Adding Additional Fees (Part I)

Our financial challenges are far from over. Thanks to rising food & gas prices, inflation, and the recession, we need to start providing a cushion to keep our parks and FEC businesses financially healthy. The next two articles will take a closer look into extra charges and the revenue potential of implementing them.

It doesn't matter if you order something from Amazon, if you stay at a hotel, travel, or eat at your favorite restaurant; new fees are emerging everywhere you go. Let's look at some of the increasingly common fees that are out there today that you might not have seen a few years ago.?

Credit Card Processing Fees

We all have credit card machines because it is a fast and easy way for guests to pay. But credit card machines have processing fees that we have to pay. There is a way to recoup the loss. But, it is important to obey the laws when you are charging fees for the processing services.

Whenever you go to a restaurant or pay a bill, you may notice a fee being tacked on to the normal amount that you owe.?

• Convenience Fees: This is applied for the “convenience” of using a credit card. These fees are legal in all 50 states. It can be charged anytime a payment is made that is not a “normal” transaction for the business. For instance, if a purchase is made online it is a good way to add this fee and make a little extra money. But, countless businesses apply it for merely accepting credit card payments.
• Surcharges: These are not legal in all 50 states in fact they're only legal in a few, but also describe credit card processing fees.?

If you want to charge a fee to cover the processing that you have to pay, you need to do a little legal research and make sure that you don't get into any trouble with applying this extra charge. You also want to make sure that it is clearly posted on your website and in your park or FEC. It doesn't need to be posted everywhere, but a small sign posted in an open location where guests will see it is important.?

Service Fee

Service fees can be added to almost any bill. Most often they are used in the hospitality, banking and tech industries. Oftentimes, restaurants, hotels, travel, banking, etc almost always have some sort of a service fee added to the bill. But what is it exactly?

There are a number of reasons a company may charge a service fee. A business can charge this fee for providing customer service, administrative duties, or any type of processing they wish, it is quite versatile. There is really no set “service” for this charge.

This is not to be confused with a tip or gratuity. A tip is a voluntary monetary allowance made by the customer. The two fees are not synonymous. The service fee goes to the company, not a specific employee.?

There are laws that govern how much companies can legally charge their clients in each state. In the airline industry, you might find that it's a specific dollar amount attached to a specific service. In most industries, however, it is a set percentage of what the guest purchases and that percentage is added to their final bill.

Cleaning Fees

For big parties and events, many businesses charge a clean-up fee. And, why not? It is an added service. This isn’t only in the family entertainment industry but in the food and beverage industry as well. We happen to be both, for the most part.

Enforced Gratuity

A mandatory gratuity or equity fee is a percentage added to the total bill for purposes of a tip. Depending on the state and laws therein, it may be equally distributed between the staff at the end of the month, the company may get to decide only certain employees get equal shares of the money, and some businesses might actually keep a portion to “cover the cost of employee pay”.

Wellness Fees

Some states are imposing a wellness fee to the total cost of purchases at restaurants or for other service industries. These are basically for the company to provide medical and wellness benefits for their staff. It helps alleviate some of the financial burden of offering specific benefits in the employment packages such as healthcare, mental health services and even paid sick leave.?

Hospitality Fees?

These have been popping up here and there, mostly at hotels, resorts, and restaurants. Some businesses that are passing this added expense on to their customers have stated that it is to help them provide competitive compensation for their staff members.?

Other businesses have used this term to describe providing customer service benefits. Depending on your state, it can be utilized in a “tip pool” for employees, it can be for offering desired benefits for customers such as wifi access, food service, or delivery, or it can be considered payment for another “specific type of hospitality service.”?

It can come in the form of a dollar amount such as $25 per day a customer enjoys the business, or 15% tacked on to the customer’s final bill. Again, it depends on the area and the executive leadership behind each company.

Handling Fees?

We have all been there. We buy something off of Amazon or another of our favorite online stores, and we are charged shipping and handling. But did you know that there are also handling fees used by other businesses as well? It's true. If you package items for a? guest, this could qualify as “handling.” Whether it is a meal or merchandise, if your staff handles it there might be a reason to apply a handling charge. Once again, it depends on your state laws.?

Charging Fees to Guests

This can be a tricky subject. You don't want to impose too many fees on your guests, but it is always good to increase the money coming in. Increasing that revenue can keep your doors open and cover expenses that you may find difficult to keep up with during hard economic times.?

It’s a good idea to always consult your lawyer or legal department regarding the laws in your area if you are planning to start adding extra charges to your guest’s purchases.

I hope you have enjoyed part one of this imposable fee series, and hope that you will read the next segment to find out what this could mean for your Park or FEC. This is a complex subject that needs proper integration in order to effectively maintain the delicate balance. If the implementation is not done properly it can backfire. You are here to make money not lose money.

Have you read an article I’ve published here on LinkedIn and want to talk about the topic a little more? If you’d like to book a call with me regarding the Family Entertainment Industry or Private Equity, please feel free. I enjoy connecting & collaborating with others in the same professional space.

Tim Murphy is CEO of APX Operating Company, dba Boomers Parks, under the ownership of Cerberus private equity ($55B assets). Boomers Parks owns six family entertainment centers and two water parks with locations in California, Florida, and New Jersey.

?As CEO of Boomers Parks since 2020, Tim took these eight parks from bankruptcy to profitability in just a year – in the middle of a global pandemic. When Boomers acquired these parks, they were operating at a $10 million loss. Tim transformed the customer experience and added new revenue streams to generate a 180% increase in revenue in 2021 (and on track to be a 250% increase in 2022).

?Tim launched his 35+ year career at Walt Disney World and has since served more than 150 entertainment, restaurant, and food & beverage brands across more than 10,000 locations in C-suite and senior positions.

Additionally, Tim is a Board Director with Coney Park, Happy City and YuKids - Family Entertainment & Amusement Parks, part of The Carlyle Group ($275B assets), a private equity firm that operates 150+ family entertainment centers and amusement parks in Latin America.??

Tim has worked with top-tier entertainment and restaurant brands including Disney, Rebounderz Trampoline Parks, Darden Restaurants (Olive Garden, Bahama Breeze, etc.), Red Lobster, Jimmy John’s, Applebee’s, Sonny’s Bar-B-Q, Denny’s, El Pollo Loco, Hardee’s, Golden Corral, and Firehouse Subs.

Tim has overseen more than 35 purchase transactions involving over 1,200 restaurants, stores, and park locations.? With extensive experience in buying and selling businesses, handling negotiations with buyers and sellers, and creating strategic partnerships to build strong brands, Tim has facilitated deals ranging from $11 million to $350 million+.?

Tim is a member of International Association of Amusement Parks & Attractions (IAAPA), California Attractions and Parks Association (CAPA), Florida Attractions Association (FAA), American Amusement Machine Association (AAMA), National Restaurant Association (NRA) California Restaurant Association (CRA), World Waterpark Association (WWA) and International Franchising Association (IFA). He is a licensed commercial real estate broker in the State of Florida. Tim earned a BS/BA in Accounting from the University of Central Florida and an MBA in Finance from Orlando College.