Thanks to an emergency bill that was introduced in early June by the same lawmaker who co-sponsored the law banning "junk fees," an exception was carved out for the California restaurant industry to continue charging those unpopular surcharges.

It's July 1, which means a raft of new laws take effect in California, including one passed last fall, SB-478, regarding all "junk fees" attached to concert tickets, travel purchases, and the like. The law as written also applied to the surcharges that have been tacked onto restaurant checks — something that has become common practice in San Francisco for the better part of two decades.

The law banned the "advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction, as specified."

The restaurant industry revolted, saying, essentially, they're having a hard enough time as it is in this economy, with inflation driving up the costs of food on top of very high labor costs and rent in cities like SF, and such a change could put some restaurants out of business.

State Sentator Bill Dodd [D-Napa] didn't seem entirely prepared for the backlash, and he relented, introducing an emergency, late-session bill four weeks ago called SB-1524, seeking to "clarify" the earlier law and allow restaurants to continue charging those fees — so long as they're transparent about it on menus, etc. San Francisco's Senator Scott Wiener co-authored the new bill.

"Restaurants are vital to the fabric of life in California, and they should be able to cover costs as long as they do so transparently," Wiener said in a release last month. "SB 1524 clarifies portions of the law that pose a serious threat to restaurants. The bill strikes the right balance between supporting restaurants and delivering transparency for consumers, and I’m proud to support it."

That bill was signed into law by Governor Gavin Newsom on Saturday, just ahead of the legislature's Summer Recess, and less than 48 hours ahead of SB-478 legally taking effect.

Dodd released a statement following the signing. "With today’s signing we can uphold the principle of providing consumers with up-front price transparency without inadvertently harming food service workers or small businesses," Dodd said. "This new law will require clear, conspicuous disclosure of any fee, and a description of its purpose, on all advertisements, menus or other displays that contain the price of a food or beverage item. Now we can ensure restaurant customers are not shocked when they get their checks."

The thing is, most restaurants were already fairly transparent about these fees, albeit sometimes in fine print on menus. And that is likely to remain the status quo across San Francisco — where fees of anywhere from 2% to 10% are tacked on to checks, and occasionally even higher "service charges" are added with additional gratuity being optional.

Since the pandemic and even several years before, the restaurant industry has been grappling with balancing issues of equity and the desire to hire qualified staff with the tight profit margins that business often operate under. Some restaurants, including SF's Zuni Cafe and Liholiho Yacht Club sought to accomplish this through 20% service charges that were shared between the front and back of house — allowing for higher hourly wages for cooks and dishwashers, but this came at the expense of higher gratuities for servers.

Zuni has continued the practice, adding a 5% "SF mandates" charge as well, while Liholiho and sister restaurant Good Good Culture Club have gone back to the traditional tipping model — though Liholiho's menu notes that gratuities are shared between front- and back-of-house, and they add a 6% "SF mandates" surcharge as well.

Some restaurant customers, though, continue to feel irked by the surcharges. And we are now 16 years out from when former Chronicle critic Michael Bauer first complained about them, suggesting they were an expression of sour grapes by restaurant owners about the cost of doing business in San Francisco — arguing that it was about time that the costs just be rolled into menu prices.

As Soleil Ho noted in the Chronicle this year, that is how it's done at Cole Valley bistro Zazie, and they've managed to pay market rent and compensate staff well with a no-tipping model — with all service charges included in menu item prices, and no extra fees at all.

"If a tiny restaurant in the most expensive city can do this, don’t tell me you can’t," said one diner at Zazie, speaking to the Chronicle.

But other restaurateurs contend that sticker shock about menu items, like cocktails that cost upwards of $20 for instance, are enough to turn customers away and hurt business, while surcharges have become more palatable, at least to some.

Previously: Emergency Bill Looks to Allow Restaurants to Continue Charging Extra Fees

Photo: Simon Kadula