Changes at California restaurants
We'll be seeing many changes to California restaurants as minimum wage increases to $20 per hour as of April 1 for any restaurant that has 60 or more locations throughout the country; and on July 1, all hidden fees must be disclosed up-front on the menus or app.
Senate Bill 478 was signed into law by Gov. Gavin Newsom in October 2023 and goes into effect July 1. The bill was called “the ban of junk fees” and was aimed at concert tickets, hotels and restaurants. The new law doesn't ban junk fees, just that any business must disclose these junk fees up-front. However, food delivery services (GrubHub, UberEats, DoorDash, etc.) were exempted from this bill and they are some of the worst offenders of hidden fees.
Anyone who has ever worked at a restaurant knows the “front of the house” (waiters and bartenders) makes the tips and are supposed to share a percentage with the “back of the house” (cooks, food prep, bus staff, dishwashers). That's the theory, at least. In reality, young adults who get hired at high-end restaurants and bars make bank. In major urban areas, a waiter or bartender can make $300-$500 in tips on weekend nights and $200$300 in tips on weekdays. This is on top of their minimum wage pay. While the back of the house workers only earn minimum wage and pray the wait staff shares their tips. In major cities, waiters and bartenders can make $75,000$90,000 a year, while the back of the house is making $35,000-$40,000 a year.
In February of this year, local Sushi Spot restaurants (three locations) came out with a new policy. They eliminated tips or gratuities and added an “employee equity charge” that automatically adds 18% for dine-in customers and 10% for all take-out orders. Per the Sushi Spot website, “This service charge not only ensures that our dedicated staff receive higher living wages but also promotes a fair and equitable distribution of income throughout our team.” This Sushi Spot policy went viral and the comments on social media and the blogs were overwhelmingly brutal. I know your arguments, the 18% service charge is forced on my bill and now taxable, adding almost 20% to my total bill.
I'm gonna play devil's advocate here. If I'm the wait staff who was used to pocketing $300 a night in tips and now this $300 is divided amongst six staff members, I'm only getting $50 a night. I'm willing to bet that a lot of their wait staff will be looking for green pastures (not greener). It's not just the price point of the total meal check, but also the volume. There's only so many Sea Grills and Larrupin Cafes in Humboldt County.
Also, will the wait staff have the same dedication to the customers if they're no longer being incentivized? If I'm the wait staff and you're paying me a reduced tip, where's my incentive to treat my dining customers great? I'm still not sure why Sushi Spot didn't just raise their prices across the board and increase the back of the house employee's pay versus splitting the “employee equity charge” with all their staff.
Cyrus was California's top restaurant inside a Healdsburg hotel that shut down in 2012 after a lease dispute with the new hotel owners. They reopened Cyrus 10 years later down the road in Geyserville. Cyrus' mission prioritized employee satisfaction, wanting to get over the restaurant industry pitfalls of high employee turnover, razor-thin profit margins and the lack of work-lifestyle balance (see the series “The Bear”). They only serve 48 diners each night, starting at a $295 pre-fixed price with a 20% service charge, plus alcohol and tax. The service charge is split amongst all the employees. Cyrus is typically booked out months in advance.
With most restaurants, I'm tipping 20% on my food and beverage, sales tax and surcharges. This adds up and is probably the main reason why I don't eat out as often ever since COVID hit and the fact I've upped my home cooking game. It's also probably the main reason that I travel to Las Vegas and LA so often — the food. I don't mind paying for a great meal, however my biggest gripe is paying over $100 (per person) for an average meal that I could have made better for a fraction of that cost at home.