With Easter arriving next month I thought it pertinent to rant about the common practice in New Zealand of restaurateurs charging extra on public holidays. But first a little history of the introduction of this nasty little practice of price gouging.
New Zealand’s labour laws were extensively deregulated in the early 1990’s to respond to a market shift in business operating hours. Retailers where freed from the burden of paying staff penal rates for work done on weekends and public holidays. Retailers also flourished with the nation wide introduction of unlimited trading hours. Deregulation also made liquor licences readily available for even the smallest of suburban cafes.
New Zealanders embraced this new found freedom of choice. Cafes and restaurants sprang up to cater for the insatiable coffee culture. But then a new socialist minded government slowly wound back the deregulators clock.
Businesses that were founded during the helicon days of a deregulated labour market also found that their business model relied on trading outside the normal nine to five, Monday to Friday. Cafes experienced their largest turnover occurred on weekends and public holidays.
The Government of the early 2000’s had strong ties to the union movement and pressure soon mounted for labour laws to be punitive towards business. The amendment of the holidays act in 2003 had enormous ramifications on businesses that traded on public holidays.
The restaurant/hospitality industry was among the most visible victims of employee pay rates that required staff to be paid time and a half plus an entitlement to an alternative days holiday for working on a public holiday.
As a form of public protest and to a lesser extent, a means to recoup excessive wage rates, many in the hospitality industry started to charge a 15% Public Holiday Surcharge on top of the menu prices.
Today some cafes and restaurants in the main cities still charge this 15% surcharge although the practice is becoming less frequent. In the tourist resorts you will find the practice universally applied by all in the trade. Some establishments are not content with 15% and have adopted 20% as the preferred public holiday surcharge.
As a retailer in a prior incarnation I employed many staff in stores throughout the country. Many of these stores are located in shopping malls that are required under lease terms to open for trade during public holidays.
Turnover greatly increased on public holidays and was and still is an important bonus to a retailers annual sales. Like all mall based retailers I did not charge a public holiday surcharge. Increases in public holiday wage rates were calculated in the total overall operating expenses and then added to the cost price of a stock unit.
Why is this practice of calculating the extra cost of employing staff on public holidays added into the total overall expenses, beyond the understanding of the hospitality industry? Perhaps I have answered this question previously when I said that their business model relied on operating outside the normal trading hours.
When the business model is working successfully and then the playing field suddenly changes. As was the case of the previous governments change to the employment laws. Restaurants had to find a quick fix for a one off problem that would not effect their pricing structure for most of the year. In otherworlds the hospitality industry did not want to re-write the model or rather re-write the menu prices for an occasional cost overhead problem.
That was many years ago and the cost mark up calculations of the hospitality industry has been reviewed many many times. The added cost should have now been absorbed into the total operating expense but in the case of cafes and restaurants opening in the tourist resorts, the price gouging on public holidays continues.
To add insult to injury, I brunch every day when in New Zealand including public holidays. I have never been charged the surcharge because I am told that I am a regular and a local…. as apposed to a walk in tourist. I am also informed that visitors are generally unaware when the extra is added to the final bill. Some even believe that it is a tax like VAT or GST. It is clearly a price gouge that unfortunately effects visitors disproportionately.