As Minnesota braces for the ban on so-called “Junk Fees” set to take effect on January 1st, those within the state's hospitality sector are voicing concerns over the legislation that was intended to streamline costs for consumers. The law, sponsored by Rep. Emma Greenman (DFL-Minneapolis) and Sen. Lindsey Port (DFL-Burnsville), and signed by Governor Tim Walz, disallows hidden fees not included in advertised prices. According to FOX 9, for services impacted by consumer selection, preference, or based on distance or time, those costs must now be explicitly disclosed.
Operating within a diverse and intricate industry, hospitality businesses must navigate the upcoming mandate, balancing the books while remaining competitive. Angie Whitcomb, President and CEO of Hospitality Minnesota, argues that different business models make a singular legislative approach impractical. She stated in a recent interview obtained by FOX 9, "When you think about the hospitality industry, all of our members have unique business operating models. Private clubs operate differently than catering companies that operate differently than the restaurants." Whitcomb called for a consideration of the nuances within these businesses, highlighting that each entity uses fees in varied ways.
There is also discussion on how these fees should be perceived. Rather than shrouded costs, many in the industry view them as integral components of employee compensation. "The message I want people to understand are service fees are not junk. These fees are dedicated funds that go directly to the employees in the form of wages and or benefits," Whitcomb told FOX 9. She supported greater transparency in pricing, preferring itemized disclosures of these fees over all-inclusive item price increases.
Brent Frederick, owner of Jester Concepts, echoes the sentiment, wary of customer reactions to rising costs. Starting in January, Frederick's restaurants, which includes venues like P.S. Steak and Borough, intend to eliminate their health and wellness surcharge. Instead, a credit card processing fee coupled with moderate price hikes shall replace it. "The reality is, is that people are so cost-conscious right now," said Brent Frederick, who found in the past deeply unpopular, mandatory gratuities. Further highlighting consumer behavior, he mentioned the negative feedback on price changes. "They notice if something goes up a dollar or two, and that's when we get the fun two-star Google reviews," Frederick conveyed to CBS News Minnesota.
Despite the upcoming legislation enactment, Hospitality Minnesota's efforts to revise the current law will continue into the next legislative session, as mentioned by Whitcomb to CBS News Minnesota. As businesses adapt to comply with the law, which also pertains to sectors regulated by the Metropolitan Airports Commission beginning June 1st, the real impact on operators and consumers alike will become more evident after the turn of the year.
