Starting July 1, California restaurants will not be able to add a surcharge to their menu items or services, which experts say will cause menu prices to skyrocket in San Francisco.
The ban, confirmed by the California Attorney General’s Office on Wednesday, has shocked the already hard-hit restaurant industry.
“Ending the ability for restaurants to use service charges (even if they are clearly and legibly listed on their menu) will have a very negative impact on the survival of this still-struggling industry,” the Golden Gate Restaurant Association said. to the San Francisco Chronicle.
‘Diners will not pay less, but will see significant increases in menu prices, which we believe will stop them from dining out. …Not only will restaurants struggle, but workers will lose hours and jobs.’
While consumers expressed approval of the state’s decision to ban hidden fees and encourage price transparency, restaurant owners in the Bay Area are concerned that the price increase will upset customers who are already cutting back on dining out. from home due to rising costs.
Diners at Zuni Cafe (pictured), best known for their special chicken dinner for two, sparked controversy in 2021 when they stopped tipping and instead charged a 20% “fair wage” fee that is divided between all the employees.
If Zuni Cafe adds the 5% health mandate fee and 20% fair wage fee to the cost of the chicken for two (pictured), which is currently priced at $75, the price would increase to $94.50 .
He San Francisco Chronicle broke down three of the city’s most popular dishes and how restaurants will adjust their prices in accordance with the ban.
Zuni Café diners, best known for their special chicken dinner for two, sparked controversy in 2021 when they stopped tipping and instead charged a 20% “fair wage” rate that is divided among all employees.
On top of that, Zuni Café charges a 5% fee for the city’s health care mandate, which requires employees to set aside money for worker health benefits.
If both charges are included in the cost of the chicken, which is currently priced at $75, the price would increase to $94.50.
Z&Y Restaurant, located in the heart of San Francisco’s Chinatown, is best known for its fish fillet with flambéed chili oil.
The restaurant charges a 4% health mandate and 18% service fee. If we add both charges to the price of the fish fillet, which was originally $38.95, the price would skyrocket to $47.79.
Koi Palace, a dim sum restaurant with three different locations throughout the city, is known for its rainbow display of six Shanghai dumplings. They charge an 18% service fee and if it is included in the total price, they will increase the price of the dumplings from $12.80 to $15.10.
California Senate Bill 478 cracks down on hidden fees in various industries, including restaurants.
Z&Y Restaurant (pictured), located in the heart of San Francisco’s Chinatown, is best known for its flambéed chili oil fish fillet.
If we add the 4% health mandate charge and 18% service fee to the price of the fish fillet, which was originally $38.95, the price would skyrocket to $47.79.
Koi Palace (pictured), a dim sum restaurant with three different locations throughout the city, is known for its Shanghai six-dumpling rainbow display.
If Koi Palace adds an 18% service fee to the total price, it will increase the price of the dumplings from $12.80 to $15.10.
Under this new law, restaurants must include all mandatory surcharges, such as service fees or fees tied to local government mandates, directly in their advertised prices.
It will not be sufficient to disclose these fees before or after the customer pays, as is commonly seen on menus, booking platforms or receipts.
The law does not apply to taxes or affect tipping practices.