How the government could change the restaurant business

A pair of FTC proposals are finally catching up to modern restaurant reality: an Expedite Explainer

There’s a coastal spot called Half Moon Bay 30 miles south of San Francisco. Surfers know it for Mavericks, the fleeting big wave surf competition. Bay Area parents know it for its fall pumpkin patches and, during the middle of October, the Half Moon Bay Pumpkin Festival, which draws huge crows and snarls traffic on all roads leading into town.

This year, one Half Moon Bay restaurant added an 18 percent “festival service charge” onto guest checks that week. The co-owner of Johnny’s, a newly reopened casual restaurant, defended the temporary charge. Past customers have tipped low during the hectic week, she said, and the charge helps compensate servers for their work. It would be removed for anyone who objected to it, she added. 

Unsurprisingly, a social media post about the charge garnered thousands of views and hundreds of comments, as they always seem to do. Service charges added to restaurant bills have become more common over time. Earlier this month, California Governor Gavin Newsom signed a “junk fee ban” into law in the state; it’ll go into effect next summer. But there’s confusion about what it might mean for restaurants. While one of the bill’s co-sponsors told Eater the bill allows restaurant service fees as long as they were disclosed to diners on the menu — presumably, before they placed an order — a rep from the state Attorney General’s office suggested it would ban service fees outright.

Also according to Eater: “The AG’s office would not confirm that interpretation of the law.” 

We seem to be in a service-fee gray area, and now the federal government is getting involved.