San Diego restaurants react to new state law outlawing surcharges

SAN DIEGO (FOX 5/KUSI) -- Added charges to your check after dining out will soon be a thing of the past. Come July, a new state law will ban surcharges across the county.

However, San Diego restaurants warn they may have to raise prices to make up for the loss of the added cost.

As the popular cliche goes, "what you see is what you'll get." In the case for restaurants and its diners, "what you see is what you'll pay."

Senate Bill 478 will make unlawful advertising, displaying, or offering a price for a good or service that doesn't include all mandatory charges other than taxes. Come July 1, the bill effectively bans any added charges ranging from three to six percent - a trend that's taken shape statewide.

Rodolfo Salum is the part owner of the Butcher's Cut Steakhouse in the Gaslamp Quarter. His business is one of many and a labor of love, but it's one that serves up quite the cost.

“There’s so many expenses - and everything is going up," Rodolfo said. "It’s not like we’re making so much money - some months you just go even.” 

Running a restaurant in the heart of downtown San Diego can be tricky given the hefty cost of rent and for the past few years, an added surcharge of 3.75 percent to diners' bills have kept his steakhouse afloat after taking a hit amid the pandemic and ongoing.

“It’s not just for us, it’s an increment of all the expenses, you know, minimum wage, rent," Rodolfo said.

He says the changes will most likely lead to higher menu prices.

"Now coming to have dinner is going to be a little more expensive, why? Because we need to cover those expenses,” Rodolfo said. 

According to economy expert Dr. Alan Gin, the new bill won't change much, but rather add more transparency by taking away hidden fees.

"Customers are going to pay the same amount as before and receive the same amount as they did before," Gin said. “The price is then closer to reflect what the customers are going to have to pay.”   

The law doesn't only apply to restaurants -- the same goes for hotels and ticketing companies which can be known to add additional fees later rather than upfront.