By Messha Halm
When it comes to health care, San Francisco restaurants are charging ahead.
San Francisco has long been at the forefront of social change, but a new city ordinance aimed at providing health coverage to more workers has the restaurant community and some of its patrons stewing. At issue is the San Francisco Health Care Security Ordinance, which went into effect this year and now requires businesses with 20 or more employees (including part-time employees) to pay a specific amount toward their workers’ health care. Many area restaurants are looking to recoup the cost by means such as cover charges, percentage surcharges or by raising prices.
Nobody’s against the idea of shrinking the pool of uninsured workers, explains Kevin Westlye, president of the Golden Gate Restaurant Association, but the issue is how and at whose expense. "We think preventive care is a great thing but an employer mandate is not the answer," says Westlye, whose group instead proposed a quarter-penny increase to the sales tax to spread the burden of the costs more widely. That suggestion was rejected by the city, and the ordinance went into effect last January for businesses employing 50 or more workers; in April, it went into effect for businesses with 20 or more workers.
One way that restaurants are trying to defray the costs is by charging a set fee per diner. Craig Stoll of Delfina was one of the earliest restaurateurs to go that route, instituting a $1.25 coperto (cover charge) – which is common in restaurants in Italy. Luna Park and TWO charge $1 and $1.25, respectively.
"At first, we were giving out cards explaining it," says Stoll, who supports progressive causes and has provided his full-time employees with health insurance for seven years, "but rather than put the burden on the waiters, the fee is now listed on the bottom of the menu and the bill. I can count the number of complaints on one hand."
Other restaurants have gone the surcharge route, such as Rose’s Cafe and Bong Su, which both have instituted a 3.5% pre-tax surcharge. Bong Su co-owner Anne Le Ziblatt says, "We’ve gotten a lot of feedback from diners about this issue. San Franciscans don’t mind, and seem to support the idea. But our out-of-town guests feel penalized and ask why do they have to pay an extra charge for something that does not affect them?"
"If I had known before we opened Bong Su in San Francisco that the city had mandated policies that are counterproductive to small businesses, I may have considered otherwise," adds Le Ziblatt, who also owns Tamarine in Palo Alto. "The cost of doing business in this city, with health care, sick leave and the highest minimum wage in the Bay Area, is a real challenge for every independent restaurant."
When Zagat asked San Francisco–area diners earlier this year how they felt about restaurants charging extra to cover the new health care costs, 13% were in favor of a set percentage surcharge, 10% preferred a set cover charge – and a hefty 47% said they’d rather just see restaurants raise their prices (30%, meanwhile, were against having to pay any kind of increase). The latter tactic has been chosen by restaurants such as BIX and MarketBar.
But for value-oriented restaurants, raising prices runs the risk of "making us considered too expensive," says Le Ziblatt. "What I most resent," explains Stoll, "is that someone else is making us change our identity."
That’s one reason Stoll opted for a fixed coperto – it’s easy to rescind. After all, the original ordinance is still the object of pending litigation. GGRA won a case against the law in Federal court last December but the city was granted a stay of that ruling while it pursues its appeal. Arguments were made in the Ninth U.S. Circuit of Appeals in April, but there’s no deadline for when it has to make its ruling – and if the city wins, most assume the case will go to the Supreme Court.
"When the litigation is done, we can take the coperto off," notes Stoll, and "we haven’t lost our identity. I doubt anyone is going to go back and lower their prices."