Legal Action and Civil Suits Face San Diego Restaurants that Add Surcharge

by on November 21, 2017 · 19 comments

in Ocean Beach, San Diego

Both legal actions by San Diego’s City Attorney and law suits face restaurants that add a surcharge to their patrons’ bills.

On October 11th, City Attorney Mara Elliott filed a civil enforcement action against Mission Bay’s Barefoot Bar & Grill for failing to disclose its surcharge and then adding it to menus in extremely small print, she alleged. This was her office’s first legal move against a local restaurant for allegedly adding an deceptive menu surcharge, ostensibly to cover higher labor costs from recent minimum wage increases.

Also, more than a dozen San Diego restaurants and dining groups now face lawsuits that have been filed against them with claims they are defrauding customers by illegally tacking on a surcharge to bills.

Elliott’s action against Barefoot Bar & Grill seeks $2,500 per violation.  The restaurant is alleged to have not clearly and conspicuously informed patrons of its 3 percent surcharge; plus it advertised prices that didn’t reflect the true cost of items to customers, according to Elliot. She told the press:

“If a family goes out to dinner, they should be able to trust that the prices on the menu are the prices they will pay. Our message to restaurants is not complicated: Tell your customers the truth.”

The City Attorney’s action against the Mission Bay eatery, described the restaurant as “committing theft by false pretenses by knowingly and designedly misrepresenting or omitting material facts to consumers,” a violation of the false advertising provisions in California’s business and professions code. The business has until November 24th to file a legal response to the city’s action.

It’s sad but true, many San Diego restaurants  instituted surcharges after the city’s minimum wage rose to $11.50 in January 2017. Elliot stated the surcharges are legal only if before placing their order, patrons are accurately told about them.

Since her office has been sending out warning letters about their surcharges, Elliot said most of these restaurants have either made their disclosures of the surcharges more conspicuous or have removed them. Another practice by a few restaurants – describing the surcharges as government-mandated – which is totally false – appears to have ended in San Diego.

Meanwhile, some of San Diego’s top dining spots, including the Cohn Restaurant Group – which has nearly a couple dozen restaurants within San Diego County (including Beau Bo’s in OB) -, George’s at the Cove, Mister A’s and Sammy’s Woodfired Pizza & Grill are named in suits filed over the last 8 months by a local consumer rights law firm, Hyde & Swigart.

The civil complaints allege the restaurants deceive their customers by not alerting them to the surcharge in the pricing of the individual menu items, plus assert the surcharges violate multiple statutes of the state business code, among them false advertising and unfair competition. The suits also ask for a court order to halt the practice and that consumers be refunded.

The law firm has filed 15 suits so far this year and hopes to add another five by the end of December.

 

 

 

 

{ 19 comments… read them below or add one }

Oldob November 21, 2017 at 2:37 pm

I only got through the first couple paragraphs or this article before I got physically sick to my stomach.

But in one sense, I get it. Don’t hide your fees in small print.

If I were a restaurant owner I would have a big notice on my menu that says, “Due to the idiocy of the majority of the people in California who think that unskilled labor should be paid unreasonable amounts of money to do a job that virtually anyone can do, it is necessary for me to raise my prices in order to pass along that cost to my customers so that my business can remain viable.”

That’s the first thing I would do. The second thing I would do is figure out a way to eliminate as much of my labor cost as possible through automation. I wouldn’t have done that before. But if it means the difference between my business surviving or failing, I am sure that not one would blame me.

Let’s see what people think of the absurd minimum wage when they lose their jobs because of it!

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Frank Gormlie Frank Gormlie November 21, 2017 at 2:43 pm

You don’t think the Cohn family group – which owns close to 2 dozen restaurants – can’t afford to give their people a living wage???? How many employees does that make?

We join the Widder Curry in boycotting any restaurant that has these surcharges.

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kh November 21, 2017 at 3:11 pm

I respectfully disagree. Keep your politics out of my food.

The surcharge is exactly that, whether or not you add any fanfare to it. As a diner I don’t want to hear about how much the pasta cost and the employee cost, and whether electric bill went up of if your roof sprung a leak.

So just put the damn price you need to charge on the menu up front and stop being sneaky about it. Or I’ll go elsewhere.

