As businesses reopen, some add a COVID-19 surcharge
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Scott Sanders owns Tobacco Barn Distillery in southern Maryland. About 50% of his revenue used to come from tastings, where people would also buy his bourbon. He’s planning to reopen soon, but he has to take new precautions.
“We’re gonna have to get some outdoor tents, you know, like a wedding tent type of thing. And then you have to clean after all your guests,” he said. “All the tasting cups have to be … you know, you can’t reuse those cups, so they have to be disposable.”
For now, Sanders said, he’s going to absorb the cost of all that, even though his business has dropped off, down about 90% from what it once was. For his customers to come back, he said, they need to feel safe, without an extra charge.
But some businesses are charging customers for COVID-19-related costs. Some hair salons, restaurants, dentists’ offices are charging for protective gear, more disinfectant and those Plexiglas barriers at the cashier. Sometimes it’s in the form of a clearly stated COVID-19 surcharge, often between 3% and 5%, to cover the cost of things like masks and gloves.
Others have just quietly raised prices.
“Many customers feel caught off guard. The perception is very negative. And I will think this is much more of a public-relations issue than a financial one,” said Ted Rossman, an analyst with CreditCards.com.
Businesses should be transparent about COVID-19-related charges, said Lynne Kizis, a lawyer in New Jersey who specializes in consumer protection. “Certainly a business is generally going to be free to raise their prices to reflect whatever increase in overhead they may have. I mean, that may be rent, insurance, labor costs, material costs.”
What companies can’t do, she said, is advertise one amount for a product or service, but then charge more.
COVID-19 Economy FAQs
What’s the latest on the extra COVID-19 unemployment benefits?
As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.
With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?
The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.
Which businesses got Paycheck Protection Program loans?
The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.
Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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