As Colorado Springs restaurants add inflation fees, some customers push back

Nov. 3—Next time you dine out, you might notice something new on the bill: an inflation fee.

Restaurants across Colorado Springs and the state are adding the fees to customers' bills or raising their menu prices as they try to survive amid soaring operating costs.

"Restaurant margins are incredibly narrow in the best of economic times — typically between 3% and 5%," Denise Mickelsen, the Colorado Restaurant Association's communication director, wrote in an email, "and in the face of historic inflation and an ongoing industrywide labor shortage, higher menu prices and even inflation fees reflect restaurants simply doing their best to remain in business."

Colorado wholesale food costs rose 13.25% over the past 12 months in addition to prices increasing on supplies, energy and labor, Mickelsen wrote.

"Operators are facing increases in overhead that are crushing any hopes of profitability after more than two years of revenue loss and hardship," she wrote.

Omelets Etc, a family-owned breakfast and lunch restaurant with three locations in the greater Colorado Springs area, added a 3.99% inflation fee about two weeks ago to help ease the blow of surging inventory prices on everything from meat to jelly packets, said Alisha Gambrell-Potts, general manger at Omelets Etc's 8th Street location.

"A lot of people have been eating here for the last 12 years at very, very low prices," Gambrell-Potts said.

The majority of Omelets Etc's menu items are priced below $10, according to the restaurant's website. Gambrell-Potts said while most customers understand the fee, some have a hard time accepting the increase. Others would then spend less on the a tip, she added.

"It is a very hard time for everyone," Gambrell-Potts said.

At Odyssey Gastropub, a New American-style eatery at 311 N. Tejon St., owner Tyler Sherman briefly added an inflation fee before resorting to a full menu pricing overhaul. While adding the fee saved Sherman time and money redoing menus and updating point of sales stations, it was not well received by customers, he said.

"It really isn't about the money," Sherman said. "It's the perception about what the money is going to."

Sherman thought the fee would be an easy, transparent way to ease the costs of inflation by posting a sign at the door and a note at the bottom of the bill, but customers did not agree, he said.

"When a customer sees a price, they assume that's what they are going to pay," an online Reddit user commented on a discussion board about the issue. "Getting smacked with a fee after you've eaten feels like a bait and switch."

"Change your menu prices," another wrote. "I should not have to read a menu front to back to determine the price of my single item. I completely understand the need to raise prices to maintain profitability in an industry with ever increasing costs."

So changing menu prices is exactly what Sherman did. But he says changing menus to keep up with the rate of inflation is tricky.

"If you raise your menu prices 3% or 5% today, you're kind of expecting that your expenses won't go up for six months or so until you go to ... release a new menu," Sherman said. "So you want to try to balance it."

Sherman said his new menu prices were much better received than the inflation fee because it is a more standard change many restaurants make.

"We want to provide a good, quality product at reasonable prices," Sherman said. "And seeing what we're charging these days doesn't always make me feel great, but that is where the market is and that's what we have to charge to stay in business."