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Wine Club Newsletter - June 2024

Restaurant Surcharges to Disappear July 1, 2024


This has been a sore spot for me, as I am a consumer to restaurants. Through COVID, things were tough for us and everyone else in my industry. Our product costs rose dramatically, as did labor costs (when you would find some who would show up to work).


We held our prices steady as best we could but did cave eventually about a year into the pandemic. However, we did not raise our wine list prices like seemingly every other

restaurant did in our city. It totally irks me to see the lowest minimum price of around $60 for a bottle of wine on a restaurant wine list that used to be $30-$35 or thereabouts. And I know very well that bottle costs the restaurant about $12-$15.


And then they add 4% on top of that? I indeed have stopped going to restaurants who practice one or both of these tactics. I am a bit of a wine crusader, and it does not help the wine industry to put a a rather simple bottle of wine on the list for $60+. No wonder wine sales are slowing!


Anyway, we have kept our prices for wine and food in check, and I am proud of that.


Gary Parker . . .



Here is an excerpt from a recent article in The San Diego Union Tribune regarding this situation.


Restaurant Surcharges to go, but Menu Prices May Climb

Dining out — and running a restaurant — have become increasingly costly in San Diego, but one way many local restaurateurs have coped financially over the past several years was to tack on a surcharge to diners’ bills.


Not anymore.

Image of waiter discussing bill with customer

A state bill designed to combat what are known as junk or hidden fees will go into effect in July, effectively outlawing added charges of 3, 4, 5 and 6 percent that have become increasingly commonplace at San Diego County restaurants.


While there had been some lingering uncertainty if surcharges on restaurant bills would definitely be disallowed under the bill, that ambiguity ended last week when the Attorney General’s Office released a set of guidelines setting the record straight. “Under the law, a restaurant cannot charge an additional surcharge on top of the price listed,” the Attorney General’s Office wrote.


The legislation, which Gov. Gavin Newsom signed into law in October, covers an array of businesses, from ticket sales vendors and delivery apps to restaurants and hotels. But it’s been the restaurant service charges that have gotten the most attention — and debate.


ELIMINATING ‘BAIT AND SWITCH TACTICS’

The legislation, Senate Bill 478, makes clear that it’s all about transparency for consumers, whether purchasing concert tickets, staying at a hotel or dining out. While a mandatory fee at a restaurant is not outright prohibited, it effectively is because, as the Attorney General’s Office stated last week, it must be included within the price of each menu item. A restaurant, it clarified, cannot charge an additional surcharge on top of the price listed.


Additionally, tips that aren’t voluntary — like a mandatory gratuity of 18 or 20 percent for large groups of diners — must also be included in the list price. The net effect, said Attorney General Ron Bonta, is to eliminate “bait and switch tactics” so consumers are aware upfront what the total cost is for a good or service they’re purchasing. “The law is simple: The price you see is the price you pay,” Bonta said. “Laws work when everyone can comply.”


California’s restaurant industry immediately pushed back, releasing its own statement in response to Bonta’s interpretation of the legislation. Nothing in the bill, nor the ongoing debate over the legislation, “suggested an intent to change the pricing structure for every restaurant in this state,” said Matthew Sutton, senior vice president of government affairs and public policy for the California Restaurant Association.


The trade group, he added, will be “considering all available options to block implementation of SB 478 in the manner suggested by the AG’s office.” The legislation was co-authored by two Northern California senators — Bill Dodd, D-Napa, and Nancy Skinner, D-Berkeley — and co-sponsored by the California Low-Income Consumer Coalition.



WEIGHING HIGHER PRICES FOR PASTA

Restaurant surcharges in San Diego have weathered a long, sometimes contentious path, ultimately surviving multiple legal challenges that were launched in 2017. More than a year later, a Superior Court judge ruled that nearly a dozen San Diego restaurants that had been sued over the extra charges they had added to diners’ bills were within their legal right to do so. Wise of Trust Restaurant Group expects some diners will be pleased to see the removal of surcharges when they get their bills.


“I haven’t wrapped my head around what people will say but there will be some positivity from people not seeing the 4 percent surcharge because we do get a fair amount of people asking to remove it,” Wise said. “Still, a lot of people coming into our restaurants understand the economics behind restaurants so they don’t have a hard time with it.”



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