Are San Francisco Restaurants Pocketing 3-4% Surcharges?

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Last week the Wall Street Journal reported that some San Francisco restaurants are pocketing the surcharges that they add to their tabs to cover Healthy San Francisco and other local mandates. Haute Living takes a closer look.

The story indicated that at the end of each year, many restaurants are keeping money from the surcharges that is not used, and in the case of One Market the Wall Street Journal reports this equates to more than $100,000 a year.

At the bottom of the One Market menus is an explanation that reads, “In response to employer mandates, including the San Francisco Health Care Security Ordinance, a 4% surcharge will be added to all food and beverage sales.” One Market’s Michael Dellar says the report was incorrect in saying that the 3 or 4% restaurants charge is solely for providing health care for employees. According to Dellar, that’s only one aspect.

“We do not tell customers that we are collecting the 4% for the singular purpose of providing health care benefits to workers as the article states. Those restaurants that use such singular language are in error and might have been a better focus [of the article],” said Dellar.

He adds that his company follows the law, and notes that they actually offered a health care plan to employees long before the ordinance went into effect. However, he adds, the restaurant workforce is made up of younger employees, so many forgo the private insurance and don’t use the money provided in the San Francisco plan. Whatever is not used goes back to the restaurants three months after the end of the year.

The costs that are peculiar to San Francisco are a 1.5% employment tax; a minimum wage of $9.92 an hour (state minimum is $8); nine days of paid sick leave; the money being paid to support Healthy San Francisco.

Dellar says that his company follows the law, and offered a health care plan to employees long before the ordinance went into effect. However, he says the restaurant workforce is made up of younger employees, so many forgo the private insurance and don’t use the money provided in the San Francisco plan; what’s not used goes back to the restaurants three months after the end of the year.

Dellar notes that it costs $213,000 more annually to do business in San Francisco, or about 7% of the total revenue. He concludes by saying that even if 90% of what the restaurant owners put into the San Francisco Health Care Ordinance were returned, it would still cost $130,000 a year extra to do business in San Francisco.

Source: Inside Scoop San Francisco

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