
As restaurant owners from across the nation look to expand and establish new locations, it is crucial that they keep a close eye on what is transpiring in the California legislature.
The recent developments in Senate Bill 1524, which seeks to exempt restaurants from including add-on fees in their quoted prices, could have significant implications for the industry as a whole.
The legislation, which is being fast-tracked through the Sacramento Capitol, would make it easier for restaurants to set food prices without having to factor in additional costs such as service fees or employee benefits.
This exemption would essentially reverse a law passed just last year that required businesses to include all fees in the prices they present to customers.
While the initial legislation, SB 478, was intended to increase transparency and awareness among consumers, the new bill aims to provide more flexibility for restaurants in setting their prices.
This shift in policy could have a direct impact on how restaurants across the nation operate, especially those looking to expand into California.
Attorney General Rob Bonta, the original sponsor of SB 478, touted the legislation as a crucial step towards empowering consumers with accurate pricing information.
However, the unintended consequences for the restaurant industry prompted a reevaluation of the law’s impact. Senate Bill 1524 emerges as a solution to address the concerns raised by restaurant owners and industry advocates.
By exempting restaurants from the pricing regulations imposed by SB 478, the new legislation provides flexibility for businesses to set their prices without the burden of additional fees.
The swift progress of SB 1524 through the Assembly committees underscores the urgency and bipartisan support for this measure.
As the restaurant industry continues to recover from the challenges posed by the pandemic, this legislation offers much-needed relief and support for businesses striving to thrive in a competitive market.
With the momentum building behind Senate Bill 1524, it is poised to bring much-needed clarity and flexibility to restaurants as they navigate pricing strategies and strive to provide exceptional dining experiences for their customers.
As the legislative process moves forward, stakeholders in the restaurant industry are hopeful that this bill will soon become law, ushering in a new era of opportunity and growth for dining establishments across the state.
Sen. Bill Dodd, a Napa Democrat and co-author of SB 478, agreed, saying, “With the governor’s signing of this historic bill, we can finally take aim at dishonest junk fees that are tacked onto seemingly everything — from online concert tickets to hotel reservations.”
SB 478 takes effect on July 1. But a couple of weeks ago, Bonta’s office released an advisory that restaurants would have to follow the new law, and restaurant owners and unions reacted, claiming that they assumed their added fees would be exempt.
Dodd, California Restaurant Association (CRA) and union officials came to the rescue of SB 1524, which was stuck in the Assembly. They lobbied to insert new language allowing restaurants to exclude fees from their menu prices if their menus include “clear and conspicuous” notices that such fees exist.
Thus, patrons would have to search menus for such warnings, but SB 1524 would give restaurants an extra year to place the language in their menus.
“SB 478 would in effect, eliminate negotiated service fees and therefore deprive employees of income,” noted Jot Condie, President & CEO of the California Restaurant Association. “There’s nothing in the new law to prohibit restaurants from folding fees into their quoted prices and using the income for whatever purpose it is being used now.”
However, no one from Bonta’s office testified on SB 1524 implying that he doesn’t oppose the restaurant exemption.
Bonta is a very likely candidate for governor in 2026, and his major rival may be Lt. Gov. Eleni Kounalakis, who lists herself as a co-sponsor of the new bill along with the California Restaurant Association.
By keeping abreast of developments in the California legislature, the nation’s restaurateurs can stay ahead of potential changes that may affect their pricing strategies and overall business operations.
Understanding the implications of legislation like the California Senate Bill 1524 can help restaurant operators make informed decisions and adapt to the evolving regulatory landscape.