Alice's restaurant profiteering from those with allergies

Question

Suppose Alice has a restaurant where she serves pies for £10. She can make them with gluten free bases for the allergic, and these bases cost her £3 over the regular ones' £0.5. However, to make one a gluten free pie, she charges £14 thereby profiting more from the allergic than the non-allergic. Is she committing unlawful discrimination or otherwise behaving in an unlawful manner?

Edit: I think the rationale is most likely they see that many people are willing to pay more for the gluten free so they charge extra. They don't realize that for some it isn't a choice and so thus their attempt to profiteer from a trend could possibly be illegal.

Answer 1

Is she committing unlawful discrimination or otherwise behaving in an unlawful manner?

No.

She would be — if she was saying like "customers with Celiac disease pay £14, others £10".

But instead, she simply offers different products at different prices. She makes it clear which option is what. Everyone can buy the option of their choice for the same price — she is happy to sell either or both options to whoever chooses them regardless of their allergies or disabilities.

Answer 2

united-states

The courts have shown a willingness to apply the ADA to celiac disease (e.g., Colonial Williamsburg lost a lawsuit when sued for disallowing a guest to bring their own gluten-free food), so the real question would be whether charging more for gluten-free would be legal.

I'll note that restaurants (and grocery stores) regularly charge more for gluten-free products. To my knowledge, P.F. Chang's is the only one who got sued over it. However, the plaintiff dropped the lawsuit.

https://www.forbes.com/sites/legalnewsline/2016/05/11/woman-dropping-lawsuit-over-gluten-free-surcharge-at-p-f-changs/?sh=23537f126d16 .

"Offer gluten-free food, but charge extra since it costs more" may constitute a reasonable accommodation under ADA. However, to my knowledge this hasn't been tested in court. So, there isn't yet a conclusive answer.

Answer 3

Alice replies that the higher price of the gluten-free bases is not the only related cost facing her business. There is also the cost of seeking out additional reputable, high-quality suppliers, of separately accounting for those purchases, for changing stock control and kitchen procedures to make sure the ingredients are never mixed up, and no contamination occurs, and extra liability/risk should a mistake be made and a customer sues for illness, loss of reputation, etc. There's staff training, quality control inspections and testing, and possibly additional H&S regulations to satisfy. Alice probably had to experiment with the recipe, to compensate for the lack of gluten on taste and texture. Quantifying all those costs objectively would be difficult - many overheads are not easily separable into ingredient-attributable components.

And I think a business might also argue that the proper mechanism for preventing profiteering is competition. If one restaurant overcharges, the others can undercut them and take their trade. It is the extra profits to be made that attracts businesses into offering risky new products. Suppose nobody in the market currently offers gluten free pies. There is a gap in the market. But is there any demand, and if so is there enough to make it worth the hassle of researching suppliers, setting up production, and maybe only then discovering that hardly anybody wants to buy them? There is a risk of losing the investment. So it is standard practice in industry that new products are initially and temporarily sold at a premium, so that the profits from the successes pay for the losses from the flops. If it proves successful, prices will soon be forced down by competition. Only if there is evidence that there is widespread prejudice blocking the price-reducing action of competition should the law intervene. The inevitable consequence of banning businesses charging higher profits when offering new and exclusive products would be that nobody would have any reason to offer those products - an even worse situation for those with allergies and special food needs. High profit is how the market drives (and funds) businesses to increase supply to meet unsatisfied demand. Presumably it was not the intention of Parliament in passing this legislation to destroy all economic incentives for innovation in this area and thus make the provision of specialised products for the disabled even worse.

Answer 4

A very important detail which you failed to include in your question is that you expected the price to rise linearly with the more expensive ingredients.

So you're suggesting that a gluten-free pie should cost £13 instead of £14, correct?

Alice is not profiteering, she's made a calculated price adjustment which reflects the total cost for her business to provide a gluten-free product: sourcing, storing, prepping, cooking, and training all come at an additional cost. If customers don't want to make their own gluten-free pies then what obligation does Alice have to provide them at-cost?

Profiteering or even price-gouging would be if Alice was selling the pies for £30, £40, or £50. However, even that is not likely to get her into any real trouble aside from ire from gluten-free customers.

Yes, she has expensive pies; don't buy them if you cannot afford them. It would be different if she already committed to making you a pie at one price and charged double when you came to pick it up.

Answer 5

Anti-profiteering laws provide circumstances under which you can not increase your prices, but they do not prevent you from setting high prices in advance of those circumstances. For example, if you sell bottled water for 20$ a case normally, and just before a hurricane hits, you hike your prices up to 80$ a case, then you are guilty of profiteering.

However, if you were already selling water under normal circumstances at 80$ a case, and a hurricane hits, you are under no legal obligation to drop rates to meet market expectations. Maybe it's sourced or processed in a way that makes that brand more expensive, maybe you do business in a really rich neighborhood where people don't mind paying 80$ a case normally, the reason does not really matter as long as it is the normal price you charge for that particular product.

So how this applies to you example (under US law) is that you are allowed to sell your gluten free pies at what ever price you wish. They could be 100$ a pie and it would not matter. However, your legal situation would get messy if you normally sell them for 14$ a pie, and then learning that a bus full of refugees with food allergies just pulled into your parking lot, hike the price up to 100$ a pie in anticipation of the sudden supply shortage.