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retired botanist November 21, 2017 at 3:39 pm

Oldob…maybe your name says it all-which previous epoch did you come from? I hate to rise to your bait, but its so infuriating I can’t resist: At least we can agree on the small print, right? Deceptive and deliberate.
First, a reality check about unskilled labor. Food service people, housekeeping, waste collectors, mail deliverers, babysitters, cleaning services, retail sales assistants, delivery drivers, to name a very few, are the fabric of everyday lives. What makes their jobs less valuable to society- the possibility that they might not have college degrees? And do you actually think ‘anyone’ can perform these jobs-have you ever held any jobs like these, and if so, for how long? Just how long do you think you could put up with serving or cleaning up after condescending individuals, who clearly think that whatever it is they do is far more important than the contribution these workers provide?
Second, do you actually believe that $11.50/hr is an unreasonable wage for at least 8 hrs of labor in a 1st world country, regardless of what kind of labor? Especially when it likely comes without paid time-off, health care or any other employee benefits? Especially when one can’t even afford to rent an SRO on that amount of income?
Third, you want automation? Great, eliminate the remaining staff at fast-food restaurants and eat there. Your attitude epitomizes what is so wrong in our country. I can only hope you were kidding and trying to be funny. Except its not. :(

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Oldob November 21, 2017 at 5:46 pm

Frank, the Cohn family DOESN’T OWE YOU OR ANYONE ELSE ANYTHING. And botanist, Frank’s comment is what is wrong with this country! Everyone wanting a handout has turned our society into a welfare state filled with a bunch of unambiguous do-nothings who spend too much time complaining that life isn’t fair, vilifying people who are more successful than them and crying to the government to prop them up. And I didn’t pass judgement on anyone or downgrade anyone for the work they did. My only point was that the market will bear a certain wage for certain work. And when the government steps in to artificially increase those wages certain industries don’t support it. Not everyone is the Cohn family. Most people aren’t. So shame on you for using your vote to put your hands in other peoples pockets!

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retired botanist November 21, 2017 at 6:33 pm

“…the market will bear a certain wage for certain work”…yeah, the only part you left out in that statement was ‘and people will tolerate…” Like paying athletes millions of dollars for playing with a ball- would that be the government? And I might add, would that be what you call ‘skilled labor’?
Or the fact that there is still wage disparity between men and women- oh wait-is that because women are less skilled then men?
The government “artificially increases wages”? Would that be like the government “artificially” increasing social security (not often enough) as a cost of living adjustment?
You’re right. The Cohn family doesn’t owe me anything. But their business owes the society of free enterprise within which they operate, a moral, responsible, and fair work ethic. The distribution of wealth in this country is gross and globally shameful. And it would appear that no amount of voting is changing that right now.
So you know what? Serve yourself. Because it sure sounds like that’s what you’re doing anyway. Shame on me? Back at you.

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kh November 21, 2017 at 6:54 pm

Actually women get tipped more than men. Where’s the outrage?

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retired botanist November 21, 2017 at 7:55 pm

Haha, now that’s really chumming the water! Maybe its the ratio of women to men in the food service industry? Or because women are supposed to be ‘more skilled” in that job, like men are supposed to be “more skilled” in combat? Or because men tip the “pretty waitress” more? All totally irrelevant :-)

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Judi Curry judi November 21, 2017 at 9:02 pm

You have any proof that women get tipped more then men? I tip the same amount for the same service, regardless of the gender. Would like to see the research that you are referring to.

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Frank Gormlie Frank Gormlie November 21, 2017 at 9:12 pm

Oh, where to start? First, by hanging their (multiple) signs out and opening up their doors to serve the public, as retired botanist said, “their business owes the society of free enterprise within which they operate, a moral, responsible, and fair work ethic.”

I would add, they owe us truth in advertising, the food and prices are what are advertised on the menu, truth in the quality of food served, a clean environment in which to prepare the food they serve – comply with all government regs that help keep the public healthy, or at least not make us sick -, and particularly for the wealthy Cohn family – they owe their many, many employees a decent wage with decent benefits, and a safe work environment. That’s just for starters.

And a decent wage is one in which the worker doesn’t have to have a second job, one with which to raise a family, put a roof over the family’s head, or … provide enough for whatever the employee wants for a decent life.

Sounds like you OldOB want to go back to “the good ol’ days” where we had unfettered capitalism, no nasty unions, no snooping government agents, no sticky health regulations, no restraints on how workers are used, hell, why not really cut down on labor costs and simply employ kids and give them cocaine to make them work faster – and have them work all day, as well.

And stuff the workers in tight spaces, with locked doors in unsafe rooms, no limits on the risks of any machinery. If somebody loses an arm, just replace them.

That’s unfettered capitalism and it all happened.

And it’s a damn good thing we don’t have it.

We do have the greatest disparity in wealth right now than we’ve had for a 100 years.

And second, … well, I’ll take a breather.

