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Political Statement Or Transparent Pricing? Wage Hikes Prompt Surcharges At Restaurants

A note at the bottom of the menu at the Catania restaurant explains a new 3.7...

Photo by Katie Schoolov

Above: A note at the bottom of the menu at the Catania restaurant explains a new 3.75 percent surcharge to compensate for higher labor costs, Jan. 3, 2017.

Several restaurants in San Diego have begun adding surcharges to diners' bills to compensate for increases in the city's minimum wage. Critics see the move as political posturing, but restaurateurs say with slim profit margins, they can no longer rely on simple price increases.

Catania is an upscale Italian restaurant in La Jolla with a scenic panorama of the Pacific Ocean from its outdoor deck. Since Jan. 1, however, diners' eyes may be drawn to a small note at the bottom of the menu.

The note reads: "In lieu of raising prices, a 3.75 percent surcharge will be added to all checks to compensate for the increase in costs triggered by the new state and local ordinances. We appreciate your trust and understanding and will continue to put our heart and soul into providing you delicious food, exceptional service and genuine hospitality." It then directs customers to the website of the restaurant's parent company, Whisknladle Hospitality.

The surcharge is part of a trend, new to San Diego but well established in some other cities, of restaurants seeking new ways to deal with rising labor costs without raising the sticker price of their food and drinks. San Diego's minimum wage increased to $11.50 per hour on Jan. 1, thanks to a local ordinance passed by the City Council in 2014 and overwhelmingly ratified by voters in June.

Reported by Katie Schoolov

Whisknladle Hospitality's founder and managing partner, Arturo Kassel, said across-the-menu price increases discourage customers from ordering higher-priced items, and that the surcharge was a more transparent way of letting customers know what they're paying for.

"You're seeing this being implemented in cities like Los Angeles, Oakland, Seattle," he said. "And over the course of the next six months here in San Diego, it'll become the new normal."

Kassel said he supports increasing the minimum wage in principle, but that the local ordinance unintentionally benefits the wrong people. He said the only minimum wage employees he has are those who earn tips, like waiters, bartenders and bussers, and that with tips factored in, they make well above their regular salary.

"Unfortunately the people that really need (a raise) and deserve it — these are your cooks, your prep cooks, your dishwashers — they're being left out in the cold," he said. "And we're opting to do something about it."

Photo by Katie Schoolov

Arturo Kassel, founder and managing partner of Whisknladle Hospitality, sits on the deck of his restaurant Catania, Jan. 3, 2017.

The 3.75-percent surcharge is higher than similar charges at other restaurants. Kassel said that's so he can give raises to the whole staff, even those already earning above minimum wage. Last year the 9th Circuit Court of Appeals ruled restaurants cannot force tipped employees to share their gratuities with non-tipped staff.

Clare Crawford is executive director of the Center on Policy Initiatives, which supported the local minimum wage increase. She said the surcharge sounds like a political statement.

"When our gas and electric bills go up, you don't see restaurants putting a surcharge on for that," she said. "(But) when it comes to employees being able to make a little bit more and have a little extra money in their pockets to cover their basic costs, they need to put a statement on their menus."

Crawford added that regardless of the surcharges, raises for employees were always good news.

"This is actually getting the restaurant industry into a conversation about the conditions of work for all of their employees, which is really critical," she said.

San Diego's minimum wage will be higher than the state's through the end of 2018, after which the state minimum wage will eclipse San Diego's and increase gradually to $15 per hour by 2022.

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Andrew Bowen
Metro Reporter

opening quote marksclosing quote marksI cover local government — a broad beat that includes housing, homelessness and infrastructure. I'm especially interested in the intersections of land use, transportation and climate change.

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