The Restaurant Association says businesses are often divided whether to open on a public holiday and charge more for their services.
Eateries can chose to enforce a surcharge on Waitangi Day on Wednesday under the law and those who are working are entitled to time and half pay.
Restaurant Association chief executive Marisa Bidois says labour makes up a third of all costs for cafes and restaurants, which operate on slim margins.
Ms Bidois says businesses try to recover those costs through a surcharge, with those who wish to dine paying extra for the privilege.
She says it is often a no-win situation, with many restaurants putting public holiday trading in the 'too hard basket', while many which do open run at a loss.