A downtown Los Angeles restaurant is adding a “security fee” to diners' bills, marking the latest in a wave of surcharges that is taking customers by surprise.
Perch, a rooftop bar and restaurant near Pershing Square, is adding a 4.5% surcharge to all customer checks to “ensure the safety of all staff and guests,” said employee Melody Lin. from Perch. According to the dinner menu on the restaurant's website, “the restaurant retains the entire charge for security resources.”
A post on Reddit by a user nicknamed “Individual-Schemes” first drew attention to the fee, and not in a good way.
“Having security is not atypical,” the post said. “It's included in our rent. All the buildings down here have security. So why 4.5%? Why not $1.00 per check? Why this amount? How much does this rate generate you per night?
State lawmakers attempted to ban surprise charges on consumers' bills last year by passing Senate Bill 478, which takes effect July 1. Applicable to any business active in California, it states that “advertising, displaying or offering a price for a good or service that does not include all required fees or charges” violates the state's prohibition on unfair or deceptive practices.
Whether that law applies to restaurants, however, is up for debate, apparently even within the state's attorney general. Gen. Rob Bonta's office, and Bonta was one of the sponsors of the measure.
The question is whether restaurants simply have to disclose their fees on their menus and advertisements, or whether they have to include the fees in the prices they charge for food and beverages.
Last year, a spokesperson for state Sen. Nancy Skinner (D-Berkeley), who co-authored the bill with Sen. Bill Dodd (D-Napa), told Eater SF that the legislation would allow service fees at restaurants if were revealed. in the menus. Representatives for the attorney general also told the San Francisco Chronicle that the law would not end the fees, but would simply require them to be disclosed.
However, the attorney general's office told Eater SF and The Times that revealing the fees was not enough: They had to be included in menu prices.
Matthew Sutton, senior vice president of government affairs and public policy at the California Restaurant Association, said in a statement that the law should not increase menu prices if applied correctly.
“The law, on its face, does not apply to restaurants that adequately disclose charges (nor was it intended to do so),” Sutton said. “Courts have repeatedly stated that restaurant menus are not 'advertisements' and that restaurants do not offer 'goods or services.'”
The Golden Gate Restaurant Association. has asked Bonta's office to clarify how its members will be affected by SB 478.
“While California regulators are expected to release guidance clarifying what exactly the law prohibits by July 1, there is uncertainty over whether fees such as surcharges or service charges will be banned entirely or, alternatively, , whether more conspicuous disclosure of such fees at the beginning of the purchasing process will be sufficient to comply,” law firm BakerHostetler said on its website.
Shareef Farag, a partner at BakerHostetler, has been advising his clients to simply assume that they must comply with the requirements of SB 478, even if their type of business is not specifically mentioned in the legislation.
“Given the breadth of the language, what we advise clients is to assume it will apply to them when the law takes effect later this year,” he said.
Timothy Butler, an attorney with Greenberg Traurig, said in a statement that the law will likely prevent restaurants from charging service fees as they traditionally do, such as adding costs separate from food and beverages.
“Instead, restaurants will likely have to incorporate previously charged service fees into the price of food and beverage-related menu items,” he said in the statement. “In other words, instead of charging $15 for a menu item and a separate 10% ($1.50) fee, a restaurant should charge $16.50 for the menu item or forgo some or all of the revenue. for service fees.”
Restaurants will likely be allowed to declare that their service fees have been included in overall menu prices, Butler said. But that could also be complicated because they tend to operate on tight margins and have already raised their prices to cope with rising costs.
“We expect restaurants to be very cautious about raising menu prices again to incorporate service fees, particularly since customers are already experiencing a shock when they look at food prices in general,” he said.
Some customers were dissatisfied with Perch's new rate.
“If you think about it, us paying their security fee is crazy,” Earnest Traylor told KTLA-TV.
The attorney general's guidance for SB 478 could turn service charges into mere footnotes on a restaurant's bill while increasing the price of menu items. Or it could allow restaurants to impose all kinds of surcharges, as long as they list the fees on their menus so diners know about them before ordering.
Either way, it would be costly for restaurants to challenge the new law. The fine per violation is at least $1,000.
