Friends of Branded!
Happy Saturday and I hope you had a great week.
This week I read several posts and articles complaining about restaurant receipts and specifically the additional charges, such as credit card surcharge fees.
First, to those that posted and wrote on this topic, respect and I appreciate you. I may not agree with you, but I appreciate you sharing your thoughts and I take all of them as an opportunity to help to make our industry be better.
I’m totally serious. We’re allowed to disagree with one another and have healthy debates. In fact, I think that’s necessary, and an important part of learning and growing (was that last comment limited to the restaurant industry? What do you think?). 😊
The Branded team knows my love of the acronym, “P.R.B.”, which should never be confused with one of my brother’s favorite beers, PBR.
As long as we can communicate Professionally, Respectfully and in the Best interest of what we’re trying to accomplish together, we can talk about anything!
I’ll go even farther and admit that my first reaction to these additional fees was consistent with the authors that were being critical of this act taken by venues that elected to pass-on these credit card fees to the guest (as being unhospitable).
Despite my understanding (and respecting) the critique of this surcharge practice, it led me to think about the speed in which I had jumped in to be critical of my brothers & sisters in the hospitality industry, so I decided to dig-in and look a little further into this.
Don’t hate the players, hate the game!
Does the line item of a Credit Card Surcharge on the receipt you're given at a restaurant offend you? Does it insult you? Does it cheapen the experience and the meal you just had?
If the answer to any of the above questions was “yes”, please, right now, go look up or take out your last phone bill. Don’t have it, okay, how about a receipt from your last flight? What about a hotel bill? How about the last receipt for that pack of gum you purchased at Duane Reade, sorry, bad example (too New York, right JB?), CVS or Walgreens?
This issue associated with guests’ unhappiness of restaurant receipts is quite simply another example of just how high the expectations from our guests are of restaurants when compared to all other consumer facing businesses.
Captain Obvious statement coming next - guests hold restaurants to a standard that they don’t hold any other consumer facing businesses.
Going back to the receipts of these other consumer facing businesses, I’ll go even further and wager that most readers of the H^2 don’t even check their cell phone receipts or the 2 ½ foot long receipt from Walgreens for the toothpaste and shampoo you purchased. The airline receipt or the multi-page hotel bill? I’ll bet they go unread and immediately discarded.
But the receipt from the restaurant and the credit card surge, yes, that piece of paper is something you’re all over like white on rice or like how my family attacks the all-you-can-eat sushi bar at buffets (that last comment was unnecessary b/c my family attacks all buffets equally…and by that I mean we treat it like it’s a sporting event and therefore a competition…us against the venue and we always win, or always lose, it depends on your perspective).
But here’s where the rubber meets the road.
Despite my feeling the need to defend restaurant operators in response to how guests react to receipts and how people wrote about this issue in a disparaging manner, the truth is, I agree with those that are offended by the inclusion of charges on receipts. In an effort to be crystal clear, I agree with those that are critical b/c I’ve long ago embraced that our industry is different than all other consumer facing industries and whether you like it or not, my statement is true.
Our industry is personal, and the connection people have with food, with dining and the experience associated with a meal is in fact different. Pretending that it’s not, is an exercise in futility and complaining that such treatment is “unfair” (while factually correct) is a mistake and a potentially a costly one. The receipt from CVS, well that’s just business. The receipt from a restaurant, well, that’s personal.
Hospitality operators & owners, sorry, not sorry, but we need to recognize and own that the judge and jury on this issue is our guests, and our guest don’t like this.
In an effort to be fair to restaurant operators, guests need to understand that if restaurants are going to charge for credit processing, they’re required to disclose these surcharges (just as these other businesses need to disclose their respective fees).
While there are state-specific laws on credit surcharges, at the Federal level, credit card charges are legal, but businesses must disclose them clearly. In order to do this in a compliant manner, the operator must inform the customer of the existence of any surcharges before they pay. This disclosure happens at the entrance of the venue or near the register, on the menus, or at the point-of-sale.
The absolute most obvious place for a restaurant to inform the guest of the surcharge is on the receipt and wait for it, where it must be presented as a separate line item.
