California will implement a new law banning service fees on restaurant meals and delivery services starting July 1, 2024.
The law has sparked mixed reactions from restaurant owners, with concerns about potential price increases.
“A lot of restaurants have said, ‘I don’t want to raise menu prices, [so] I’m going to add some surcharges,’” Taffer said.
Taffer criticized the ban on “junk fees,” advocating for consumer choice in accepting higher menu prices instead of surcharges.
“[Or], ‘I’m going to put a $2 surcharge on every [menu] item to cover my increased energy or food cost, [or] I’m going to put a $1 surcharge on there to cover my increased employee medical insurance costs,’” Taffer added.
“I don’t believe that the state of California should be involved in the way that we go about doing our business,” Taffer said.
“For Taffer’s Tavern, we chose not to go with surcharges, we just dropped it onto the menu charges,” he said.
“The consumer is starting, dare I say, to get used to the $30 hamburger,” he added.
“Prices are incredibly high now — a hamburger in some markets cost what a steak used to cost.”
He highlighted the financial pressures on restaurants, with rising costs leading to menu price increases.
Restaurants “don’t have a lot of margin to play with,” he noted.
“Someone’s got to pay for it and the restaurant operators don’t have the margin for that,” FAT Brands founder Andrew Wiederhorn said. “So, prices are going to go up.”
Taffer emphasized transparently covering costs through menu pricing as a preferred approach.
“Let’s do it honestly, let’s just do it through the menu,” Taffer said.
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