Why Chicago restaurants still apply surcharges
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Last week, Chicago-based writer Kit Graham ignited a firestorm with a story on local restaurant surcharges.
- She asked in her "I'll Be Honest" newsletter why Chicago restaurant groups are retaining the charges post-pandemic instead of just raising menu prices.
Why it matters: Many Chicago diners who see these charges on already growing restaurant tabs have the same questions.
What's happening: We queried the leaders at the city's largest restaurant groups — Lettuce Entertain You, Boka, DineAmic, Hogsalt, One Off Hospitality and 4 Star — to find out.
- They all politely declined to comment, but Illinois Restaurant Association CEO Sam Toia shed some light on the subject.
Between the lines: Toia says restaurateurs are betting that an optional surcharge is less annoying than price hikes.
- "If you raise prices 3% or 5%, you could lose 3 to 5% of butts in seats," he tells Axios. "But if you add a removable surcharge and try to explain its added value, like to give team members health care, consumers could be more OK with that."
By the numbers: The cost of running a restaurant rose 36% from 2019 to 2026, Toia says.
- And 42% of American restaurants failed to make a profit in 2025, according to the National Restaurant Association.
Yes, but: If things are tough across the nation, why are menu surcharges mostly a Chicago thing?
- For example, why are menu prices largely identical at Lettuce Entertain You's Aba restaurants in Chicago and Austin, Texas, but without the surcharge in Austin?
One reason: Illinois is one of the few states that allows surcharges on restaurant bills as long as they're disclosed.
- But Toia notes that Chicago differs in another big way: "Our tipped wage is $12.96, which I think is very fair," he says. "But it's $5.12 nationally, and the tip credit in Texas is just $2.13."
- Several Chicago restaurateurs told Axios the same thing off the record, claiming the tipped minimum wage hike pushed by Mayor Brandon Johnson has contributed to increases in prices and surcharges.
The other side: "It's important to note that there is no evidence that fair wages for tipped workers have led to increased menu prices, and no restaurant group has come forward to corroborate these claims," Johnson's press office tells Axios.
- "The Johnson administration is proud to have moved Chicago in a stronger direction when it comes to fair wages for tipped workers."
The upshot: While the hike has earned the mayor praise from workers' groups, it's gone over poorly with Chicago restaurant leaders.
Follow the money: State election records show 2026 donations to mayoral candidate Alexi Giannoulias of $80,000 from Lettuce Entertain You chairman Rich Melman, $15,000 from Boka Restaurant Group and $5,000 from Ballyhoo Hospitality.
- Giannoulias did not respond by press time to questions about his stance on the tipped minimum wage.