When I opened my first restaurant 16 years ago, it was my hope to provide people with a great place to work, a great place to enjoy with friends and family, and a great place that supports its community. To accomplish this while remaining profitable is challenging, and something I’ve discussed before.
I believe the key to a successful business is to hire the best people, and I have always felt strongly that restaurant workers deserve to earn a living wage. This is why we provide our employees with competitive compensation and generous benefits that go above and beyond what is required. Despite this high standard, the rising costs associated with operating a restaurant and employing skilled labor in the Seattle area has outpaced the ability for restaurants to comply without somehow passing these costs on to customers.
At John Howie Steak, we decided 12 months ago to implement a three percent surcharge. The intent was to apply the modest proceeds toward a myriad of new employee costs, including minimum wage increases, expanded health insurance requirements, and new family and medical leave mandates, among many other recently introduced city, county, state and federal requirements.
The John Howie Steak team put a lot of thought and discussion into the decision to add a minimal surcharge. Was it necessary? Yes, we could no longer afford to lower our already low profit margin. Were we alone? No, many of our fine dining peers in Bellevue had already raised their menu prices or – more commonly – replaced tipping entirely with a mandatory 20 percent service charge. Although not ideal, I felt confident our minimal surcharge was the best approach and would be preferred by our guests.
Well, I believe that I was wrong. Despite being as open, honest and transparent as I could about the need for a minimal surcharge, I was surprised when guests and even close friends suggested we rethink our position. I initially felt any price increase –whether to individual menu items, as a minimal surcharge or as an overall service charge – would be received negatively so we needed to have faith in our decision and just ride it out.
It wasn’t until I was on a recent vacation with a close friend who explained to me the surcharge – even if just a few additional dollars – felt like an unpleasant way to end an otherwise lovely evening. He strongly suggested we instead consider nominally increasing the price of a steak or entrée and insisted this was a much more palatable solution. His point was he would not remember being charged a slightly higher price for an entrée, but would always remember being charged a surcharge. Although I disagreed, I appreciated his point of view and began thinking seriously about removing the surcharge.
The next day, my wife and I played golf with our friends. When I paid for the round, I was shocked and dismayed to see a $3.00 water fee added to my bill. When I wondered aloud why the fee wasn’t just added to the green fees and complained to my wife, she responded, “Oh, it’s kind of like your…” before catching herself and saying nothing more. Her unintentional point could not have been clearer and, in that moment, I understood how our surcharge felt to my friend and to our guests. I experienced the same feeling again when I paid a resort fee over and above the nightly fee for my hotel. I felt a little bit like the pot calling the kettle black when I said to myself, “Why don’t they just add the fee into the actual price of the hotel room?”. That’s when I knew we had to eliminate the surcharge.
Over the weekend, we removed the three percent surcharge and made minor price adjustments to the menu at John Howie Steak. We understand our prices already reflect the significant cost of purchasing only the very best steak, meats, seafood and other high-quality ingredients, not to mention the time and preparation required to serve our food in special and innovative ways. It is our hope that you, our guests, understand this is how we must balance the rising cost of doing business in order to also do right by our employees – the people whom I consider to be the best in the business.