Chef Andrew Gruel, the owner of multiple California-based restaurants, stated that the cost of dining out will continue to rise due to factors including lawsuits, insurance, supply chain disruptions, and regulations such as SB 478. Gruel shared his statement in a May 26 post on X in response to a question about why restaurant prices are skyrocketing.
"Too many new regulations, lawsuits, supply chain issues, insurance costs, labor shortages, and market hiccups directly affecting restaurants," said Gruel. "The lawsuits are huge as trial attorneys prey on small- to medium-sized business owners. And in California specifically, SB 478 prohibits any line item charges, so you will see it all lumped into menu prices and biz owners are going to massively increase costs."
SB 478, California’s "junk fee ban," will take effect July 1, according to a report from Eater SF. The legislation prohibits fees and service charges applied by businesses such as hotels, car rental providers, and ticket sales platforms. The California Attorney General’s Office said the law also applies to bars and restaurants, which will no longer be allowed to charge mandatory service fees that frequently serve to supplement gratuities and offset the costs of other regulations, such as a San Francisco requirement to allocate funds for employee health care. Many restaurant and bar owners said they will be forced to raise their prices to account for SB 478.
According to Restaurant Business, after bars and restaurants reopened in the wake of the pandemic, fewer people re-entered the workforce, leaving businesses facing labor shortages. The rate of job openings in the hospitality industry declined from 9.6% in November 2022 to 6.4% in November 2023, which is still higher than that of many other industries.
Excessive lawsuits are negatively impacting California’s taxpayers and businesses, according to a press release from the American Tort Reform Association (ATRA). The state loses more than 787,000 jobs each year due to the costs of these excessive lawsuits, which also cost every California resident an extra "tax" of nearly $2,120 each year.
A minimum wage increase for California’s fast food workers contributed to menu prices rising faster in California than in any other state, according to an analysis conducted by Datassential. The four-dollar minimum wage increase for workers at fast food and fast casual restaurants took effect April 1, bringing the required minimum pay rate to $20 per hour. The rate of menu price inflation in California was 10.1% between September 2023 when the measure was signed into law and April 2024 when it took effect. In area code 442, which encompasses southeastern California, the rate of menu price inflation was 12.5% during that time period.
Gruel is a food entrepreneur and TV personality, according to his website. He has been featured as a judge on Food Network’s "Chopped Junior" and "Food Truck Face Off." He is CEO and founder of American Gravy Restaurant Group which includes Calico Fishhouse, Big Parm Pizza, Two Birds Chicken, Butterleaf, Lolo’s Tacos and 101 Burger.