California Bay Area Restaurants Add Fees to Address High Labor Costs, Worker Shortages

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As restaurants open up in California’s Bay Area, diners may be surprised to see a new charge added to their meal tab: a fee operators say is necessary to pay workers more in a post-pandemic economy where millions of Americans are still getting paid to stay home.

At the Refuge restaurant in San Mateo an explanation is included on the bill: to “compensate (for) high labor costs in the Bay.”

Refuge co-owner Matt Levin told the San Francisco Chronicle that the two percent “wellness fee” is tied to the struggle to find workers. He is already paying 15 to 20 percent more than he paid pre-pandemic hires.

The Chronicle reported on the trend of adding fees for restaurant dining services directly related to the high cost of labor and worker shortages:

Although replacing tipping with automatic service charges is already gaining momentum, some of these new fees are in addition to an expectation to tip. Pinstripes, a restaurant and bowling alley near Refuge at Hillsdale Shopping Center in San Mateo, is also charging a 3 percent wellness fee to “offset the stringent safety standards and practices” put in place during the pandemic, said Don Hoffman, chief marketing officer. At San Francisco’s Che Fico Alimentari, the aim of a new 10 percent “dining-in” charge, owners say, is to provide a living wage for the staff.

Many restaurants are raising wages to stay operational. Chipotle recently increased prices by about 4 percent to cover the cost of higher wages. According to a recent survey by job-hunting website Joblist, 39 percent of former hospitality workers said they would return to those jobs for higher pay, and 23 percent want more benefits. In the Bay Area, the high cost of living continues to be a significant factor for workers.

The cost of food is also going up, including basics such as dairy, meat and vegetable oil. Global food prices have increased every month for the last year, according to Reuters.

Laurie Thomas, executive director of the Golden Gate Restaurant Association, told the Chronicle she’s familiar with the trend of more local restaurants adding surcharges or service fees to help cover increased costs.

“I think everyone is trying to figure out what works in order to keep the lights on and in order to be able to pay employees more,” Thomas said.

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