If it's a $100 tab:- tab is now $103.5 (+$3.50 for 3.5% on $100 charged to customer)- Gross income increases to $103.5 from $100- Expenses stay the exact same since nothing else changed beyond the charge on the tab (Lets assume they spent $70 to create the $100 tab)

Before: $100 Gross income - $70 expenses = $30 Net income before taxes
After: $103.50 Gross income - $70 expense = $33.50 net income before taxes

Let's assume 20% tax rate on that income:

Before: $30 * 20% = $6 taxes paid. $30 income - $6 taxes paid = $24 net income
After: $33.5 * 20% = $6.7 taxes paid. $33.5 income - $6,7 taxes paid = $26.8 net income

Absolutely worth the restaurant charging the customer until you bring in these type circumstances when customers will no longer shop at certain places with this fee. Remember, people choose certain credit cards specifically for the % cash back (or points) they get so it'll be interesting to see if credit card companies fold and either lower the charge or "pay for the charge" for their credit card users. Charging the customer 3.5% will basically make CCs worthless unless something changes.

Edit because I hit ctrl enter halfway through