Restaurant Surcharge California: New Rules and Menu Disclosure Requirements

California restaurant surcharge rules cover SB 1524, backlash over surprise fees, and required menu disclosures for service charges. From July 1, 2025, fees must be shown wherever prices appear, including online menus, or restaurants risk costly lawsuits.

By Brad Nakase, Attorney

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Table of Contents

1. Introduction

2. Controversy over restaurant surcharge in California

3. Regulations against hidden charges

4. Conclusion

Introduction

Running a restaurant in California has never been cheap, but in the last few years, the numbers have started to pinch harder. Ingredients cost more, wages keep inching up, rent doesn’t stop for anyone, and delivery apps take their cut without blinking. Restaurant owners began leaning on surcharges just to keep the wheels turning. Roughly 15% of restaurants were doing it by 2023. That number nudged to 16% after a year. Not a massive jump, but enough to show the trend was sticking around.

Controversy over restaurant surcharge in California

The restaurant surcharge in California came in all shapes and labels. Some restaurants added “service fees” for large parties. Others slapped on delivery charges. A few even used temporary surcharges to handle unpredictable cost spikes—like when bird flu hit and suddenly eggs, of all things, were treated like luxury items. Waffle House had to tack on fifty cents per egg for a while. Customers noticed.

And that’s where things got messy. While restaurateurs saw these fees as survival tools, diners looked at them and felt tricked. It wasn’t the fee itself, but the element of surprise. Seeing a price on the menu and then realizing on the bill that you were actually supposed to pay something else entirely. CNBC even reported customers venting that the extra charges felt sneaky. Over on Reddit, people compiled lists of restaurants using these hidden or unexpected fees. No business wants to end up on that list, but some did.

Regulations against hidden charges

Meanwhile, lawmakers had their eyes on “junk fees,” not just in restaurants but in pretty much every consumer-facing industry. California decided to crack down with SB 478, the False Advertising Law. The basic idea was simple: if you’re going to charge people something, you should show the full price upfront. Airlines, hotels, ticket sellers—everyone was under the microscope. Initially, restaurants were swept into that, too.

There was a collective groan from restaurant owners. The idea of eliminating every restaurant surcharge in California meant they’d have to push up menu prices. Not by a little. By enough to cover whatever they had been offsetting with fees. The FTC’s national proposal to ban junk fees wasn’t helping either. They estimated the rule would cost an average restaurant about $5,000 just to implement. For big chains, maybe that’s manageable. For small family-run places operating on razor-thin margins, that feels like a punch.

Pressure built, and eventually, regulators decided to carve restaurants out of this. The FTC removed restaurants from its junk-fee ban, and in California, Governor Newsom signed SB 1524, a kind of “we hear you” exemption. But it wasn’t a free pass. Restaurants weren’t suddenly allowed to hide fees again. The state instead replaced the ban with a new rule focused on disclosure. If you’re going to have a restaurant surcharge in California, fine. But the customer needs to see it. Before ordering.

These new rules are applicable from 1^stJuly 2025. They also apply to bars, cafés, & food trucks. Basically, anyone selling food and beverages. SB 1524 says any restaurant surcharge in California must be “conspicuously” displayed anywhere a price appears. And the state really means the word “conspicuously.” It’s not enough to slip fine print into the bottom corner of a menu or hide a note behind a QR code. The fee must stand out. Bigger font, contrasting color, some kind of symbol or highlight. Something that tells diners, “This is part of what you’ll be paying.”

If the restaurant uses a service fee, or a kitchen-equity charge, or a group-dining fee, or anything similar, the purpose of the fee also has to be spelled out. Not in legal jargon. Just a simple explanation so the customer understands why it’s there. And this requirement doesn’t just apply to physical menus. Online menus count too—whether they’re on the restaurant’s own website, on Yelp, on DoorDash, or wherever else the restaurant’s menu might appear. If the business puts a price in front of customers, the disclosure must follow it wherever it goes.

This means a lot of restaurants will need to overhaul materials before July rolls around. Printed menus, chalkboards, PDFs, QR-code menus, and those menu photos floating around the internet. They all need a cleanup. Some restaurants may not even know that copies of their old menu sit on half a dozen third-party sites, so tracking them down is its own project.

The consequences for ignoring the rule aren’t small either. A restaurant that violates the disclosure requirement could face legal action, including consumer lawsuits. And consumers are entitled to actual damages of at least $1,000. That’s per violation, not a flat fee. So one missed disclosure can snowball fast.

Conclusion

The goal behind the law isn’t to punish restaurants. It’s to avoid sticker shock. You can apply a restaurant surcharge in California. Just don’t surprise people with it. California is basically saying: charge what you need to charge, but be upfront.

In an industry where margins are thinner than a sheet of filo dough, surcharges probably aren’t disappearing. But how they’re shown to customers is changing, and restaurants will need to adjust.

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Restaurant Surcharge California: New Rules and Menu Disclosure Requirements

Introduction

Controversy over restaurant surcharge in California

Regulations against hidden charges

Conclusion

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