Retailers add COVID-19 surcharge for services to help offset costs of pandemic

VANCOUVER — Among the many changes that returning customers to Hatz Hair Studio in North Vancouver may notice is a $5 charge on their bill to help offset costs associated with operating during the coronavirus.

The hair salon is among retailers adding a COVID-19 surcharge, which can range from a few dollars to a percentage of the final bill, as business owners grapple with a combination of new costs from strict sanitation measures and lost revenue from mandated closures.

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"My start-up cost was about $5,000," said Shaun Mitha, owner of Hatz Hair Studio, which he opened in the early 90s. That figure includes materials for cleaning and sanitation in order to adhere to guidelines on preventing the spread of the coronavirus.

When a customer comes in for an appointment, staff members no longer offer to take their coat. Instead, customers receive a box for their personal items that is stored in a locked area and disinfected between uses. Staff spray the customer's hands, clothing and the soles of their shoes with a diluted alcohol solution.

Between clients, staff take 10 minutes to disinfect any touched area. Laundry is done with hot water and disinfectant and the floors are mopped every night, among other measures, Mitha said.

Part of the reopening conversation for him and his team was how to cover these additional costs, he said. They considered raising service prices, but decided a flat $5 charge worked better.

Other hair and nail salons in the area apply a similar COVID-19 charge.

Zazou Salon & Academy in North Vancouver charges $7.55. It calculated its charge by accounting for the revenue it expects to lose by reducing its capacity from 19 chairs to nine, as well as reopening costs such as team training and signage.

The salon preferred to be transparent with the customer via the surcharge, rather than hide the added cost of business within a broad price increase, said Janine Cannon, concierge and marketing manager at Zazou.

"We see it as something that's a temporary thing," she said. The salon intends to reduce the fee and eventually eliminate it as restrictions lift and the working environment returns to a pre-pandemic state.

When the time comes to reopen his Toronto seafood restaurant and other dining establishments safely, Malcolm Smeaton hopes restaurateurs will band together to add a COVID-19 surcharge to customers' bills.

He envisions a percentage — say 10 per cent — added to the bill to help offset added costs, as well as the expected lost revenue with dining-room capacity restrictions.

When eateries in Ontario eventually reopen, Smeaton expects government will mandate dining rooms slash their capacity in half and enforce strict physical distancing measures. For Smeaton's 44-seat Stamp's Lane that would most likely mean he'd be down to 35 per cent occupancy.

Meanwhile, his bills won't be reduced by 65 per cent. An industry-wide surcharge would help prevent eateries from having to raise prices, he said.

"To some degree, this is a way also of drawing attention to the problem," of operating at a reduced capacity when people don't want to pay, for example, $45 for a salmon dinner that pre-pandemic cost them $22, he said.

But the system only works with a critical mass and not many restaurateurs are jumping on board.

When Smeaton suggested the surcharge in a Facebook group for food-industry professionals, many balked at the idea.

"Everyone is struggling during these times. The average person is looking at their own financial stresses and to be hit with something that's called a service fee, I think, is not the way to go," said Pam Fanjoy, who owns a 30-seat restaurant in Hillsburgh, Ont.

She plans to reopen her dining room when permitted, but will focus on special events and switch to a fixed-price menu with limited seatings.

"It allows you to have predictable, controllable food costs," she said.

She's not against raising prices, and would prefer the industry charge what food and services are worth so it can pay living wages to service staff.

"I would rather charge what the actual plate costs."

Zazou, which reopened its doors May 20, has seen negative reaction to its $7.55 fee mostly from non-customers responding to its social media posts, said Cannon.

"Our guests have been amazing about it," she said. "A lot of them are surprised that it's not more expensive."

Since reopening May 19, Mitha's hair studio clientele have not complained about the $5 COVID-19 fee.

"We didn't find any resistance to it," he said, adding staff inform customers about the extra charge when they book their appointments.

He's even noticed customers now leave larger gratuities.

"We found that people (are) actually chipping more now because it's a form of thank you to the staff that's working in there."

This report by The Canadian Press was first published May 26, 2020.

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