Unless the attorney general backtracks in any way, come July, restaurants in California will no longer be able to add service charges and other surcharges to customers' checks — and this will mean that the price of drinks and dishes will likely go up significantly.

SB 478, which bans "junk fees" of all kinds, including on concert tickets and restaurant checks, takes effect on July 1. Two state senators from the Bay Area, Nancy Skinner [D-Berkeley] and Bill Dodd [D-Napa], co-sponsored the legislation, which was also co-authored by the attorney general's office, and it has the local restaurant industry in a panic.

While restaurant patrons have generally disliked them, restaurants in San Francisco have been adding "SF healthcare mandate" and other surcharges onto checks going back more than 15 years. This was initially in response to the city having mandated healthcare be paid by employers for all workers who work a certain number of hours per week — and the surcharges first appeared as a form of protest, informing customers of a cost that the restaurant needed to offset somehow.

As far back as 2008, former Chronicle restaurant critic Michael Bauer lodged public complaints about this practice. "It's gotten to the place that I can't hold my tongue any longer. Enough with the surcharges," Bauer wrote on his blog sixteen years ago. "Here's my proposal of how restaurants should handle the situation: Incorporate all these expenses into the menu prices." Bauer would continue this line of complaint for a decade, though the surcharges continued past his tenure at the paper.

The surcharges morphed during the pandemic, with several prominent restaurants in San Francisco opting to charge a flat 18% or 20% service fee on all checks in lieu of the traditional tip model — allowing them to share these fees between both front- and back-of-house staff and raise wages all around.

Che Fico, perhaps most notably, additionally added a 10% "dining in" surcharge two years ago, which they said was intended to spark "conversation" about the "true cost" of doing business in a restaurant. This was met largely with frustration from diners sick of added surprises on their bills, and last month the restaurant said it was dropping this charge but replacing it with a 5% "SF mandates" surcharge.

As the Chronicle reports, in anticipation of SB 478 taking effect, another restaurant that was charging a flat service fee, Good Good Culture Club, is reverting to a traditional tipping model, as is its sister restaurant Liholiho Yacht Club, and raising menu prices about 8%.

Zuni Cafe, which notably lost most of its seasoned staff two years ago when it reverted to the service-fee model, may be forced to return to traditional tipping as well.

There is some question about whether the bill's authors understood the broad and potentially damaging impact this change could have on the restaurant industry.

"It is terrifying," says Tim Stannard of Bacchus Management Group (Spruce, La Connessa, Selby's), speaking to the Chronicle. "We can’t pay the wages we’re paying now unless we dramatically increase prices and hope guests actually come in and pay those prices."

Stannard says that the lawmakers and the attorney general "lit the fuse to this bomb" and are now "standing back to see what happens," and what he expects will happen will be a crisis for the restaurant business as a whole.

A much-anticipated FAQ document is being published by the AG's office Wednesday, which is expected to answer some open questions about private-dining fees, automatic gratuities for large parties, and more.

Restaurants also will have a particular grievance over an exception granted to delivery apps like DoorDash and Uber Eats, which have been blamed for negatively impacting brick-and-mortar restaurants — as the Chronicle notes, these apps will be able to continue charging their service fees.

One could see more pushback on the horizon getting some exceptions carved out for restaurants, but barring that, starting this summer, you can expect meal prices to go up further when you dine out — but those annoying surcharges will be a thing of the past.

Related: Che Fico Has Done Away With 10% 'Dine-In' Surcharge, But Will Add 5% Charge

Photo: Serge Esteve