Well-known Minneapolis restaurants adding surcharge on tabs to cover staff health insurance

A well-known group of Minneapolis restaurants will add 3 percent to every customers' bill in an effort to offset the rising expense of providing health insurance to its employees.

Kim Bartmann, whose restaurants include Barbette, the Red Stag and the eclectic Bryant Lake Bowl, said Thursday that she is making the surcharge, which begins Friday, known to her customers, rather than "raising prices here and there" on various menu items.

"Just as people are wanting transparency on where their seafood or beef or vegetables come from," Bartmann said, "we're hoping that transparency around this issue in our restaurants is appreciated and encourages people to patronize our locations."

She said she has spoken with many of her employees at the six restaurants, and "I haven't gotten any negative feedback. I often get thanked [for offering health insurance]. ... A lot of restaurants don't offer insurance."

Along with Barbette, Red Stag and Bryant Lake Bowl, Bartmann is applying the surcharge at Pat's Tap, Tiny Diner and The Bird.

"Health insurance has been going up 20 to 30 percent a year for the last few years, and we can't continue to sustain those increases," Bartmann said.

She doubts customers will skip an appetizer, or scrimp on the tip or stay away entirely over a 3 percent bump on the bill.

"We think our customers will appreciate knowing that our workers have good quality, affordable health insurance," Bartmann said.

She has been offering health care coverage to her employees since 1993. Anyone working 25 or more hours can choose from four plans and also receive dental coverage. Staff members pay 30 percent of the premium, and management picks up the rest.

Bartmann said "it's probably true" that she is the first restaurant operator in the Twin Cities to create a customer surcharge for employee heath insurance costs.

"I'm probably the first person [in the industry] to try everything," she said, noting her commitment to being environmentally conscious in how her restaurants operate and in supporting local organic farms through her business decisions.

Patrons at Bartmann's restaurants Thursday had generally favorable views about the surcharge.

Norah Shapiro, an independent filmmaker with Flying Pieces Productions and a customer of The Bird in downtown Minneapolis, said she was in favor of it.

"People need health insurance," Shapiro said. "That's not going to affect my consuming habits, and if anything, I would tend to frequent restaurants that were doing that."

Kellie Bronson, a producer and customer of Barbette in Minneapolis' Uptown neighborhood, said she supported the surcharge as well.

"Totally all for that," Bronson said. "That's awesome."

Another Barbette customer, who asked not to be identified, said she supported the idea of raising costs to cover employee's heath insurance, but didn't see why Burkmann preferred doing so through a surcharge.

"Why wouldn't she just increase her prices and pass the costs along that way?" she said. "I'm just curious."

She said it would be awkward for employees to keep explaining to customers that the surcharge on their bill was for their health care.

"I would rather just have the food prices go up," she said.

The federal Affordable Care Act requires employers to provide a health insurance benefit, or pay penalties, if they employ a formula-based equivalent of 50 or more workers clocking 30-plus hours.

While Dan McElroy, vice president of the Minnesota Restaurant Association, doesn't have a firm figure for how many of the state's 10,000 or so restaurants are subject to the mandate, he's confident that it's less than half.

McElroy said it's too early to say whether Bartmann's move will spur some sort of trend in the Twin Cities among restaurateurs.

"Our members are good business people, and they're not all going to figure it out the same way," McElroy said.

While McElroy said "the association doesn't have a position" on Bartmann's surcharge, he called it "creative, and Kim is often a leader. I have heard about this in other markets, but not here."

Employee health coverage is just one of several costs that have been rising for restaurant operators, particularly in Minneapolis, where the minimum wage is climbing from $9.50 to $15 an hour over the next several years.

"Commodities are going up, utilities going up," McElroy said. "Every [restaurant operator] will set their own policy on how they deal with rising costs."

Bruce Nelson, whose Edina-based Nova Restaurant Group counts the Hazellewood Grill and Tap Room and Tavern 4&5 among its locales, said his company has no plan to go the surcharge route but understands why it would be appealing.

"There is a competitive disadvantage to [raising] the menu price," as opposed to breaking out this particular expense for diners to see, said Nelson, who is Nova's chief financial officer. "We're all trying to figure it out; how we adjust."

Paul Walsh • 612-673-4482