Fair or Unfair? Customer Reactions to Restaurant Pricing and Disclosure

Amid rising inflation and operating cost pressure, this study investigates how restaurant pricing strategies—a 5% surcharge versus a 5% menu price increase—and prior disclosure affect customers' perceptions of price fairness and transparency. Utilizing a 2 (pricing strategy: surcharge vs. price increase) × 2 (disclosure: presence vs. absence) experimental design, 193 responses were collected via a scenario-based survey. Results revealed that customers perceive a 5% price increase as significantly fairer and more transparent than a surcharge. While prior disclosure signage did not significantly influence perceptions of fairness, it marginally improved transparency, especially with the surcharge strategy. These findings suggest that restaurants aiming to maintain customer trust should consider implementing direct price increases rather than surcharges. If surcharges are used, clear prior disclosure can help mitigate negative perceptions. The study emphasizes the importance of transparent pricing communication to foster positive customer experiences and long-term loyalty.