Restaurant surcharges remain legal in California so long as businesses list these charges “clearly and conspicuously” on the menu.
Governor Gavin Newsom's office confirmed Saturday that he had signed SB 1524 into law, which allows restaurants to proceed adding surcharges to their customers' bills – fees that the industry says are critical to the survival of those businesses.
These fees range from additional suggestions to take care of pay equity between waiters and kitchen staff, to fees resulting from city health regulations, to corkage fees for guests who bring their very own bottles of wine to dinner.
Without the industry exemption, an emergency measure introduced by Senator Bill Dodd (D-Napa) in early June, restaurants, bars and other food service establishments would have been subject to SB 478's ban on so-called “hidden fees” starting July 1.
The Golden Gate Restaurant Association welcomed the approval, noting that the supplements “will enable restaurants to continue to support pay equity and contribute to the health care of their employees.”
Transparency is crucial, the GGRA said in its statement on Saturday. “Customers should never be surprised by their bill,” the group said.
Restaurant owner Helen Nguyen, who owns Pho Ha Noi restaurants in San Jose, Palo Alto, Fremont and Milpitas, was pleased to listen to of the answer to the issue on Saturday.
“I am pleased that politicians finally understand the importance of taking action to support the hospitality industry,” she said. “The service charge will help business owners maintain a balance between paying front-of-house and back-office staff,” she said. “It will also save money for customers ordering takeaway food.”
In the months leading as much as SB 478's introduction, there was confusion about how it might be implemented. When details of the brand new policy were released in a California Department of Justice FAQ in May, it raised alarm within the restaurant community since it specified that no additional restaurant fees—including mandatory gratuities for giant groups (a standard industry practice) in addition to various surcharges, a lot of which were clearly displayed on restaurant menus—could be allowed. Restaurants would then need to attempt to recoup that revenue by factoring those costs into the full price per item on each menu.
And that, in turn, could trigger an excellent greater price shock for restaurant customers, Darren Matte, a Bay Area restaurant owner and partner, said earlier this month.
“There's an art and a science to menu pricing,” says Matte, whose restaurants include Los Gatos Parkside, Harvest in Danville and Per Diem in San Francisco. Efforts by restaurants to maintain burgers under a $20 cap or entrees under $30, for instance, could be futile if there have been no other ways to cover the prices of running the restaurant, he says.
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