A concession fee on a restaurant bill is a charge, often a small percentage of the total, that can confuse patrons who mistake it for a standard gratuity or tax. This fee is a cost passed directly to the consumer, reflecting the restaurant’s expense of operating in a specific, high-traffic venue. It signifies a unique business relationship between the dining establishment and the property owner.
Defining the Concession Fee
A concession fee is a payment made by a restaurant (the concessionaire) to a third-party venue owner for the privilege of operating within their facility. This arrangement is governed by a formal concession agreement, granting the restaurant the right to sell food and beverages on the property. The fee is typically structured as a fixed rent payment, a percentage of gross sales revenue, or a combination of both.
This charge is a location-based operating expense that the restaurant passes on to the customer instead of embedding it into menu prices. It may be labeled with acronyms like CNF, or simply as a “venue fee” or “surcharge,” appearing as an additional line item on the final bill. This fee is a direct financial consequence of the restaurant occupying a premium, high-foot-traffic space.
The Context: Why Concession Fees Exist
Concession fees arise when a restaurant operates as a vendor within a larger, non-traditional facility. Examples include airport terminals, sports stadiums, hotels, or major shopping malls. The venue owner controls access to a captive audience and requires a share of the restaurant’s revenue. The concession agreement formalizes this revenue-sharing model, making the restaurant a licensee rather than a traditional lessee.
The justification for these fees relates to the venue’s high operational overhead and specialized infrastructure. For example, an airport restaurant benefits from guaranteed high foot traffic and may require specialized security clearances. A stadium vendor relies on an audience present only during events. The fee compensates the venue owner for this unique access and the costs of maintaining the high-volume environment.
The concession fee is often structured as a minimum annual guarantee (MAG) or a percentage of gross revenues. This ensures the venue owner receives a predictable income stream, regardless of the restaurant’s daily performance. This structure reflects the risk and reward of operating in locations that offer high sales potential but have increased access costs. The restaurant passes this cost to the consumer to maintain profit margins without raising menu item prices.
How Concession Fees Differ from Other Charges
The concession fee is distinct from other common restaurant surcharges because the revenue is paid to a third-party landlord or venue owner. This differs from charges retained by the restaurant for internal operations or staff compensation. The key distinction is that the collected funds are a payment for the right to occupy a space, not retained by the business itself.
A Service Charge or mandatory gratuity is retained by the restaurant and allocated toward staff wages, pooled tips, or operational expenses. These charges cover the cost of providing service or supplement employee income. The funds remain within the restaurant’s financial structure and do not satisfy a landlord’s revenue-sharing requirement.
A Health Care Surcharge is collected by the restaurant to offset internal costs, specifically for providing employee benefits like health insurance. This surcharge is retained by the restaurant to subsidize its workforce and address rising labor expenses. The restaurant also collects and retains Credit Card Processing Fees—often a 2% to 4% surcharge—to cover costs imposed by card issuers and payment networks. Both the healthcare and credit card fees are retained by the restaurant to manage its direct operational costs, whereas the concession fee is forwarded to the venue owner.
Transparency and Disclosure Requirements
Regulations governing the transparency of restaurant surcharges, including concession fees, are becoming stricter across jurisdictions. The legal principle is that any mandatory fee must be clearly and conspicuously disclosed to the customer before the purchase. Disclosure must be apparent on the menu, posted signage, or the establishment’s website, ensuring consumers are fully aware of the extra cost before ordering.
In some regions, legislation requires restaurants to provide a clear explanation of the fee’s purpose, not just the amount. Some laws mandate that the notice must state what the charge is for and that its font size must be equal to or larger than the font used for menu descriptions. Hidden or poorly disclosed fees can lead to legal action, as regulatory efforts focus on eliminating “junk fees” that surprise the diner. Customers should check the fine print at the bottom of the menu for any mention of a concession fee or similar surcharge.
Strategies for Handling the Fee
When a concession fee appears on a bill, the consumer should first check the menu or posted signage for prior disclosure. If the fee was clearly stated, it is a mandatory charge for dining at that location, and the patron is obligated to pay it. Understanding that the fee is a non-negotiable part of the restaurant’s pricing model in that specific venue helps manage expectations.
If the fee was not disclosed anywhere (on the menu, signage, or verbally), the customer can politely ask the server or manager for clarification or request that the charge be removed. Many establishments, even when legally permitted to charge the fee, will remove it if the customer was genuinely unaware and disclosure was inadequate. Patrons who wish to avoid concession fees can choose restaurants operating under a traditional pricing model or those located outside of large concession-based venues.