A new California law aimed at banning hidden service charges could eliminate surcharges some restaurants add to their customers’ bills.
Diners in San Francisco often think twice when they see a blanket line at the bottom of their menu warning of mandatory service charges that can run anywhere from 4% to 20%.
While a proposed new law could make these notices disappear, customers could also be forced to bear the costs elsewhere.
Food experts like Marcia Gagliardi, author of the 18-year-old food newsletter tablehopper, say this isn’t good news for customers or the restaurants they eat at.
“Just when you thought your pork chop was already really expensive, guess what? We’re going to see higher prices because nowhere else can these restaurants use these compensations and higher wages to keep these employees,” Gagliardi told CBS. Bay Area News.
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The law, which takes effect July 1, bans junk fees that are common in ticket sales. But on Tuesday, the attorney general reportedly confirmed that this also applies to restaurant service charges.
“It’s used to create an equitable model for employees. Servers typically make a lot more money than back-of-house (employees) and dishwashers, so it allows for a way to fairly distribute those funds,” Gagliardi explains .
The bill, co-sponsored by Bay Area senators Sen. Nancy Skinner of Berkeley and Sen. Bill Dodd of Napa, aims to “ban the use of trickle pricing, a practice in which companies advertise only a portion of what a customer would actually pay. for a particular product or service,” according to a release published by Skinner.
“The law does not prohibit companies from setting a price, but it does regulate how companies can advertise or display costs,” the press release said.
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Tom Medin has been leading food tours in San Francisco for decades. He’s seen the city’s rollercoaster of restaurant prices and says the change may not be all bad news, shifting the focus back to traditional restaurants.
“The restaurants that you go to and you feel like you’re a part of it, that restaurant is kind of secondary,” he said of the extra costs. “I want your employees to do well. I think as long as restaurants maintain the idea that they really know their customers, they will do well.”
However, some fear the change could make restaurants less fair to staff. Laurie Thomas, executive director of the Golden Gate Restaurant Association, says restaurants will struggle to maintain wages and retain customers.
“So now you lower their rate and you go to an old fashioned tipping model and you tell your servers to tip the whole house, but that lowers everyone’s salaries or you raise your prices by 20%, 25%? ” she told CBS News Bay Area. “It could make a lot of customers happier. They could say, ‘We understand why prices went up.’ Let’s hope that happens. But I don’t know if our industry can hope for that to happen.’
But Gagliardi says customers may feel some relief if they don’t see any additional charges, but they will still feel it in their wallets.
“I can easily see restaurants raising prices 5%, 15%. It’s going to be tough,” she explained. “We will see even higher prices based on this unfortunate interpretation, but all is not lost… things may change.”