As the summer season approaches, California is gearing up for a new law that is set to impact restaurant menu prices across the state. Restaurant owners are bracing themselves for the implementation of this law, which they believe will result in price hikes for their customers.

Following the recent increase in the minimum wage to $20 per hour in the state, fast-food chains had already raised their prices to offset the additional labor costs. Now, a new law signed by Governor Gavin Newsom is set to further impact the restaurant industry by banning ‘junk fees’ starting July 1.

Under this new law, restaurant surcharges and fees that were previously used by owners to provide benefits such as health care to employees will be prohibited. Many businesses would include these surcharges on menus or offer them as optional additions for customers to choose from.

With the impending ban on such fees, restaurant owners are left with no choice but to raise menu prices in order to comply with the new regulations. The California Attorney General has confirmed that these surcharges will indeed be illegal under the new law, posing a challenge for the industry.

Laurie Thomas, the Director of the Golden Gate Restaurant Association, expressed concerns about the impact of the law on the industry. She highlighted the dilemma faced by restaurant owners, who may have to decide between reducing wages for employees or increasing prices to cover costs.

Thomas raised the question of whether establishments should revert to a traditional tipping model or increase prices significantly to navigate the changes. The uncertainty surrounding customer reactions to the price hikes adds another layer of complexity for struggling restaurant owners.

As California prepares to enforce this new law, experts warn that it could further strain the restaurant industry, which has already faced significant challenges in recent times. The delicate balance between maintaining employee wages, satisfying customers, and staying afloat financially remains a pressing issue for restaurant owners across the state.

With the deadline for compliance approaching, California’s restaurant landscape is set to undergo yet another significant transformation, leaving both owners and customers to navigate the evolving dynamics of the industry.