Hawks Public House patrons can glean a wealth of information from the menu. It tells them that the cherries on the mortadella toast come from Saeng’s strawberry stand in Granite Bay and that the blue cheese used in the Cobb salad comes from Shaft’s Cheese & Co. in Roseville.
It also lists the names of every back-of-house staff member who prepares these dishes, down to the last line cook. Take a look at the fine print at the bottom of the menu and you’ll learn that these employees are getting extra compensation through a 3% surcharge passed on to customers, an anti-inflation move that may soon become illegal.
Surcharges have become increasingly common in California restaurants over the past decade, a way for companies to boost wages and resist inflation without directly raising menu prices. However, they will be banned under a new state law that takes effect July 1 — unless the bill’s original author can get a last-minute amendment passed.
Customers can opt out of Hawks Public House’s 3 percent fee, but only one group per month does so, general manager Cody Goessman said. The restaurant’s service fee for banquets, private events and catering orders is more mandatory.
If the supplements disappear, Goessman said, so will Hawks Public House’s business plan.
“It has a domino effect that really affects the business as a whole. Everything should change,” Goessman said.
Was California’s Surcharge Bill Intended for Restaurants?
SB 478, also known as the Consumer Legal Remedies Act, was intended to eliminate “unwanted fees” when it was signed into law in May. Authored by Sen. Bill Dodd, D-Napa, it prohibits businesses such as hotels, ticket sellers and short-term rentals from listing one price and charging another because of resort fees, processing fees or other reasons other than taxes.
A few weeks after the passage of SB 478, California Attorney General Rob Bonta clarified that restaurants would be included in this group of businesses. This sparked concern and anger from the California Restaurant Association, which worked with Dodd and other lawmakers to draft an emergency measure (SB 1524) on June 6 that would allow restaurants to continue administering surcharges to provided that they are clearly listed.
Hidden fees are unpopular, but most fee-based restaurants already advertise theirs on their menus. That should be enough, said Clay Nutting, co-owner of East Sacramento small-plates concept Canon and West Sacramento cafe Franquette.
“I don’t think people like surprise fees, so I totally understand where that comes from. But I also think the key is transparency, and most good players in any industry are completely transparent about their service charge or mandatory tipping,” Nutting said. “The business should be able to operate the way it wants as long as it communicates that to its customers. »
Dodd, whose district stretches from the North Bay to Davis and Woodland, said he never intended the original bill to apply to restaurants. The state Assembly unanimously approved SB 1524 on Monday, setting it up for a Senate concurrence vote to approve final changes before it heads to Gov. Gavin Newsom’s desk. It’s unclear whether Newsom will sign it before SB 478 goes into effect on July 1.
“Throughout the whole time I was promoting my bill on this (SB 478), I never really believed that restaurants should be included,” Dodd said. “People understand that restaurants tip. In some communities, they tip because a city has imposed a health care fee or something like that.
How do surcharges appear on Sacramento restaurant bills?
Surcharges are perhaps more common at fine dining restaurants: prix fixe meals at Localis, The Kitchen, and Allora all come with at least a 22% automatic gratuity and/or other fees.
But it’s not just high-end restaurants. Tahoe Park brunch favorite Bacon & Butter and its East Sacramento sister restaurant, The Green Room, each had operating expenses of 5% for about four months last year.
A night out can also bring unexpected fees. Darling Aviary, a rooftop burger bar near Downtown Commons, recently made waves on Sacramento’s Reddit page for an automatic 20 percent gratuity that kicks in once the bill hits $100. Dive Bar patrons get a $1 “entertainment fee” and a $10 cover charge when the bar’s sirens swim by. Midtown sausage and beer icon LowBrau includes a 15 percent gratuity for sit-down diners as well as those who shout their orders to busy bartenders on busy weekend nights.
Midtown vegan restaurant Veg Cafe pays cooks in part through a 5% catering fee on dine-in orders. Before the fees were implemented in 2021, servers tipped kitchen staff based on a percentage of their sales, said chef/owner Calvin Born, who worked his way up from front and back. backroom of the Veg Cafe before buying there in 2022. .
Under Veg’s old system, a $100 tab for a table earned the kitchen staff $5, whether the customer tipped their server 15% or 30%. This made sense in theory, Born said: Tips are meant to encourage and reward good service, so the server should keep the extra money if customers are feeling very generous.
Yet some customers inevitably refused to tip on principle. The kitchen staff still received their $5 based on the total bill, but since that $5 came from the server’s tip, the server was actually losing money for serving the table.
“I can’t speak for everyone, but for Veg, this is not a ploy to make more money, but actually a byproduct of the tipping culture in the United States,” said Born wrote in a text message.
Veg Cafe will waive its kitchen fees with the upcoming rollout of its summer menu, Born said. Canon and Franquette, on the other hand, will keep their surcharges — a 4% fee that covers employee health care and additional wages on the back end — in place if Newsom signs SB 1524.
Canon, like many restaurants, also charges parties of six or more a 20 percent gratuity. It’s unclear whether that would be allowed if SB 1524 doesn’t pass, Dodd said.
A consistent service fee allows restaurants to “smooth out the trend” as operating costs rise, Nutting said. Even a restaurant like Canon, which frequently changes its menu, is reluctant to implement elastic pricing that increases to reflect the cost of merchandise and miscellaneous fees.
“The restaurant industry is already notorious for having razor-thin, if any, margins, and you’ve definitely read in the paper about shutdowns happening week after week,” Nutting said. “Business owners have an obligation to try to find ways to keep their business solvent, keep their employees employed, be able to pay their bills and make a living. Sometimes you have to make business decisions that you know are in the best interest of the company.
Even if Dodd’s emergency measure passes, hotels, ticket sellers and short-term rentals like Airbnb will still have to list their actual prices in California starting July 1. Many of them are currently administering surcharges well beyond 3 to 5 percent: for example, a $100 ticket to Tim McGraw’s upcoming Golden 1 Center concert costs an additional $23.20 in fees.
“It’s an imperfect system and I understand this is a hot topic right now,” Born said in a text message. “But I don’t understand why people are so upset to see small businesses doing what big companies like Ticketmaster have been doing for years. »
This story was originally published June 27, 2024, 5:00 a.m.
Benjy Egel covers local restaurants and bars for The Sacramento Bee as well as breaking general news and investigative projects. A Sacramento native, he previously covered business for the Amarillo Globe-News in Texas.