CALIFORNIA SURcHARGE INFO
Market Broiler & MB Grille have made California our home and we are proud to operate six restaurants throughout this beautiful state. Along with its golden coastlines and great weather, California also presents some unique challenges to business operators. For example, by the year 2022 California’s mandated minimum wage will be 50% higher than it was in 2015.
As these operational costs continue to rise, we have determined it necessary to implement a surcharge fee, allowing us to continue to provide the high-quality food, exceptional hospitality and value you expect, and provide our valued team members the best working environment possible.
Since 2015, federal, state and local governments have passed legislation significantly increasing mandated minimum wage rates, as well as implementing new health care requirements. Additionally, some municipalities have chosen to mandate even higher local minimum wage rates. For example, San Francisco’s 2020 minimum wage is $15.25, without a tip credit.
In most states, tipped employees are paid less than the federal/state minimum wage. This is the case in Texas, where tipped employees are paid a minimum wage of $2.13 per hour, and once their tips are accounted for, their total wages are at or above the minimum wage. The state of California is one of only seven states that do not offer a “Tip Credit”.
Minimum wage increases have primarily impacted our tipped team members, as they are typically the only team members in our restaurants who are paid at the minimum rate. We feel it is also important to allow these changes to impact our non-tipped team members’ compensation, and therefore have increased our labor costs across a majority of our positions. Not only is the rate of pay impacted by these changes, but the cost of benefits has also significantly increased to cover healthcare, paid time off and other new mandated benefits.
Market Broiler and MB Grille, like the majority of the restaurant industry, operates with extremely small profit margins. On average, restaurants operate between a 2% - 5% profit margin, which is impacted further by these increases to minimum wage, healthcare, paid time off, and other labor-related costs. Unfortunately, we believe we could not cover these new costs, and keep our doors open, without finding new ways to cover these increases. We fear we would find ourselves to be in the same position as the over 400 San Francisco restaurants who closed their doors in 2019. It is important to note, in San Francisco labor costs have quickly risen from 20-30% of sales to close to 50% for many restaurants.
Market Broiler has been a community staple for over 30 years and have no intention on joining the growing list of restaurant closures any time soon. For this reason, we feel that it is necessary to incorporate a small surcharge to help offset these runaway costs. While this surcharge is not treated as a tip or gratuity to the service staff, it is used to help cover not only the increase in labor costs, but the increase in health care, workman’s compensation, and other costs of doing business.
We do not want to simply increase our prices, as we believe it is important to continue offering the value you have come to expect from us. These changes and operational cost increases also impact the many organizations that we do business with, and have impacted many of our other costs, including the cost of goods. We believe passing menu wide increases could negatively impact your dining experience, and it is our hope that implementing a flat surcharge fee, will be a less impactful way for us to cover these new costs, while still preserving the dining experience and value you expect from us at Market Broiler & MB Grille. We also do not want to be forced to discontinue the value items that so many of our guests enjoy including our Reelin In The Deals, Lunch Combos, Right Sized and Happy Hour menus.
We believe that the industry as a whole will continue to transform as these costs continue to rise, but we have no intention of changing the level of service you have come to expect over our 30 years of service. With the use of a surcharge fee, Market Broiler will be positioned for a quick and easy reversal of this charge in the instance that California does allow operators to exercise a minimum wage tip credit and maintain prices that offer our guests a value beyond that of the competition.
If you have additional questions or comments regarding our surcharge fee, we welcome your feedback. Please take the time to contact us directly at firstname.lastname@example.org. Thank you so much for your continued support, we hope to have the privilege of serving you for another 30 years!
Interested in learning more about current and future legislation? The California Restaurant Association is a great resource!