable, controllable food costs,” she said. She’s not against raising prices, and would prefer the industry charge what food and services are worth so it can pay living wages to service staff.“I would rather charge what the actual plate costs.”

Since reopening May 19, Mitha’s hair studio clientele have not complained about the $5 COVID-19 fee. “We didn’t find any resistance to it,” he said, adding staff inform customers about the extra charge when they book their appointments.He’s even noticed customers now leave larger gratuities.

Source: The Star
Source: The Star