Dive Brief:

• New York City's City Council is mulling a bill that would allow restaurant surcharges of up to 15%. Restaurants would only be allowed to use these surcharges if they pay all of their employees the city's minimum wage of $15 per hour before tips. The bill would repeal temporary surcharge legislation introduced by Councilman Joe Borelli and approved in September. 
• The temporary COVID-19 surcharge legislation allows restaurants to charge a 10% extra fee until 90 days after indoor dining resumed at full capacity, which happened on May 19, meaning the cutoff will come in August. Borelli opposes the new proposal to make these surcharges permanent, he told Silive.com. 
• The New York Hospitality Alliance opposes the new bill because it would end the current COVID-19 recovery surcharge law before it is set to expire and because it would exclude restaurants that receive a tip credit. The association argues these changes don't "make financial or operational sense" for New York City restaurants, which have suffered major revenue losses after a year of stringent restrictions. 

Dive Insight:

The tension over this proposed legislation shows just how hard it will be to pinpoint when the pandemic "ends" for restaurants. Even though most dining room restrictions have been abolished or significantly relaxed around the country and diner demand is booming, many operators are still reeling from COVID-19's aftershocks. 

This is why the NYCHA argues the existing surcharge legislation should remain in place. 

"Restaurants want a smaller surcharge while continuing to take the tip credit, or a larger surcharge in which case they would not take the tip credit," the association writes on its website. "The math doesn’t work otherwise, and we also are concerned that the City would be overstepping its authority by modifying state and federal labor law."

Borelli opposes the new legislation for a different reason — he believes it is time for the financial safety net of the temporary surcharges to be phased out without being replaced. 

"It was a temporary way for restaurants to openly charge their customers without raising prices long-term. We should be looking for a date for its sunset and be thankful that it helped keep a few places afloat, while others had to raise their prices and hope customers didn’t complain," Borelli told Silive.com

Because New York City is such a major and influential restaurant market, the City Council's decision could shape how other jurisdictions approach restaurant industry support as the pandemic ebbs. Earlier this month, the National Restaurant Association urged governors, mayors and state legislators to create a state-based restaurant grant fund to support restaurants while they wait for additional federal aid, which could come through a refill of the Restaurant Revitalization Fund.