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New Restaurant Billing Practice Upsets Diners

Lotus of Siam is one of Las Vegas’ most famous Thai restaurants, drawing people from around the world. 


Recently, though, the restaurant started a new billing practice that has upset some customers. Lotus began adding an optional 3 percent surcharge to bills to help pay for employee health insurance. 

Penny Chutima is the manager of the restaurant and the daughter of the chef and owner Saipin Chutima.

She told KNPR's State of Nevada that she decided to add the surcharge after hearing about a similar idea at restaurants in California.

Chutima said the restaurant pays 60 percent of the health care costs and the employees pay the rest. The surcharge now offsets what the employees were paying.

The reaction to the decision has been intense. Customers have said they would not be returning to the restaurant, which is a James Beard award-winning establishment.

Some have suggested the restaurant increase the price of the menu items instead.

Chutima said there are tax reasons for creating a surcharge.

“If I added a 3 percent mark up on to my menu, it’s considered what? – income," she explained, "So when the government sees… when you file at the end of the year – it’s income tax. If I do a 3 percent, which is a 3 percent employee-only, it’s non-taxable."

While the practice is common in California and other places, Lotus of Siam is one of the first restaurants in Nevada to give it a try. Chutima said the history of her restaurant is allowing them to be the canary in the coalmine.

“My mother is very established in the restaurant business. We’ve been in business for 20 years," she said, "All of our employees have actually been with us for a very long time.”

Longtime restaurant critic and blogger John Curtas agreed that Lotus of Siam's reputation is allowing it to be the first restaurant to give the surcharge a try.

“In a sense, they’re sort of like the Colin Kaepernick of local restaurants here," he said, "They’re taking the bullet here for everybody else by doing what is more and more becoming commonplace not so much in Nevada but certainly in California and other cities around the country.”

Curtas wrote about the surcharge for his blog. He received a lot of comments everything from people decrying it as part of the Californication of Nevada to others saying they're willing to pay a few cents for wait staff and cooks to keep their health insurance.

As for Curtas, he's on the fence about whether it is a good idea.

“I think they are to be applauded for what they’re trying to do but I don’t like the optics of it,” he said.

Curtas thinks one of the problems is while Lotus of Siam is trying to do the right thing for its workers the general public doesn't value restaurants and restaurant workers.

“We have put restaurants into this second-class citizen role in America for so long to where we think that waiters don’t have to be paid much and who cares if the dishwasher is paid much and who cares if the owner or the guy cleaning the plates is putting in 12 hour days at a wage much lower than it should be comparable to other types of labor like that,” he said.

Curtas noted that Americans pay a lower percentage of their income for food and service than people in other countries. He said that even though the restaurant business is booming workers aren't paid like other businesses.

He said higher-priced restaurants would get less blowback from customers because if they're paying $250 for a dinner it doesn't matter if a salad is $15 or $16. However, less expensive restaurants get more pushback when they raise their prices even a few dollars.

James Trees is the chef and owner of Esther's Kitchen. He agreed. He said owners of three restaurants in Los Angeles - one high end, one middle and one less expensive - raised their prices to pay for an increase in the minimum wage. Customers at the high-end eatery didn't mind but that was not the case at the less expensive place.

“People at Huckleberry who were buying a $4 muffin? They freaked out,” he said.

Trees was working LA when minimum wage hikes and rules for employee health care went into effect. He said the mandates made the profit margins for restaurants even thinner.

“In the last 10 years, the amount a restaurant can make going from 15 and 20 percent down to five and four percent,” he said.

And he said restaurant owners are afraid to raise prices, especially if they're making something a customer feels they could get cheaper somewhere else with little explanation for the price difference.

But Chutima pointed out that if a dish at one restaurant is a lot cheaper it is either because the quality of the food isn't as good or because the employees aren't getting paid as much or they aren't getting any benefits.

Trees said Lotus of Siam is actually unusual because it is offering health care benefits to its employees. Most restaurants -including his own - can't afford to provide health care even though they want to.

“The first year my restaurant was open I didn’t have health insurance,” he said.

Despite the pushback from customers, Chutima said the 3 percent surcharge is staying.

“My whole 3 percent is actually to show that restaurants don’t do what everyone assumes. We’re not billionaires. We’re not millionaires," she said.


Penny  Chutima, manager, Lotus of Siam; John Curtas, restaurant critic,; James Trees, chef and owner, Esther's Kitchen

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Joe Schoenmann joined Nevada Public Radio in 2014. He works with a talented team of producers at State of Nevada who explore the casino industry, sports, politics, public health and everything in between.