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cover-charge

Cover charge

At bars and nightclubs, or restaurants with live entertainment, a cover charge is a flat fee for entry to defray the cost of entertainment such as live musicians, singers or a DJ, or for the use of a dance floor, pool tables, or services such as dancing lessons. In some countries, restaurants without entertainment may have a cover charge or ("couvert") for bread, butter, olives, and other accompaniments.

Business models

Cover charges

Bars and clubs that use cover charges use the cover charges for several reasons. In some cases, popular bars and clubs have a substantial excess demand; patrons are lined up outside the club waiting to get in. In this case, the club can gain additional revenue from customers by requiring an entrance charge. Other bars and clubs use cover charges only on nights when there is live entertainment or a DJ, to help defray the cost of paying the band, comedian, or DJ.

Cover charges are usually much lower for local, semi-professional bands or entertainers than for better-known touring bands from other regions. In North America, the cover charge for a performance by a local teenage band may be as low as a few dollars; a show by a nationally-known band with a recording contract may have a $10 to $15 cover. Some prestigious jazz clubs and comedy clubs have both a cover charge and a minimum drink requirement.

Price discrimination

In economics, the term "price discrimination" refers to charging different prices to different customers, based on the anticipated elasticity of demand of different customers. Bars often offer student discounts because university or college students will have a different willingness to pay than an average consumer, due to their budget constraints. Thus, the bar sets a lower price for entry for university and college students because students have a more elastic price elasticity of demand.

Bars often have a “no cover for women” policy, to attract male drinkers. A variant of the “no cover for women” policy is promotions in which women patrons get a “reverse cover charge”, often in promotional coupons, for coming to the club before a certain time, or for the first 50 women to come to the club. In the United Kingdom, this option is illegal under the Sex Discrimination Act 1975. In some bars, there are also different cover charges for legal drinking age customers and for minors (e.g., a $5.00 cover charge for those over 21 and over $8.00 cover for minors). Presumably the higher charge for minors is to make up for their lack of alcohol purchasing. Some bars have lower cover for some categories, such as college or university students with student identification. As well, some bars have lower cover charges for members of the club or of nightclub organizations or associations. Cover is also waived at some clubs for early arrivers (people arriving before 11 p.m. or midnight), for people that order food, or, if the club is in a hotel, for hotel guests.

Revenue-sharing with performers

The bar usually allows the band or performers to provide a list of guests who will be admitted without paying the cover charge ("the guest list"). The bouncer may waive the cover charge for some customers, such as regular customers that usually purchase a large number of drinks. As well, bouncers sometimes waive the cover charge for their friends, in what could be described as a "perk" of the job.

Bars and clubs have different policies for how the cover charge is shared, if at all, with the performers. Different revenue-sharing agreements are often negotiated by different performers. The range of revenue-sharing arrangements range from the band or performers retaining all of the money collected for the cover charge, to a split between the bar and the band, to arrangements where the bar retains all of the cover charge. A variant of these revenue-sharing arrangements occurs in cases where the bar also gives the band a share of the bar's alcohol sales receipts. Some bars may also agree to a guarantee, in which the bar promises to pay the band a certain amount even if this is less than the amount collected at the door.

Luxury cover charges

Luxury clubs with unusual architecture and interior design and a lush, high-end atmosphere sometimes have cover charges even when there is no live entertainment or DJs. The cover charge for these clubs pays for the massive renovations and the opulent, plush atmosphere which includes leather couches, candles, and attention to detail throughout. Luxury clubs such as Mike Viscuso’s On Broadway, a glam-disco dining palace, has a cover charge of $15. James Brennan’s Stingaree, a glam restaurant and club/lounge, has a cover charge of $20.

Some high-end and luxury bars and nightclubs have yearly membership fees which can be interpreted as annual cover charges. For example, Frederick's has a $1,200 a year membership, the Keating Lounge has a $2,500 annual membership fee, and The Core Club has a $60,000 membership fee. A variant of these annual fees are "table charges" at some elite nightclubs, in which a customer agrees to spend a minimum amount in order to reserve a table in the club (e.g., $1000 in the evening).

No cover charge

Some bars and clubs do not charge an entrance fee, which is indicated in signs stating "no cover" or "no cover charge" . These bars use the live entertainers to draw and retain customers in the establishment, so that the customers will buy alcohol. To attract more female customers, bars often have a “no cover for women” policy. Some comedy clubs and strip bars may allow patrons to enter without paying a fee, with the implicit or explicit expectation that the customers will buy alcoholic beverages while inside. Some bars with "no cover charge" policies may have higher prices for their snacks and beer, to make up for the lack of a cover charge. Many nightclubs oriented towards electronic dance music have a cover charge due to the fact that most of their patrons are not drinking alcohol. Bottles of water are also often priced at up to $10 to offset the loss of revenue from reduced sales of alcohol.

Legal restrictions

According to Massachusetts law, no cafe, restaurant, bar can require a cover charge unless a sign is conspicuously posted with at least one inch-high letters, stating that a minimum charge or cover charge shall be charged and indicating the amount. This law was put in place to resolve the problem of “secret” cover charges, which are only indicated in tiny text on the menu. Clubgoers would then find this cover charge added to their first drink order. In Illinois, bars cannot impose a cover charge unless the fee goes towards the cost of off-setting entertainment costs such as a live band. In 1995, the Italian regional government in Lazio (which includes Rome) began requiring restaurants in the region to remove the cover charge for "Pane e coperto" (bread) from their bills. In 1998, the European Union ruled this regional law was invalid, but the region is continuing to try to abolish the practice

Restaurant cover charges

The Lion's Court restaurant, near the Prague Castle, charges a “couvert” or cover charge of 40 CZK (around $2 USD) for each dish except desserts. The cover charge pays for accompaniments such as garlic butter, extra virgin olive oil, olives and home-made bread. Restaurants in other parts of Europe, such as Italy and Germany also sometimes charge a cover charge for bread and butter.

A variant term for a cover charge in a restaurant is a "table charge" or "minimum charge" of several dollars.

History and etymology

The couvert or cover charge originated in the 1920's illegal bars called speakeasies, during the Prohibition-era ban on alcohol. Manhattan saloonkeeper Tex Guinan, was an early example of a bar requiring a cover charge from patrons.

The etymology of the term “cover charge” is disputed. The term may refer to the tablecloth and table settings, the things that cover the table, which have to be renewed for each group of people in a bar or restaurant that uses a table. The term may also be derived from the French word "couvert", which means "all you use to cover the table (...) tablecloth, china, glasses...". This charge appears at the top of your bill, even in cheap restaurants, as an additional charge over what you eat and drink. Alternatively, some clubs have signs stating "No Minimum or Covert Charges," which suggests that “cover” may be a corruption of “covert.”

References

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