Jethro’s BBQ has recently captured Iowa City residents’ attention due to the addition of an “inflation fee” on customer bills.
This fee, which the restaurant has since renamed to a “market surcharge,” is a 3.5 percent fee added to a bill to accommodate for the fluctuating market. The hope is the fee will allow restaurants to maintain their current menu prices while still responding to the rising costs of operating a restaurant, as the corporate operation manager for Jethro’s BBQ, Heather Henderson, explained to the Des Moines Register.
But extra fees like Jethro’s BBQ’s market surcharge are nothing new.
Mandatory gratuity fees, credit card fees, and delivery fees have all existed for years to compensate for the rising costs of food and labor that restaurants pay for. By December 2024, the average wholesale food price had increased 7 percent from December 2023, according to the National Restaurant Association. The price of eggs has increased by 134.5 percent, fresh vegetables by 27.5 percent, and fresh fruits and melons by 17.3 percent.
There are multiple causes for the rising prices of food items, which Peggy Stover, an associate professor and director of the Marketing Institute at the University of Iowa, said. Stover cited weather patterns like hurricanes in Florida and flooding in Spain, which impacted the prices of oranges and lemons; the war in Ukraine, which impacted the cost of wheat, a shortage of drivers impacting the supply chain; and the bird flu, which has infected over 147,000,000 poultry since January 2024, according to the CDC, and raised the price of eggs and poultry items.
Stover also discussed the impact President Donald Trump’s mass deportations and tariffs would have on the cost and availability of food items and labor with labor prices being a big determiner of food prices. The labor involved in raising crops and animals will be directly influenced by Trump’s mass deportation with 45 percent of hired crop farmworkers in 2017 being undocumented migrant workers, according to Investigate Midwest.
“Mass deportations are going to hurt a lot of the labor within the agriculture industry,” Stover said. “If the new administration goes through with their tariffs, that’s [also] going to start impacting the prices you’re going to be seeing on shelves. For example, if President Trump enacts a 25 percent tariff on Mexico, that means for anything produced [in Mexico] and imported into the U.S., that cost is going to be passed on to consumers.”
But restaurants have already been impacted by the rising prices, and Jethro’s BBQ’s market surcharge is just one response to the price jump.
George Etre, the owner of Formosa Sushi Bar and Iowa Chop House, said rising food prices have caused him to raise menu prices, cut staff hours, and switch vendors in the past.
“We’re getting to the point now, though, where we’re actually going to start lowering [prices], even though our food costs haven’t gone down,” Etre said. “We just don’t feel comfortable passing that cost along because we know how expensive it is for people to eat out.”
For Etre, one of his solutions was to research what his restaurants order from vendors so he can ensure he’s purchasing items at their lowest prices and reimagining his restaurants’ menus.
“Next month, we’ll put out a new menu,” Etre explained. “Because food prices have gone up, but certain items have gone up dramatically, so we’re going to try and mix-and-match to see if we can find items that aren’t as expensive or haven’t risen as much.”
Similarly, Josh Silver, the owner of Nodo, said he had to adjust menu prices after the COVID-19 pandemic.
“Prices got raised during COVID,” Silver said. “We waited a little, then we redid our menu, and I made sure all the prices were what they needed to be. We try not to [raise prices] too often.”
It’s not just local restaurants and cafes that are affected by the rising food prices, as Sara Castlebury, the manager at the UI’s Eckstein Medical Research Building Cafe, said. University Dining is also feeling the effects of the spike in food costs and is navigating these issues by observing how restaurants are responding and using this as a model.
“We try to either match them in prices or we try to make them a little bit less,” Castlebury said. “Unfortunately, prices are being raised, so we’re also trying to look at our different food systems and see if we can get our lettuce cheaper from another brand, or if we can get our yogurt cheaper from a different distributor.”
And while the costs of food and labor are rising, Castlebury said that so far, this has not affected how many students the UI is hiring to work in its dining facilities.
“I know that [University Dining] is looking into shifts that people are covering to see where we need to cut back on shifts or add shifts,” Castlebury said.
Stover agreed with the response from restaurants and cafes, stating that it’s a tough dilemma to maintain a profit while also satisfying customers.
“The restaurant industry, like the grocery industry, have very thin profit margins. If the labor increases or if the price for material increases, it’s going to have a detrimental impact on them,” Stover said. “As far as what restaurants can do, is reconsider portion sizes, making them smaller to where it doesn’t have such an impact on profitability.”
Stover said she couldn’t say whether “inflation fees” would become a popular trend amongst restaurants, but as Silver commented, customers at Jethro’s BBQ seem to agree if it does become a trend, restaurants should be transparent with customers.
“I don’t have an issue with [inflation fees] as long as it’s transparent,” Silver said. “I was brought up that you give the price, and that price should pay for all those things.”
Silver explained how he understood restaurants have to take care of themselves and the people they hire, to which Etre shared similar sentiments.
“Restaurants, in general, is very tough, so everybody’s struggling,” Etre said. “So, please don’t take offense against these restaurants if they are trying to cover some of their costs.”