Credit card charges at trendy restaurants are new on menus

For Mary Diedrich, a recent quiet brunch on the Lower East Side turned into a frantic race for cash when the bill came with a 3% credit card fee.

“Notice,” a sign in bold, red capitals outside the Poco tapas restaurant read, “This business has a 3% cash adjustment built into all prices. All purchases made with a credit card or debit will receive a non-cash adjustment and will be reflected on your bill.

Diedrich, 34, launched his Chase app so he could find an ATM and withdraw a few hundred dollars to cover the meal.

“I thought, ‘Why would we spend that extra money?'” she told the Post. “Taxi prices are more expensive these days, if you can save a few dollars, you’ll choose to save them.”

Mary Diedrich outside Poco, a tapas restaurant, on the Lower East Side where a sign informs diners of a 3% charge for credit card use.
Courtesy of Mary Diedrich
A 3% credit card fee added to Diedrich's check from a recent brunch at Poco on the Lower East Side.
A 3% credit card fee added to Diedrich’s check from a recent brunch at Poco on the Lower East Side.
Courtesy of Mary Diedrich

Cheap nail salons, bodegas and pizzerias have long offered secret discounts for cash payment or additional credit card fees. But now hip, upscale restaurants are also offering incentives to pay with cold, hard stuff, offering up to 10% off those willing to lug hundreds of dollars to pay for ceviche samplers and bottles of Sancerre. With increasingly thin profit margins, general inflation and rising credit card fees – merchants in the US paid $137.83 billion in processing fees in 2021, up 24.3 % compared to the previous year, according to a Nilson Report – it’s yet another way restaurants are trying to stay afloat in these trying times.

“It’s all about the bottom line for these companies, and credit card fees are one of the biggest and most frustrating costs they face,” said Matt Schulz, chief credit analyst at Lending Tree, a platform that connects borrowers to lending operators. “I don’t think there’s any doubt that we’ll see more restaurants and businesses [doing this].”

Carlo Silva, the master of Mission Ceviche on the Upper East Side.
Carlo Silva, the butler of Mission Ceviche on the Upper East Side, one of several restaurants that have instituted credit card fees.
Stephane Yang

“Credit card interchange fees are often the third highest operating cost for restaurants, behind food and payroll,” added Brennan Duckett, director of technology and innovation policy. at the National Restaurant Association. “So menu prices are slowly rising, and more often consumers are seeing credit card charges as part of their bills.”

At Mission Ceviche, a Peruvian restaurant on the Upper East Side with a $46 branzino and $165 tomahawk steak on the menu, closing bills show diners getting a 3.50% discount if they pay in cash.

Customers don’t seem bothered.

“They don’t care too much. We probably get one complaint a week,” said Carlo Silva, butler at Mission Ceviche. He said 95% of people still pay with credit cards despite signs hanging around the restaurant stating that “if you pay cash you won’t be charged”.

A sign showing the 3.5% charge for credit cards at Mission Ceviche on Manhattan's Upper East Side.
A sign showing the 3.50% charge for credit cards at Mission Ceviche on Manhattan’s Upper East Side.
Stephane Yang

Saving money on credit card fees could contribute to higher food prices, said general manager and partner of Mission Ceviche, Miguel Yarrow.

“Everything right now is more expensive – seafood, lamb, eggs, milk, all the ingredients we use,” Yarrow said, adding, “We have a CVS next door – it’s easy access for customers who want to pay in cash.”

The law also has no problems with the practice. In 2019, merchants in New York were allowed to charge extra fees for credit card purchases as long as the price is clearly marked, following a lengthy legal battle. However, businesses are not permitted to not accept cash. After a number of restaurants, including Union Square Hospitality Group and Sweetgreen, switched to cashless models, the city council banned the practice in January 2020.

Dinners at Mission Ceviche.
People dine at Mission Ceviche on Manhattan’s Upper East Side where a 3% credit card fee is applied due to high food costs, management said.
Stephane Yang

At Lamia’s Fish Market restaurant on the Lower East Side, diners get a huge 10% cash discount.

“I try not to raise our prices,” says owner Lamia Funti. “We stay pretty much the same, our profit margin is much lower – it’s that or you have fewer customers. It’s been difficult for everyone.”

Still, Funti said only about 2% of customers pay cash.

Diedrich, meanwhile, never found an ATM and ended up paying by card for her brunch, swallowing the 3% fee. She said she was unlikely to make carrying a wad of cash a habit in an increasingly dangerous city.

“I prefer not to travel with large sums of money, especially if I take public transport,” Diedrich said. “There’s a price to pay for everything these days.”

About Shirley L. Kreger

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