For businesses struggling to survive the COVID-19 pandemic, adjusting to the new normal may come at a cost. New, enhanced cleaning procedures, reduced foot traffic to adhere to social distancing recommendations, and the cost of protective gear for both staff and customers all come at a cost. In order to survive, some businesses have begun passing these costs on to their customers through a newly implemented COVID-surcharge.
But customers may be struggling as well. In July 2020, 1.3 million Americans filed for unemployment for the first time in the country's history - the same month the $600 unemployment benefit ended.
So how are Americans responding to being charged a COVID-19 fee from restaurants, service providers, or other retailers? For an inside look at both perspectives, we surveyed over 800 customers and more than 200 business managers who've either been charged or are charging an added fee due to the pandemic. Read on as we explore how many customers are choosing not to patronize businesses charging COVID-19 fees; in which scenarios they're more willing to shop with businesses billing these fees; and what COVID-19-related costs business managers are putting this money toward.
Across the country, more than 100,000 small businesses shuttered as a result of the COVID-19 will never reopen. Extended closures combined with new operating costs in order to conduct business have made it impossible for many smaller establishments to survive. More than half, 58%, of business managers and owners said the new COVID-19 fees they're charging are critical to keeping their businesses afloat throughout the pandemic.
Customers may occasionally have a different perspective when it comes to paying more for the same services or products as a result of COVID-19. Just 24% of customers said they see COVID-19 fees as being very necessary for companies to charge, and 41% see these fees as being somewhat necessary. Twenty-three percent of customers were neutral toward businesses charging them an additional COVID-19 fee to cover new operational costs.
While 58% of customers would be willing to patronize an establishment that charged a COVID-19 fee, 32% of customers were unsure, and more than 1 in 10 would avoid these businesses altogether. Compared to baby boomers (77%), who were the most willing to shop with businesses charging COVID-19 fees, millennials were the most likely to avoid these businesses completely. Forty-two percent of customers said they'd been surprised by a COVID-19 charge, and 34% of customers acknowledged they felt taken advantage of by companies instituting these fees.
The level of comfort that customers have paying added COVID-19 fees may depend on the specific establishments charging them. Those surveyed were most willing to patronize businesses billing these surcharges when it came to health care offices or hospitals (46%), gyms and fitness centers (36%), and restaurants or other food service businesses (35%). On average, customers were willing to spend a maximum of $30 in COVID-19 fees for a health care visit, compared to $22 for a personal service establishment and $21 for hotels or other lodging.
On the topic of food service, 32% of customers agreed patrons should not dine out if they're unwilling to tip at least 20% during COVID-19. The biggest tippers were older restaurant patrons, who identified as baby boomers or older, who said they're willing to tip their waiter 49% while dining out during COVID-19!
While a majority of customers often indicated it made no difference if a business was billing an extra COVID-19 fee, they were typically less willing to shop with businesses charging these fees at hotels (42%). Although customers were the least willing to support hotels charging fees due to the pandemic, we also found 50% of baby boomers were actually more willing to book with hotels that charged these fees.
Overwhelmingly, 67% of business managers and owners said their customers have largely reacted positively to the COVID-19 fees they've had to implement. While 7% of managers and owners indicated that their operating costs have not changed at all as a result of COVID-19, 59% indicated operating costs were somewhat more expensive, and 22% said they were significantly more expensive.
Business managers and owners reported spending $832 each month, on average, for pandemic-related supplies and procedures at personal service establishments (including salons and spas), $727 at retail stores, $645 at health care offices, and $473 at restaurants. Among those instituting added fees during the pandemic, 55% indicated the fees were used for sanitizing their establishment, in addition to providing PPE for their teams (48%), enforcing social distancing (46%), and general finances (44%).
The COVID-19 pandemic has created a financial burden for customers and business owners alike. According to more than half of business owners and managers we surveyed, adding additional COVID-19 fees was imperative to survival. With so many businesses managing additional expenses for sanitizing their establishments, stocking up on PPE, and enforcing social distancing, standard operating costs have increased hundreds of dollars a month, on average, for some.
As we found, a majority of customers were comfortable with these added charges, but some were also unaware that they were or had been charged the fees. While generally less common, some customers admitted to feeling taken advantage of by businesses charging them COVID-related fees.
Skynova provides online software, like invoices, accounting, timesheets, and more, for small businesses. In addition, we provide in-depth studies and resources across a variety of business topics to help small business owners navigate obstacles and changes in the workplace. Our research methods include surveys, relevant datasets, and unique research to explore topics small business owners may find useful and interesting.
We surveyed 818 customers who have been charged a COVID-19 fee at either a hospital, restaurant, delivery service, retail establishment, gym, or other venue. Then we surveyed 203 business managers or owners of an establishment that charges these fees to explore the perception of the COVID-19 fee, as well as reasons why businesses charge them.
Respondents ranged in age from 18 to 69 with a mean age of 37 and standard deviation of 11 years. Around 11% of our respondents were baby boomers or older, 28% were Generation X, 58% were millennials, and 4% were Generation Z. Gen Z respondents were not included in certain analyses due to low sample size.
Survey data has certain limitations related to self-reporting. These limitations include telescoping, exaggeration, and selective memory. We didn't weight our data or statistically test our hypotheses. This was a purely exploratory project that examines customer sentiment toward COVID-19 fees.
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