What is a “Kitchen Appreciation Fee”? Why does this restaurant in NJ charge customers extra?

Shanti and Steve Mignogna knew they had to do something.

Costs at Talula’s, their popular Asbury Park pizzeria, have soared due to inflation – a scourge felt across the restaurant industry. Basic ingredients like flour, canned tomatoes, cheese, oil and cold cuts were all 30-40% more expensive than usual. Take-out supplies, such as pizza boxes, were also more expensive. Even the price of gas for their pizza oven has gone up 60%.

“We had to quickly figure out how to cover these costs? said Steve Mignogna. “Because otherwise we’re not going to make any money, and you can’t run a business if it’s not making any money.”

The Mignognas considered raising menu prices dramatically, but landed on a more original idea: a 3.5% surcharge for “kitchen appreciation fees” added to the end of each bill at Talula. The policy has been in effect since January, but recently caught the eye of an Asbury Park Facebook group.

“So when did restaurants in Asbury start charging a 3.50% kitchen appreciation fee,” the post asked, including a photo of a recent Talula’s bill. The thread generated nearly 700 comments, with some calling the charges unfair and others defending Talula’s decision.

The discussion comes at a time when restaurants and customers are feeling the pressure and frustration of high inflation for 40 years and some diners are already reconsidering how often they eat out.

The policy is listed on the Talula’s menu and has been advertised on the restaurant’s website. The owner also had conversations with the staff about how to speak to customers if they had any questions. Talula’s says the policy has not only been a major boon to business, but has mostly been welcomed by customers at the Cookman Avenue restaurant.

“We really haven’t had any hindsight on this. I don’t really think anyone complained,” Steve Mignogna said. “Once in a while someone just wanted to know what it was, and we were able to explain it to them.”

The implementation of the surcharge not only kept Talula in business. This allowed the restaurant to give employees a raise without tipping, which the owners say would not have been possible otherwise. Kitchen salaries have increased by an average of 20% thanks to the policy.

“Covering food costs is one thing, but we also wanted to give everyone in the kitchen a big raise because they needed it.” said Steve Mignogna. “Life in Asbury has skyrocketed, rent has gone up 50%.”

Talula opted for a supplement in part because they say it’s cheaper for the customer than increasing each menu item by as much as the food cost has increased. They also felt safe enforcing the policy because they’ve seen restaurants around Asbury Park and across the state add surcharges with a different name — credit card fees.

Manager Nick Boyce checks the online order at Bagels by Jarrett. The West Orange take-out restaurant charges a fee for credit card orders, which is becoming more common throughout New Jersey as restaurant costs rise. Ed Murray | NJ Advance Media for NJ.com

Credit card companies have always charged restaurants a fee to allow them to accept payment by credit. Restaurants usually collect this fee. But with rising costs, more and more people in New Jersey are asking customers to cover it.

James Avery, the owner of The Bonney Read and The Black Swan Public House in Asbury Park, said he paid $80,000 last year in credit card charges. It now charges a 2.5% surcharge if customers pay by credit card and follow the policy.

“It’s very simple, 95% of restaurant transactions are now done by credit card. When you look at that fee, it’s a salary and a half in most cases,” Avery said. “If you choose a payment method that costs me more, I will pass that cost on to people who choose to use it for payment.”

It’s not just sit-down restaurants that are implementing similar policies. Jarrett Seltzer, the owner of Bagels by Jarrett bagel shop and take-out restaurant in West Orange, had been debating a similar strategy for some time. After talking with friends in the industry and realizing that he was among the last companies not to charge credit card payments, he decided to install a 3% fee when paying by card.

“It doesn’t hit the customer that hard, it’s not something that costs $20 to $25,” Seltzer said. “I hate doing this because it feels cheap and picky, but it’s a way for me to keep my other expenses reasonable.”

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Jeremy Schneider can be reached at [email protected] and followed on Twitter at @J_Schneider and on Instagram at @JeremyIsHungryAgain.

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