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Oldob November 21, 2017 at 10:36 pm

Thanks for the very rational reply,Frank. You got me. That’s exactly for what I am advocating. Let’s give coke to child laborers and let safe working conditions go by the wayside. Let’s just make the minimum wage age $50/hr. Or better yet how about every rich, successful person has to send 10% of their after tax wealth to you care of the ob rag for you to distribute to the people who really “deserve” it.

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unwashedwalmartThong November 21, 2017 at 6:35 pm

Apparently, the definition of success would be a corporation that possesses the ability to fool a lot of people into believing it is successful because of business savvy, in part, & not because it is paying people low wages. U.S. corporations fled to Southeast Asia to avoid paying U.S. citizens a fair wage; U. S. corporations continue to battle against organized labor, unions, collective bargaining, just to suppress wages. Were it not for the inception of the organized labor movement over a century ago we would all be working 16 hours a day for dog food & day-old bread. Mimic the “right wing” & cite the meme that anyone desiring a living wage wishes for a handout. We’d appreciate a fair wage for fair work.
Remember Jack, the country was built upon genocide & slavery. The market will fluctuate wildly when unregulated; remember the crash of ’07? Also, the greedy masters of the corporations always cite the “will of the competitive market.” They always spew the crap about how good competition is good for everyone, AND THEN THEY DRIVE TOWARDS MONOPOLY.
Granted, the subject is really not a simple one, given the complexities of economics. But one can trace the line between profit margins & lower wages; they are entwined.

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kh November 21, 2017 at 6:50 pm

Here’s some good reading.

Cliff notes: Median wait staff in SF makes $13/hr in tips. And about 40% of tips are unreported and untaxed. Add that to the new minimum wage and the wait staff will be getting $25 an hour in CA. Is that what the voters intended? Seems hard to run a restaurant with those costs. Maybe we should stop tipping if we’re going to force the owners to pay them more.

https://www.theatlantic.com/business/archive/2015/02/how-much-do-waiters-really-earn-in-tips/385515/

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Judi Curry judi November 21, 2017 at 9:09 pm

I would like to have you read what a reader said when I posted my article about tipping on Next Door. Might be a long read, but some very interesting information:
“Minimum wage may be up but servers aren’t reaping huge $$ because of it. I used to be a server and can tell you from first-hand experience how it works. At the end of my shift, I have to “tip out” to my bar, bussers, and expediters (the ones who get the food organized and off to the tables). Typically, it is 1-1.5% of my overall sales, which doesn’t always proportion out with my tips. If I’m under-tipped on a few tables, it really throws off how much I take home at the end of the night. So then after tip-out I have to claim my tips when I clock out (government doesn’t let you take anything without their cut). Let’s say I “skim some off the top” and don’t claim all my tips…well it comes to bite me in the ass come W-2 time. When I get my W-2 there is a little box that is filled in called allocated tips where I’m given a dollar amount I have to claim in tips that are being allocated to me whether I earned it or not. So you do feel the pinch one way or another. But back to how servers aren’t getting rich. When you claim your tips they show up on your paycheck with your hourly rate and you are taxed on your tips too. But where do they take the taxes from? They take it from the hourly pay!!! So no, a server, bartender, or tipped employee isn’t walking away with $15 plus tips. That is where the argument that servers are paid under minimum wage comes in at. I worked with a bartender at this restaurant I was at who’s checks would only be for about $10 bucks every two weeks because of claiming tips. Now, the restaurants do offer you help. There are IRS booklets they provide us which allows us to record what we made pre-tip-out and to account for what gets tipped out and what we make at the end of the night. So that way if you are ever audited you have back-up. It is also to a tipped-employee’s benefit to claim exactly what they get paid in tips for purposes of unemployment since that accounts for your salary. So let’s clear it all up now so we all know servers still aren’t magically cleaning up in wages and tips. Please continue to tip when you receive outstanding service.

Judi Curry, Sunset Cliffs North·5d ago
So I have a question for you. When using a credit card, I always try to leave the tip in cash, primarily so that there is no record of what you received. Usually it is 18-20% but occasionally it is less – or more. So….does it make a difference if I tip in cash or put in on my credit card?

Also, I think a surcharge sucks, but don’t take it out on the waitstaff. They aren’t getting at surcharge at the end of the night. If you want to take it out on someone, take it out on the manager, but not a servers pocket.
Thank

No ma’am it doesn’t make a difference. What happens is in most corporate restaurants a server acts as their own register so say a table gives a server all cash including tip and doesn’t want change. Then you come along and tip on a credit card. When we check out at the end of the shift it all gets reconciled based on cash and card. So we may owe the restaurant if there are cash tables. But say all my tables pay in card and tip on the card, the restaurant owes me money and then I tip out from there. And because tips can be allocated it really doesn’t matter. Plus some managers used to look at my charge receipts and ask why they weren’t leaving a tip. He thought I was giving crappy service. But thank you for tipping!”

