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How a $26 burger becomes $41 at California restaurants
At one San Francisco restaurant, service charges are so astronomical that a burger billed on the menu at $26 will end up costing $41.
But the Black Cat is far from unique in the city. And restaurants there seem to be coming up with every more creative fees to add on, the San Francisco Chronicle reports.
Charges include 'the cost of doing business' - which most diners would assume would be covered by the main price.
At the Black Cat, a jazz bar and lounge in the Tenderloin district, bosses there add a 20 percent service charge 'to ensure a living wage' and a 10 percent 'SF safety and benefit charge' to its bills - on top of the 8.63 percent sales tax.
It is made clear the service charge is not a tip. Adding the customary 20 percent tip, which bring the restaurant's $26 burger, served without extras such as fries, to $41.24.
Black Cat, a bar in the Tenderloin district of San Francisco, adds a 20 percent service charge
Fees and a 20 percent tip take the restaurants burger from $26 to $41.24
A breakdown of the fees that make up restaurant bills is set to become mandatory by July 2025, following a recent change in California law.
Service charges, which are set at the restaurant's discretion, tend to range from five to thirty percent of the check.
Service charges are often to 'enable more equitable pay for staff and help finance more benefits,' according to the California Restaurant Association.
The Black Cat claims the 'service fee is used to ensure a living wage for all of our employees.'
Another San Francisco restaurant, 3rd Cousin in Bernel Heights, charges customers a 20 percent service charge and a '7 percent fee for SF mandates and costs of doing business in SF.'
Additional fees - on top of tips - were first introduced in San Francisco in 2008 when the city introduced a law requiring businesses to support employees health care.
The range of benefits, including sick leave and parental leave, have since expanded and have become associated with these fees.
Other restaurants tack on such additional fees too, including Tiya which has a 25 percent service fee and Pawn Shop which adds 10 percent.
Some customers have branded service charges as 'manipulative' and 'deceitful.'
The rise in additional fees is also not specific to California, with 15 percent of all restaurants added a surcharge to customers bills, according to the National Restaurant Association.
As well as employee benefits the charges may be used to cover rising costs restaurants face due to inflation or even tap water, CNBC reported.
A restaurant's pretax profit is usually around 5 percent of sales, according to Hudson Riehle of the National Restaurant Association.
'It's a very thin margin to begin with,' Riehle told CNBC, making it hard for such businesses to absorb or pass on price increases.