By Marisa Upson on September 27, 2023
Most restauranteurs thought this was the year when neighborhoods would return to their full measure post-pandemic. Workers would start returning to the office in droves, and service charges would be a thing of the past. But, as with most extraordinary events, it appears “returning” is not an option. And while most of us are aware technology will forever be a burgeoning aspect of the industry, we were hoping for some return to normalcy.
In light of the hopes and misconceptions, we’re highlighting some of the restaurants and communities forever affected by COVID-19 and the precautionary measures we took to stay afloat.
San Francisco’s Financial District
According to data from CBRE, a commercial real estate firm, as reported by abc7news, the vacancy rate in San Francisco’s Financial District was 4% before the pandemic. As of the second quarter of 2023, the vacancy rate remains at over 31%. And according to the chief economist of The Golden City, even spaces with tenants are down by at least 40%.
What does this mean for restaurants? With foot traffic half of what it was before the pandemic, they can no longer rely on the business sector to pull them through. One example is BARBACCO, an Italian restaurant that had been in business in the Financial District for almost 14 years. Unfortunately, it recently closed as it could no longer sustain itself due to reduced traffic.
In an Instagram post, the restaurant shared, “We hoped 2023 would be the year the neighborhood returned to the way it was pre-pandemic, however, that hasn’t been the case. We appreciate each of you for allowing us to serve you over the years, whether it was lunch with coworkers, a date night after a long day, or a meal at one of our many pasta dinners.”
While restaurant service charges are not a new addition, they became more prevalent during the pandemic as establishments looked for any means to bring in additional revenue. Post-pandemic, that practice remains, and some customers have turned to social media to complain. These service fees may help cover employee health insurance, rising wages, inflation, and increasing food costs and may range from 3% to 22%, quite a gap.
The problem arises for customers when the charge does not explain where it goes. Is it considered a tip, which means they do not have to provide an additional tip? Street to Kitchen, a Thai restaurant in Houston, told the New York Times that, without their 22% extra charge, they would be out of business.
Like many restaurants, they wanted to pay their employees more, getting them closer to a living wage and adding additional benefits. They also believed, as many restaurants do, that guests would not accept higher menu prices. In response, their service charge was born.