I have removed the name of the respondent, but if you belong to Next Door you can read it yourself.

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kh November 21, 2017 at 11:01 pm

It’s in the link I posted. It seemed like an honest article without an angle to it.

I believe tip out was discussed as well so I assume they are factoring that out of the servers take home.

I don’t really have a dog in the fight. That may sound like a cop out but these things are never so clear cut when I dig in for details.

Seems to be a lot of experts here on how to run a restaurant though. Just pay garbage wages and go home and count your money. Making a restaurant break even, let alone a profit, is nothing I’d take for granted, it involves long hours and sacrifice.

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Daniel Beeman November 21, 2017 at 9:54 pm

I went to Anthony’s Grotto, before it closed on the day of Martin Luther King parade. It was my first time ever eating there. Heard it was good food, and great view so wanted to try before they closed down and never could. Both I and a friend ordered food, and some beers. The surcharge was not listed on the inside menus given to us. And when I complained, when bill came with added fee/surcharge, I questioned it. Waiter said the surcharge was on the main menu outside the restaurant…well we just walked in, didn’t look at that menu, as we KNEW we were going to eat there! Weren’t worried about what was on the menu. Although it wasn’t much maybe a $2 or less, but it was the point of the matter. Couldn’t spit the food back up & return it! And secondly WE TIP waitstaff, not the owners, so much of their income is generated by US!!! So what really is the surcharge for? Seems like to pad the owner, manager, and etc. pockets. Waitstaff, bussers, and service personnel are paid for much by US the patrons! And if a restaurant can’t come up with enough to make it meet minimum wage, even new higher minimum wage, then they are in the wrong business…and really doubt this is the case in a tourist trap and restaurant like the waterfront Anthony’s Grotto!

I’m really wonder what is going on in San Diego business, Restaurant, Associations mind when they add surcharge fee (not a public tax) just prior or during Restaurant Week!?? I really think they and the San Diego Chamber have been at this cat & mouse time games long enough…and NOW ALL OF US ARE PAYING: Hep. A, homelessness, and lack of affordable housing because they sick the NIMBY’s and Taxpayers org.s on us, while they continue to fill their bank accounts, and we the constituents pay for housing that their wages to employees should! Heck, why don’t those organizations invest in employee housing…why shouldn’t those whom make your profits via their sweat, hard-work, and attendance be made sure they have housing. Doubt any manager or owner goes “home” to sleep in RV on street, on the sidewalk or in some park if not cited by police! EQUITY IS WAY PAST DUE!!!
IF THESE ORGANIZATIONS OWNED EMPLOYEE HOUSING THEY COULD ALWAYS SELL FOR HUGE PROFIT ONCE THEIR OWN EMPLOYEES ARE BETTER OFF! And they even might make a profit from collecting some rent along the way…and if purchased nearby ensure that employees can easily make it to work! With less polluting too!

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Frank Gormlie Frank Gormlie November 21, 2017 at 10:17 pm

There’s a great discussion going on here; this post has really touched a nerve with the issue of surcharges, tips, how much waitstaff make ….

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kh November 21, 2017 at 11:04 pm

You heard it here first. Greedy restaurant owners are responsible for the hep A outbreak…

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Frank J November 23, 2017 at 6:06 am

Someone please correct me if I’m wrong. A restaurant’s labor costs are usually just over 30%…Let’s call it 35%. Minimum wage goes up 10% last January. If 35% of your costs go up 10% that equals 3.5%. Then lets add in a bit more as your purveyors, delivery drivers, suppliers, disability insurance and whomever are charging a bit more to cover their extra labor expenses. However, some servers shifts are cut, they are asked to handle an extra table or 2, anyhow management finds a way to shave off a little. Regardless, let’s double the added costs from 3.5% to 7%.
So overnight, 10 months ago, our favorite eateries and bars costs went up 7%, maybe less. In the mean time many places decide not only to charge more but to add tax to the bill. Example: The $5 beer goes up $1 and tax is now added and it becomes $6.45. The $10.95 burger becomes $14.95. Do the math.
As far as I’m concerned the extra 7% in costs to the restaurant took 25% and more out of my pocket. Like I said, correct me if I’m wrong, please.

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