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COVID-19 Recovery Charge into Effect on 10/17

By NYC Hospitality Alliance

On September 16, the City Council passed legislation that will allow restaurants and bars to charge a COVID-19 Recovery Charge. The law goes into effect on October 17, so restaurant and bar owners should be aware of its major requirements.

 
First, understand that restaurant and bar owners are not required to implement this charge - it's optional.  If you own a restaurant or bar, it is entirely up to you as to whether you want to have it or not. Many restaurant and bar owners supported the legislation because having the option to impose a clearly disclosed surcharge on menu prices is common in the hospitality industry throughout the country, and other industries in New York. New York City is the only jurisdiction in the country where restaurant and bar owners are singled out by being prohibited from having this option. With the COVID-19 Recovery Charge, restaurant and bar owners are given an additional revenue raising tool that can help sustain operations and pay for new expenses such as PPE and outdoor dining structures. Many food and beverage businesses want a way to explain these new expenses to customers without raising menu prices.

Second, if you do decide to try out using the COVID-19 Recovery Charge, these are the rules:
  • Can be set any percentage up to 10% of the consumer's total bill
  • Surcharge is subject to sales tax
  • Surcharge is not a gratuity or tip
  • May not be used in addition to a charge for the administration of a banquet, special function, or package deal
  • May be imposed for on-premises dining only (indoor and outdoor), not for take-out or delivery
  • Must be clearly disclosed on the menu and wherever food and beverage choices are listed such as chalkboards, etc.
  • Must be disclosed to any prospective consumer before any item is ordered by placing it at the bottom of each menu page, whether in paper or electronic format
  • You must state in writing in a font size similar to surrounding text that the COVID-19 Recovery Charge is a surcharge, not a gratuity for employees
  • Must be in English. For bars and restaurants that disclose the surcharge on menus written in other languages, the surcharge must also be in that language. For example, if you have a version of your menu written entirely in Spanish (not just the names of some menu items), then the surcharge must also be disclosed in Spanish
  • When a receipt is provided, it shall disclose the COVID-19 Recovery Charge and the total dollar amount attributable to such surcharge
  • Shall not be given any other name, and shall reference such charge as the "COVID-19 Recovery Charge" except that such charge may be referred to as the "COVID Charge" on any final consumer bill or receipt
  • Final consumer bill shall disclose the COVID-19 Recovery Charge as a separate line
As stated, the law will go into effect October 17 and remain in effect until 90 days after restaurants in New York City are permitted to operate at maximum indoor capacity again. We encourage you to review the text of the new law here.
 
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