New law targets predatory restaurant reservation practices

Minnesota is set to ban so-called junk fees in restaurants, effective January 1, as part of a new law aimed at ensuring consumers know the total cost of their meals upfront. Advocates of the law argue that such fees are often misleading and hurt consumer trust. The law specifically targets extra charges labeled as health and wellness fees, which some restaurants impose on bills, asserting that these fees mask the true price of dining out. Critics, including restaurant owners, contend that service fees are essential for employee compensation and their elimination could lead to staff shortages and diminished service quality. As a response to the new law, some restaurants, like Jester Concepts, plan to pivot their business models. Jester Concepts will replace its previous 5% health and wellness surcharge with a 3% credit card processing fee and slight price increases on menu items. The owners of these establishments express concern that consumers are increasingly sensitive to prices, which makes any uptick in costs more noticeable. They fear that subtle price hikes may prompt negative reviews and alienate price-conscious diners who expect value. The change reflects a significant shift in Minnesota's dining landscape, moving towards greater transparency while balancing the financial needs of restaurants. Additionally, the new legislation comes amidst broader efforts to enhance consumer protection in the service industry, with support from local advocates advocating for fair pricing models. Hospitality Minnesota, the trade association representing the restaurant industry, plans to address the law in the next legislative session, seeking amendments that could better accommodate the financial realities faced by restaurants. Restaurant owners fear the continued viability of their business models is at stake, as they also must navigate the complexities of consumer expectations and regulatory compliance while delivering quality service. In another state, New York, a concurrent legislative effort is addressing a different aspect of the restaurant experience: reservation services. Governor Kathy Hochul signed legislation imposing restrictions on third-party apps that exploit consumers with inflated fees for access to restaurant reservations. The bill seeks to put an end to what has been described as a predatory market, where bots automatically purchase coveted reservations, giving an advantage to those willing to pay a premium. This move indicates a growing awareness among state lawmakers regarding the dynamics of the hospitality sector and the need for both consumer protection and fair market conditions.