How does this new California legislation designed to eliminate “junk fees” impact restaurants that include a mandatory Service Charge ? Some last-minute modifications were legislated (and enacted) right before the July 1st implementation. We’ll get the accurate story and an informed restaurateur’s POV from Chef Andrew.
SoCal Restaurant Show
Co-Host Chef Andrew Gruel of Calico Fish House with “Ask the Chef”
- This is Tristan Beeman of the Wine Exchange in Santa Ana. You're listening to a spectacular vintage year in food news. SoCal restaurant shows. Cheers. - And welcome back. Sadly, it is the concluding segment of the SoCal restaurant show, but the better news is, is we're gonna be right back here with you next week from 10 a.m. until 12 noon on Saturday, right here on A.M. 830 K-L-A-A, in the home of Angels Baseball. And you can also catch us on the A.M. 830 K-L-A-A Angels app. I'm Andy Harris, the executive producer and co-host of the show, and it is a pleasure to welcome back my co-host, Chef Andrew Guille of the Calico Fish House. Chef Andrew, good morning, and welcome back. - Oh, it's great to be back. Thank you so much. - We took the 4th of July holiday off. We graciously stepped aside for an early Angels game. They were playing the cubbies in Chicago, but I know you did not take the 4th of July off, so we'll get into that in a minute. And we're enthusiastically presented each and every week by Melissa's World Variety Produce and West Coast Prime Meats. Chef Andrew, I know from the past that the 4th of July holiday weekend in Huntington Beach is just absolutely crazy. And you're only a couple blocks away from the beach at Calico. That must have been one heck of a week for you. - Oh, it's always a great week, and it was another great week this year. Obviously, we close on the 4th. I don't want to make my team members work on the 4th of July. I think that's a little bit unfair. So we were only open six days, but it was six great days. Very busy by the beach. Happy people. It was. I can only imagine last weekend, wow. When a lot of restaurants were not well populated because people were out of town, not the case in Huntington Beach. - Not at all, not at all. I mean, it's still amazing to me how massive the celebration is in Huntington Beach every year. It seems to get bigger and bigger. And the week is, when 4th of July kind of falls later in the week like that, it's great because the beginning of the week is also a holiday for everybody. So every day is a holiday. - Well, Chef Andrew, I did see that last week. It's kind of surprising. A lot of folks were taking the whole week off. And you know, good for them if you can do it. But yeah, I know where for you speak. Chef Andrew, we've kind of discussed this in the past. California, in general, without getting political here. There constantly is a lot of legislation that comes through. And from an entrepreneurial businessman's point of view, which is the point of view of the SoCal restaurant show and you as an independent restaurateur, sometimes this can be quite a lot to deal with because some of these new laws and regulations that come in are not necessarily completely well thought out in advance in terms of what all the potential ramifications can be for various businesses that are impacted. You know, it starts out as a good idea, but there's some permutations and combinations along the way that can really be hurtful to the restaurant industry, which is which we concentrate on here. So, as of July 1st, there was a new law that went into effect that basically was called the junk fee law. Now, on a surface, I think there was some good aspects of the law because particularly if you're going into a hotel or you're buying an airline ticket, from my point of view, I really wanna know what the total upfront costs are before you know, I give my credit card authorization. And kind of a nasty thing in the hotel business these days are these resort fees that, you know, you're not really sure what they're going for. And in some instances, the resort fees are actually more than what the daily rate of the hotel is and you sort of scratch your head. But this had some impact, potential impact on restaurants that then was walked back a little bit. So, from your point of view, if you can help educate our audience, what was the so-called junk fee legislation? And how then was this walked back for restaurants? - Yeah, so it was Senate Bill 478, which was exactly as you described, to eliminate junk fees. And as you said, and I agree on the surface, it's kind of a universally accepted principle. The way in which legislation works in California is that everybody kind of generally agrees with the headline of a bill and the overall premise. And then everyone has different special interest groups that begin to attempt to contribute to the authoring or the description of the bill. So, a bill and headline, in many cases, can end up becoming completely different than the original intention. And we've seen that across all governments, actually. I don't think it's even specific to California. We just, there's more legislation, as you said. And that's because in California, there's super majority. So on the one hand, which is a good thing, you can actually pass things quicker and faster and have more agreement when you've got such a super majority. But on the flip side, it can also sometimes lead to sloppy work or ambiguous legislation. And that's what we saw in this case, because while we agree, and I agree with you, right, I hate when I'm presented a charge or I'm presented a cost at something, regardless of what it is in any retail environment. I mean, let's use a couch as an example. And then you go to pay and it's $100 or $200 more expensive or 20% more expensive because of all these additional fees. It's very frustrating. It's a waste of time and time is opportunity cost, so that's money. So they said, okay, well, look, every single, you know, all of the costs associated with the final cost need to be transparent. And where that was ambiguous is that in the restaurant industry, in many cases, you do have these additional fees that are kind of case by case specific. So service charges on tables of eight or more, in many cases. And that's just very expected and regular in the restaurant industry where there's an automatic service charge for tables of eight or more, six or more, large parties. Now we've seen, as you and I have covered in the past, living wage line items, health insurance line items, various item lines, it's cost that things could go from your bill, if your bill's $200, the bill ends up at $280, right, or $260. So they passed this bill and restaurants didn't know, I think the most important part of this story is that restaurants didn't know how they were going to have to react to it because it was so ambiguous. And when the attorney general and ultimately, the people that were authoring the bill were asked a lot of these questions, they responded at the same level of ambiguity. So it was really up until quite literally the final hour, I think it was like June 30th that government Newsom decided, look, we're gonna strike restaurants from this bill. And that was due to a lot of work by the California Restaurant Association lobbying the government to, hey, restaurants either need time, they need lead time and they need explicit definition of this bill and exactly how it's supposed to be implemented or else there's gonna be a ton of costs and restaurants, as we know, are already facing an increased cost structure from inflation to local supply chain issues, local economies, insurance, you may need it. So I think that given the nature of what we've seen in politics over the past couple of months, the Newsom was very, I don't mean to distract it as a majority, but of course he is a face on a national level, didn't necessarily have the time to put into trying to really line this up for restaurants. So fortunately, for restaurants, the entire bill was, well, it doesn't apply to them. The bill is still in place for other industries. I think in general is a good thing for restaurants just because I think it would make it very difficult. And then if there was a lawsuit, then it, when it goes to court, it's like, well, what does that mean? And if the government and the people who wrote the bill don't even know what it actually means, well, then it makes it very hard to legislate. So it could have led to a significant number of lawsuits, which would have tied up court resources and made it a little bit more difficult for both the state and the businesses. So good thing all around, restaurants can continue to list these additional fees. But I think even before this bill-- - Chef Andrew, I'm sorry we need to end it there. Great perspective. - Good fans, that's our show. We're proudly presented to you by Melissa's World Variety Produce in West Coast Prime Eats. Back next week, "Doctor in the Dugout" with Alan Byer MD takes the field next. Be safe and good eating. [MUSIC PLAYING]