For avoidance of any doubt, the failure to disclose surcharges properly can lead to penalties, fines, or lawsuits. For those interested, the Truth in Lending Act (TILA) requires transparency in consumer transactions and while the act doesn’t regulate credit card surcharges, it does require clear disclosure of finance charges and fees. The Consumer Financial Protection Bureau (CFPB) enforces TILA, which ensures businesses do not engage in deceptive practices related to payment processing.
To be clear, it’s the credit card network’s (Amex, Mastercard, Visa) rules that require advance notice to guests and a clear & separate line-item disclosure on receipts and failure to comply with these rules can lead to fines or the loss of the ability to accept credit card payments. Losing access to non-cash payments is akin to being shutdown b/c about 90% of guests today pay with a credit card or another non-cash payment solution. When I started in the industry and was working at Martell’s in New York City, over 90% of our guests paid with cash (yes, times have changed).
The obvious response these credit card surcharges to satisfy the guests and remain compliant in regard to the legalize issues highlighted above is for the restaurants to simply NOT charge the credit fee and if necessary, raise the price of the food instead
I’d argue that one of the driving factoids of restaurant operators charging a credit card surcharge fee is to cover processing fees without raising menu prices (further) for everyone. It’s also important to remember that cash customers don’t pay this fee (and spoiler alert, restauranteurs still love guests that pay with cash).
Rising food, labor and operational costs continue to make it increasingly more challenging to run a restaurant and absorbing credit card payment processing fees is something many operators are electing not to do and therefore pass onto the guests (that choose to pay with a credit card).
This is exactly what other consumer businesses do (and without any backlash from customers).
I’ll end this week’s Top of the Fold with two topics associated with restaurant receipts that as an owner and frequent patron, I find upsetting and unforgivable, respectively.
The upsetting practice is when the venue provides a recommendation of a TIP amount or even charges a specific gratuity that includes the credit surcharge in the calculation. The guests should not be tipping on the credit card surcharge fees.
Yes, I look at my restaurant receipts and when I see that move, it upsets me as I feel its blatantly unfair and unethical (and for avoidance of any doubt, I accept it, but that doesn't mean I have to like it).
The move, however, that will have me ask to speak with a manager, is the Double-Gratuity (aka, the “Double-G” or the “Double Grat”).
This is when a party of X or more (usually parties of 6 or more) is automatically charged a certain gratuity (typically 20%), but when the applied gratuity is not clearly marked or identified and the guest, when closing out the tab, includes, in essence, a second gratuity on the full amount of the bill (which already included a gratuity and where the guests are not only giving a second TIP, but are doing so on the gratuity already included, thus, the “Double-G”).
I pride myself (as most restaurant owners and operators do) on taking care of the staff at restaurants, so seeing a “Double-G” attempted is redline for me.
What do you think about restaurants applying a credit card surcharge? I’d love to hear from you on this topic.
It takes a village.
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We’ve got a few Shoutouts this week and I also want to use this section to try something a little new and specifically an “Ask the Village” question.
This is a new section we’re exploring, and I want to see if this community can help Branded with our own Top of Funnel in connection with our investments and specifically the themes we’re exploring.
So, let’s kick of this week’s Shoutout section with “Ask the Village."
Operators, how much time do you spend per year thinking about your insurance? Do you care enough about the cost of insurance to explore new opportunities if you could save 25%?
For small-to-mid sized restaurants, the cost of insurance typically ranges from 1% to 4% of total revenues. For higher-risk establishments (bars, nightclubs, restaurants with deep fryers), the costs can be on the higher-end and closer to 3% to 5%. For full-serve and fine-dining, these operations are considered lower-risk, and the costs are around 1% to 2%.
These are (obviously) real numbers any business and in an industry with famously tight margins, insurance is a meaningful and necessary cost of doing business.
Like so many parts of our industry, we can get complacent and accept things that we believe we can’t change. Operators, you've also probably been buying insurance from the same source for as long as you can remember. But things are changing and that includes greater transparency around our costs and opportunities where competition can help drive prices lower.
