California restaurant prices to surge under controversial new law – here’s what three famous meals could cost you

Starting July 1, restaurants in California will no longer be allowed to add a surcharge to their menu items or services, which experts say will lead to rising menu prices in San Francisco.

The ban, confirmed Wednesday by the California attorney general’s office, has sent shockwaves through the already suffering restaurant industry.

“Ending the ability for restaurants to charge service charges (even if clearly and legibly stated on their menu) will have a very negative impact on the survival of this still-struggling industry,” the Golden Gate told Restaurant Association to the San Francisco Chronicle.

“Diners will not pay less, but instead they will see significant increases in menu prices, which we believe will cause them to refrain from dining out.” … Not only will restaurants struggle, but workers will lose hours and jobs.”

While consumers expressed their 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 irritate customers who are already cutting back on dining out because of rising costs.

If Zuni Cafe added their 5% health mandate surcharge and 20% fair payroll tax into the cost of the chicken for two (pictured), which currently costs $75, the price would increase to $94.50

The San Francisco Chronicle looked at three of the city’s most popular dishes and how restaurants will adjust their prices in line with the ban.

Best known for their chicken-for-two dinner special, Zuni Café diners courted controversy in 2021 when they stopped tipping and instead charged a 20% “fair wage,” which is split among all employees.

Additionally, Zuni Café charges a 5% fee for the city’s health care mandate, which requires employees to set aside money for employee health benefits.

If both costs were included in the cost of the chicken, which currently costs €75, the price would rise to €94.50.

Z&Y Restaurant, located in the heart of San Francisco’s Chinatown, is best known for their fish fillet with flaming chili oil.

The restaurant charges a 4% health mandate and an 18% service fee. If you factor both costs into 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 in the city, is known for their rainbow sampler of six dumplings from Shanghai. They charge an 18% service charge and, if included in the total price, increase the price of dumplings from $12.80 to $15.10.

California Senate Bill 478 is cracking down on hidden fees in several industries, including restaurants.

Z&Y Restaurant (pictured), located in the heart of San Francisco’s Chinatown, is best known for their fish fillet with flaming chili oil

If you factor in both the 4% health mandate fee and the 18% service charge into 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 in the city, is known for their rainbow sampler of six dumplings from Shanghai

If Koi Palace hides an 18% service charge in the total price, it will increase the price of dumplings from $12.80 to $15.10

Under this new law, restaurants must include any mandatory fees, such as service fees or costs associated with local government mandates, directly into their advertised prices.

Disclosing these costs in advance or after a customer has paid, as often seen on menus, booking platforms or receipts, is not enough.

The law does not apply to taxes or affect tipping practices.