scorecardDiners are shocked to see a 4% 'employee healthcare' fee on their bills at an LA restaurant — but the owner says it's common
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Diners are shocked to see a 4% 'employee healthcare' fee on their bills at an LA restaurant — but the owner says it's common

Nancy Luna   

Diners are shocked to see a 4% 'employee healthcare' fee on their bills at an LA restaurant — but the owner says it's common
Retail6 min read
  • Diners are increasingly noticing restaurant surcharges.
  • A Los Angeles eatery received blowback after a diner tweeted about its 4% healthcare surcharge.

The owner of a highly-acclaimed Los Angeles restaurant said his staff is receiving hate mail and threats of protests after a local podcaster called out the 40-seat bistro this week on social media for adding a 4% surcharge.

The fee, listed on the check, covers the cost of healthcare for employees at Alimento, an Italian restaurant in the historic Silver Lake neighborhood of Los Angeles.

Dave Anthony, a comedian with the podcast "The Dollop" took issue with the surcharge and a $3 "water donation" fee and posted his ire on Twitter on July 3.

"Lotta bullshit going on here, including charging for tap water (illegal)," Anthony tweeted after receiving his bill.

At the bottom of the bill, the restaurant stated that a service charge is added to each check "so we may offer our staff health insurance. Please notify your server if you would like this removed."

It's unclear if Anthony asked the restaurant to remove the surcharge. He could not be reached for comment.

The post went viral, eliciting dozens of responses, with several people criticizing Alimento for adding a surcharge rather than raising menu prices. Some questioned if the owner would cancel an employee's health insurance on a slow night.

"So... If the restaurant has a slow day or u opt-out, do staff not get health insurance that day?" one person wrote.

"This reads like an Airbnb cost/fee list," one tweet stated.

"I just hate the restaurant industry in North America. I tip because I bear no ill will toward the wait staff. Give them a decent salary, health care and charge what you need to charge. Period. A lot of the world has this figured out," someone else tweeted.

Restaurant responds to the 'rant' over surcharge

Zach Pollack, chef-owner of Alimento, took to Instagram to respond to the "rant" over his restaurant's surcharge. He questioned why his establishment is "being singled out" for something that has been a routine practice in the industry since the passing of the Affordable Care Act.

"As most LA diners will know, Alimento's 4% healthcare surcharge is hardly unique," he wrote. "There are dozens if not hundreds of other restaurants in Los Angeles that implemented similar surcharges when the ACA mandated that companies with 25 or more employees offer health insurance to full-time employees more than a decade ago."

Pollack did not address the water charge and declined Insider's request for additional comment.

He noted that Alimento has fewer than 25 full-time employees, so he doesn't, by law, have to offer workers a health insurance plan.

"We offer it to employees because we chose to, not because we had to," he said in his post, which has logged more than 124, mostly positive, comments.

One supporter said if restaurants raised the menu prices to cover costs, "everyone would complain that it was too expensive. Here you are clearly explaining where the money goes, to take better care of employees."

And, as for the suggestion that he might cancel someone's insurance if the restaurant has a slow night?

"No, of course not," he said, adding that the 4% surcharge "hardly covers the bulk" of the healthcare costs.

Surcharges are catching on at restaurants

As minimum wage and health care costs surge for service workers, restaurant chains have responded over the years by adding surcharges to cover the costs.

"The costs of operating a restaurant are becoming greater and greater, and they're trying to figure out how to stay afloat," Jot Condie, president and CEO of the California Restaurant Association, told Insider.

He said surcharges have been widespread for years in California, especially in San Francisco, which requires small businesses to provide healthcare to employees.

"I think that customers in San Francisco are kind of conditioned and used to seeing it," Condie said of surcharges.

Fast food joints are not immune to imposing such charges.

A Pizza Hut franchisee in Los Angeles earned media buzz in 2021 after it added a service fee to help offset the cost of doing business in California.

Surcharges are catching on outside of California.

Last August, one in six National Restaurant Association survey respondents said they were adding fees or surcharges to customer checks to pay for higher costs.

In January, two Dallas restaurants started getting dinged on Yelp and Google reviews after tacking on a 3% surcharge to diner checks to offset the costs of covering health insurance and paid time off for their workers. Also, in January, a TikTok video went viral after a woman posted a video about receiving a 5% surcharge for employee health.

Customers are not the only ones upset by restaurant fees.

Last month, Los Angeles restaurant Jon & Vinny's, known for its celebrity sightings, was sued by staff over the company's 18% service fees tacked onto checks. The servers claim the fees result in reduced tips. After the suit was filed, the restaurant owners clarified that the 18% fee helps the restaurant provide higher wages to staff, according to the Daily Mail.

While the CRA doesn't have a position on surcharges, Condie said the trade organization provides restaurant members guidelines.

The main point they try to convey is, "Be as transparent as possible," Condie said. "You need to be extra careful and diligent about making sure that the customer sees it ... .so you don't face lawsuits or consumer blowback."

Still, Pollack's surcharge is transparent on the check, but his restaurant remains under siege, he said.

"People are sending my staff hate mail and threatening to picket outside our tiny storefront, purportedly to defend workers' rights," he wrote on Instagram.

But in reality, Pollack said the naysayers are "in fact hurting the very people that work hard to nourish a few hungry souls a night."