Is insurance an area where restaurant operators (and here we’re really talking about the owners and / or financial folks at these businesses who are more focused and responsible for these costs) would you be willing to invest a little time and explore new opportunities to reduce the cost of insurance.
I’d love to hear from you on this topic, so if you’re interested, shoot me a note.
Okay, now back to our regular programming.
The FIRST Shoutout this week goes to our friends at YUM! Brands and its introduction of its very own state of the art tech suite to power its restaurants worldwide.
I’ve copied a link to the article from QSR Magazine here: Yum! Introduces State-of-the-Art Tech Suite to Power its Restaurants Worldwide
This week YUM! Brands introduced “Byte by YUM!”, a proprietary AI-driven platform that consolidates several essential ResTech system into a single platform for its entire restaurant group.
This announcement deserves a shoutout for several reasons, first, and maybe in Branded’s self-interest (which I believe, as Milton Friedman did, is always the most important and meaningful driver of actions) that this move is consistent with what we’ve been pounding on the table, the need for more integrated and platform-oriented solutions for restaurants.
Consolidation is a theme Branded believes will be a big part of the ResTech landscape in 2025 as this will streamline operations for restaurants and that ideally will translate into better financial performance and guest experiences.
YUM!, of course, is among the shortlist of industry giants that have the depth and breadth to advance with its own proprietary ResTech solutions for its franchisees, but that also highlights one of the biggest value propositions for other (smaller) operators. The available technology for the super vast majority of the market where a proprietary tech platform isn’t an option, is there for you.
Branded recognizes that our industry is imperfect of course, but it's still the most democratized industry in the world. This includes technology and innovation solutions that allow SMBs and independents to leverage a comparable and competitive tech solution to address the very same issues that YUM! is advancing with its Byte platform.
Examples of integrated tech-platforms:
· Chowly brings every part of your off-premise strategy into a single platform and is designed for independent restaurant operators. Google: Your Restaurant’s Digital Front Door
· Fishbowl is the guest relationship management platform designed specifically for restaurants to manage and optimize their guest relationships. Data-Driven Loyalty Webinar: Olga Lopategui Previews the Fishbowl GRM
Branded applauds this move by YUM! and we see it as a validation for smaller operators that have also been investing and leveraging technology to enhance their business and maybe a wake-up call for those that haven’t.
The SECOND Shoutout this week goes our friends at one of Branded’s OG portfolio companies, Ovation, the market’s leading guest feedback platform!
Founded and led by one of the industry’s favorite sons, Zack Oates, who I learned also shares a birthday with my partner Schatzy (Happy (belated) Birthday Zack), Ovation is a guest experience platform designed for multi-unit restaurants to collect and act on guest feedback - leading to better online reviews, streamlined guest recovery, and improved operations.
This week, the good people at Ovation created a video to talk about how Ovation works, and it’s narrated by Mr. Zack Oates himself (who not only has the best hair in the industry, but a silky-smooth voice as well!). 😊
You can watch the 2-minute video here: Watch How Ovation Works - video
The THIRD and final shoutout this week goes to our portfolio company, Curbit, the kitchen capacity management solution for restaurants.
This week Curbit shared how it’s been spotlighted in a recent press release highlighting cutting-edge advancements in restaurant technology. The release, published by Epson in collaboration with Curbit's official reseller, Kitchen Armor, emphasizes the importance of integrated solutions in streamlining kitchen operations—a mission that Curbit continues to champion.
Here are those important buzz words again, “integrated solutions.”
The press release also highlights a collaboration between Epson and Kitchen Armor to enhance the Epson TrueOrder Kitchen Display Solution. This partnership is a testament to the growing demand for advanced tools that simplify and elevate restaurant operations—a focus that aligns with Curbit’s own mission to transform capacity management for restaurants.
To access the press release and learn more about these exciting developments, click here
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Branded invites readers of the H^2 that are interested in learning more about our portfolio companies, and investment strategies to become part of our Access Hospitality Network.
At Branded, we love to use this section to specifically highlight some of the companies we’re working with, and where financial opportunities may be available for discussion.
