If you run a restaurant in CA, this one's for you...
Just a follow up on last week's email: we all know that service charges and auto grats (for now) are going away July 1. I am told that GGRA and CA Rest Assn and other groups are continuing to work with Sacramento to either delay implementation or create a carve out for restaurants. So this is not yet a done deal.
With that said, IMO, now's the time to be prepared and have plans in place so that just in case the law stands, you're ready to go.
I think some of your options are:
- to cover the loss of service charges, increase menu prices. If your current service charge (Healthy SF) is 5%, consider menu price hikes of 6%-7%. It's been our experience that menu price hikes don't replace the service charge exactly, so plan for menu prices higher than your current service charge rate
- to cover the loss of large party auto grats, consider impact on servers receiving voluntary tips (and related tip outs to boh).
Not all the best news, but at least be prepared.
As we get more info over the coming weeks, I'll keep updates coming.
If you have questions, please let me know.