Right now, many of us are feeling the pressure from fuel in more ways than one. We’re seeing it come through our suppliers—delivery charges going up, fuel levies being added, freight costs increasing.
At the same time, our customers are feeling it too, with recent card payment data highlighting how more of their income is going towards filling their tanks and less into discretionary spend.
While we’re not seeing fuel surcharges widely applied at the customer level in New Zealand hospitality just yet, we know it is starting to come into the conversatio —and you may be wondering whether it’s something you should be looking at. In some overseas markets, including parts of Australia, they are starting to be explored more actively, although surcharges are still far from standard practice in hospitality.
If you’re exploring this, it’s worth weighing up the potential impact. Here are a few things to think through.
Customer reaction is the biggest variable
We’re hearing from many of you that customer price-sensitivity is as high as it’s been in a long time.
At the same time, we’re operating in a world of surcharges—including public holidays and card fees. Would adding another one tip your customers into ‘too much’ territory? Or is it something they would understand in the current environment?
We aren’t saying that fuel surcharges in hospitality can’t work—but how it’s positioned is important. If it feels unexpected or unclear, you risk losing trust faster than a straight price increase would.
You know your customers best. It’s worth thinking about how they’re likely to respond. And how you would explain it in a way that feels fair and transparent?
It’s also important to consider how your team will manage customer communications. Front-of-house staff will often be the ones fielding questions. Making sure they understand the “why” and feel confident explaining it is just as important as how it is noted on the bottom of the menu.
There are some important requirements to be aware of
From a regulatory point of view, the Commerce Commission isn’t saying you can’t apply a surcharge. However they are definitely monitoring surcharge activity and have provided guidance on how it should be done.
In practice, that means:
- Customers need to know about a surcharge before they order
- It needs to be clearly visible on menus, boards, and online
- The total price must not be misleading
Having a customer first become aware of it on the bill will likely be negatively received and can create issues for you. The expectation is: no surprises.
In addition, if you’re calling something a “fuel surcharge,” it should relate to actual cost increases you are experiencing, so it’s important to be clear on what costs it reflects—and how you’ve arrived at it.
We are seeing the costs come through from suppliers, so the pressure is legitimate—but from a compliance and trust perspective, it’s important that this isn’t just a price increase under a different name.
Clear, honest wording will be key here.
Think about whether it’s temporary
In other sectors, fuel surcharges are usually positioned as short-term measures tied to spikes in costs.
That can make them easier to explain, is transparent —and easier to remove later. In fact there will be an expectation that a full surcharge will be removed at some stage – If you’re unsure whether it would be temporary or ongoing, it’s worth thinking about whether a surcharge or a broader pricing adjustment is the better fit for your business.
There are other ways to recover costs
Fuel-related increases can be dealt with in different ways, without calling them out separately. That might look like:
- Gradual menu price adjustments
- Reviewing menu mix or portion sizes
- Tightening up supplier arrangements, or reducing your number of supplier deliveries per week
None of these are easy, depending on your customers, these approaches may be more straightforward than adding another surcharge line. It’s also worth thinking about how easy this is to implement and manage day-to-day—across POS systems, menus, online ordering, and staff training.
Keep an eye on your local market
At this stage there is some talk but a hospitality fuel surcharge isn’t been seen widely yet. You need to weigh up the risks in being the only one (or one of the few) doing it.
If customers can walk down the street and avoid a surcharge elsewhere, that can influence where they choose to spend. On the flip side, if it becomes more common in your area, it may be more easily accepted.
It’s also worth being careful about how this is discussed publicly—anything that looks like coordinated pricing across businesses can raise competition concerns.
You’re already paying for it—this is about how best for you to handle it
If you are being impacted by fuel increases (which we all are across the board) then the decision now is how to deal with it:
- absorb it – however we know that we aren’t usually in a position to absorb rising costs for long with the margins we are operating on
- build it into pricing
- or pass it through more explicitly
There’s no one right answer—it depends on your business model, your customers, and your margins.
Fuel surcharges aren’t standard practice in hospitality—but they are starting to come into the conversation as cost pressures build.
If you’re thinking about it, it’s worth stepping back and considering not just the short-term recovery, but how it fits with your overall pricing, your brand, and your relationship with your customers.
There’s no one right answer—just what works best for your business, your customers, and the environment you’re operating in.
For general information on fuel updates the following links are useful:
