New city attorney Mara Elliott is alleging that several San Diego restaurants, including some in Point Loma and Ocean Beach, are adding 3-percent surcharges to customers’ bills without proper notice to compensate for a minimum-wage pay increase that took effect Jan. 1. That practice may be illegal. Local restaurants include ones in The Cohn Restaurant Group, which owns Bo Beau Kitchen + Bar and OB Warehouse in Ocean Beach, Coasterra on Harbor Island and Corvette Diner in Liberty Station. That list also includes the Brigantine chain, which owns a restaurant of the same name, as well as Miguel’s Cocina, both on Shelter Island.
At a Jan. 5 press conference, Elliot said her office’s Consumer and Environmental Protection Unit has received information that “some San Diego restaurants are adding what they describe as a ‘mandated’ minimum wage surcharge to customers’ bills, as much as 3.5 percent above and beyond what the prices on the menu indicate.
“Many of these diners did not learn of this so-called surcharge – which is not mandated by any governmental entity – until they received their check,” Elliott said at the conference. “This practice may violate California law, and specifically, its provisions against false advertising. “Citizens are entitled to know upfront the cost of their meals and the basis for each charge included in their bill. Those restaurants who do not adequately inform their customers may be receiving letters from our office indicating that we are investigating them for potential violations of the law,” Elliott said.
David Cohn, president of Cohn Restaurant Group, said, “Every restaurant I know of that’s doing surcharges is properly noticing and labeling the surcharge.” Cohn said notice of 3 percent surcharges are present in both the reception areas and every Cohn restaurant menu.
Cohn said, with any patron coming forward complaining they weren’t aware of the surcharge, that “we take it off the guest’s check. We can’t force anyone to pay if they didn’t see it.”
Cohn said that in San Francisco, where minimum wages were already increased, “80 percent of restaurants now have surcharges.”
“We have no problem with a minimum-wage increase, and are glad our employees are benefiting,” Cohn said. “These are unprecedented additional costs.”
Cohn added that, over the last 2 1/2 years, “Wages have gone up 44 percent. If every business paid that increase to its employees – a lot of them would have a hard time staying in business. We just want to be transparent with people, let them know that, at some point, we need to pass that along (costs).”
On its website, the Brigantine restaurant chain noted that, as of Jan. 1, 2017, a 3 percent surcharge was being added to all guest checks at The Brigantine and Miguel’s.
“In restaurants, where employees earn tips, the increased minimum wage goes directly to the highest earners in the house,” said the posting on Brigantine’s website. “At the same time, the restaurant employees who would benefit most from an increase won’t see their pay go up much, if at all. The reason: California is one of the only states in the country that do not allow tips to count toward an employee’s income.
“Rather than just raise prices and, in turn, raise the pay of the highest earners (tipped employees), we decided to add a surcharge so we can better compensate all our employees,” the Brigantine website continued. “Any restaurant operator will tell you how much they value their back-of-the-house staff (the dishwashers, preps and cooks), who are doing some of the most demanding, labor-intensive work. … the addition of the surcharge is by no means a political statement. Rather, it is our company trying to be more transparent with our guests in lieu of just raising prices.”
Noting San Diego’s minimum wage increase was approved by voters six months ago, Elliott said, “There has been ample time for every business owner to think through the law’s ramifications on their operations, and to make whatever lawful changes they deem appropriate to their prices. It’s unfortunate some restaurants chose another course. Based on the evidence, we may need to take them to court.”
San Diego consumers who believe they have been improperly charged a surcharge may contact a consumer hotline at 619-533-5600 from 9 a.m. to 5 p.m. Monday through Friday. Or they can file a complaint at sandiego.gov/cityattorney. All complaints will be reviewed to determine whether there are violations of law.