I’m going to do something a little different this week and use the announcement by our new friends and now partners at GoVo Venture Partners.
GOVO VP has joined Branded as LPs in Starfish, the PLAID of Product Traceability and a platform that is transforming the way businesses manage and share product traceability data across supply chains.
In addition to investing, Mr. Rob Panepinto, GOVO’s managing partner, will also be joining me on the Board of Directors of this company and I’m super excited about that.
You can read GOVO’s announcement of its investment into Starfish by clicking the link below, but I’ve also pulled this quote from Mr. Panepinto here:
“The global trend toward transparency in food supply chains requires seamless information exchange. Starfish’s platform provides the solution, enabling partners from around the world to participate and share data. As the Food Safety Modernization Act and other regulations are adopted, Starfish supports compliance for food companies of all sizes.”
GOVO Venture Partners Invests in Starfish Technology Inc.
GOVO is a venture fund that invests in seed through series A companies and has a particular focus on early-stage companies that are doing business with the government or where navigating government regulations is an important success factor.
As food transparency and traceability has become increasingly important to both consumers and governments, the Branded team values GOVO’s expertise in supporting companies that are navigating government regulations and how it’s identified the importance of the Starfish platform b/c it provides participants in the food supply chain a solution for complying with the requirements of the Food Safety Modernization Act, which will require detailed food supply tracing and tracking for high-risk foods beginning in 2026.
When we write about our village, this is just such a wonderful example of how having the right partners helps us all win (and that’s exactly what we plan to do with Starfish).
Welcome to the party Team GOVO and we’re excited to be on this Starfish journey with you!
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Featured Episode: How Big Mamma Went from a Scrapped Idea to 30 Restaurants with Co-founder Victor Lugger
From a scrapped café concept to a European restaurant empire—Victor Lugger, co-founder of Big Mamma and Sunday, shares the brand’s remarkable evolution and its ambitious expansion into the U.S.
Victor takes us behind the scenes of Big Mamma’s success, revealing how a pivot to Italian cuisine unlocked massive growth, why immersive dining is at the heart of their brand, and how trusting his team led to unexpected breakthroughs in quality and efficiency. He also dives into his latest venture, Sunday, a payment-processing app born out of necessity that’s now reshaping the way restaurants handle transactions.
Key Takeaways:
- From French Breakfast to Italian Powerhouse – How Victor and his team realized their original concept lacked excitement and made a game-changing pivot.
- Scaling Smartly – The decision to step back and empower their team led to better ingredient sourcing, higher efficiency, and rapid growth.
- Going Global – London proved to be Big Mamma’s strongest European market, solidifying its international potential.
- Funding the Future – Bringing in McWin as an anchor investor allowed Big Mamma to scale while maintaining control of their vision.
- Tech Meets Hospitality – How Sunday started as an in-house solution and quickly became a standalone company transforming payment experiences in restaurants.
- Cracking the U.S. Market – After conquering Europe, Big Mamma is now bringing its signature experience to American diners.
But that’s not all! Victor takes on our signature Food Service Feud, shares what surprises European servers most about American diners, and puts his industry knowledge to the test in Hot or Not, Branded Quickfire, and The Feud.
Don’t miss this episode packed with insider insights, bold moves, and game-changing hospitality innovation. Tune in now!
Listen now and stay ahead of the game! 🎧
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Victor Lugger
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MARKETING
The Best Models In The World Are Marketers
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
Marketing is a tough gig.
You’re always expected to be on. You’re always expected to improve. Your feet are held to the fire when sales are down.
Technology
Why Founders Need to Stop Expecting Employees to Share Their All-In Mentality
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
Founders must recognize that while their business represents their identity, for employees it's an activity—understanding this fundamental difference.
Food For Thought
Menu Science
By: Dr. Melissa Hughes, keynote speaker & author
On average, diners spend just 109 seconds scanning the menu. In under two minutes, the human brain is making dozens of decisions and assumptions—many of them subconscious—about the meal, the restaurant, and even overall satisfaction before the first bite.
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That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and solutions platform at the intersection of foodservice, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its partners through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance