Due to the pandemic and the safety guidelines which have greatly limited restaurants' ability to operate, New York City's dining industry has been in crisis for months now, with over a thousand restaurants permanently closing already. Restaurant owners and industry groups have beseeched officials to come up with ways to help them survive, especially with winter approaching—and this week, the City Council passed a bill to allow them to add up to a 10% surcharge on meals as a recovery measure.

Restaurants will now be allowed to add the “COVID-19 Recovery Charge," up to 10% of a customer’s total bill. It passed in a 46-to-2 vote on Wednesday, and as of now, it will be permitted until 90 days after full indoor dining is once again permitted.

“This bill will give restaurants the freedom they need to increase revenue to help cover rapidly rising labor and compliance costs and keep them in business," said Council Member Joe Borelli, who sponsored the legislation. "This new policy is coming as a result of the impact of COVID-19 on our city but I have every intention of making this change permanent." He first introduced a version of this bill over two years ago, when the surcharge was meant to offset rising rent and other operating costs; it didn't have enough backing to be passed until it became a temporary COVID measure.

Cuomo recently announced that indoor dining could resume on September 30th in the city at 25% capacity, with other restrictions including temperature checks at the door, socially distanced tables, mask requirements, a midnight curfew, upgraded air filtration systems, and more. Indoor dining has been allowed throughout the rest of the state at 50% capacity since July. Officials hope that the city can increase the capacity of indoor restaurants to 50% by November 1st, but it all depends on New Yorkers preventing an increase in COVID-19 cases.

Mayoral spokesperson Mitch Schwartz said the mayor's office isn't sure when it will go into effect, but it is expected to happen soon. “The mayor supports the bill and he’ll be proud to sign it," he said. "This is an unprecedented emergency, and we’ll do everything we can to support the industry that employs thousands of New Yorkers and makes us the greatest city in the world.”

The revenue can be used toward any part of the business, but it needs to be clearly disclosed to customers; customers need to be informed that it isn't in lieu of a tip; and the money can't go towards staff wages.

"Outdoor dining and limited capacity indoor dining are helpful, but not enough at this time — and not going to be enough when the cold weather comes," City Council Speaker Corey Johnson said at a press conference on Wednesday. “The goal of the fee is to help restaurants have enough income to cover their costs."

With no sign of the pandemic ending anytime soon, the NYC Hospitality Alliance has been advocating strongly for several financial measures to buoy the industry, like this and the RESTAURANTS Act, a bipartisan federal bill introduced this summer that would create a $120 billion fund to help small restaurants cover the difference between revenues from 2019 and estimated revenues through the rest of the year.

Andrew Rigie, who heads the NYC Hospitality Alliance, told Gothamist the surcharge bill is a positive step forward. "New York City restaurants have been financially devastated, and it only makes matters worse that a 45-year-old regulation discriminates against only the restaurant industry by prohibiting these small businesses from having the option of using a clearly disclosed surcharge, if they so choose," he said. "The passage of the COVID recovery bill will help struggling restaurants generate additional revenue to help pay for expenses like PPE for their employees, outdoor dining setups, rent, labor and other expenses to give them a fighting chance of survival."

Not everyone was fully onboard with the surcharge — the two "no" votes came from Councilwoman Adrienne Adams and Councilman Brad Landers, who argued the surcharge would be bad for workers.

One Fair Wage, a national organization that represents service industry workers, wanted the surcharge to only be allowed for restaurants who pay their workers a full minimum wage. 

“Thousands of these workers are being asked to return to work and expose themselves to the virus for a subminimum wage when tips are down 50-75%, and are facing homelessness, food insecurity, and unable to pay utility bills with winter approaching," said One Fair Wage president Saru Jayaraman. "Making matters worse, these workers are being asked to enforce social distancing and mask rules with the very same customers from whom they must obtain tips to survive."

Supporters of the bill argued that measures like this are the only way restaurants are going to be able to survive in the first place and keep employing those workers, and that it is preferable to restaurants raising menu prices.

Rigie added, "All tipped workers in New York City are guaranteed by law to earn at least the minimum wage and many who earn tips, earn much more than that. And, if some customers tip on top of the recovery charge the way they do sales tax, those workers may end up earning more money in tips."