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Breaking News: Major Advocacy Win for Restaurants as FTC Excludes Industry from Junk Fee Rule
Dec 17, 2024
After a 15-month advocacy campaign, restaurant operators have scored a significant victory. This morning, the Biden Administration and the Federal Trade Commission (FTC) released their final rule on so-called “junk fees,” explicitly excluding restaurants from the regulation.
This decision marks a critical win for the restaurant industry, which faced potentially devastating costs if service fees, delivery fees, and credit card surcharges had been subject to the ban. The FTC’s rule now applies only to live-event tickets and short-term lodging (e.g., hotels, motels, inns).
What This Means for Restaurants
In 2023, the FTC initially proposed broad restrictions that would have forced restaurants to incorporate service fees and surcharges into menu prices. The FTC estimated compliance with this mandate would cost the industry $3.5 billion, translating to an additional $4,800 in expenses per restaurant location.
However, thanks to thousands of operators raising their voices—both directly with the FTC and through engagement with lawmakers—the restaurant industry has been protected from these harmful mandates.
The FTC Acknowledges Industry Advocacy
The FTC recognized the significant impact of the restaurant industry’s advocacy, noting:
- “A mass mailing from about 4,650 restaurant owners criticized the rule as a one-size-fits-all approach that would be unworkable for the restaurant industry.” (p. 19)
The final rule confirms that restaurants are not included in three key areas:
- Definition of Covered Goods or Services – Limited to live-event tickets and short-term lodging.
“[This] moots the commenter’s concerns regarding restaurants or other franchises.” (p. 67) - Restaurants are explicitly excluded.
“This is no longer a concern in the final rule, which does not apply to restaurants.” (p. 194) - FTC wage estimates no longer apply to the restaurant industry.
“Concerns...are no longer subject to the final rule.” (p. 196)
The Timeline of Advocacy Efforts
- October 2023: The FTC releases its initial “junk fee” proposal, threatening restaurant service fees and surcharges.
- February 2024: The National Restaurant Association and Restaurant Law Center submit formal comments opposing the rule.
- April 2024: Over 500 restaurant operators urge Congress to push back during the Public Affairs Conference.
- June 2024: 40 lawmakers send letters to the FTC demanding restaurants be excluded.
- December 2024: The FTC excludes restaurants in its final rule.
What’s Next?
The National Restaurant Association met earlier this month with FTC Commissioner Andrew Ferguson to reiterate industry concerns. Moving forward, the Association will maintain its vigilance in advocating against harmful regulations that could impact restaurant operators.
Notably, Commissioner Ferguson, nominated by President-elect Trump to serve as FTC Chair in 2025, is expected to play a pivotal role in ensuring fair treatment for businesses.
Your Voice Made the Difference
This victory highlights the power of collective advocacy. By engaging with lawmakers, sharing stories, and voicing concerns, restaurant operators nationwide ensured that their businesses were protected from damaging, one-size-fits-all regulations.
Thank you to everyone who raised their voices and stood up for the industry. This is a win worth celebrating!