At Kiraku, a busy izakaya in Berkeley, dinner might come with a surcharge that you won’t see at many Bay Area restaurants. Notices can be found at the entrance, by the cash register, on the menu and on a little card that comes at the end of the meal.
The culprit for a higher bill? Using a credit card.
Kiraku is one of the first restaurants in the Bay Area to charge diners an extra fee for paying with plastic. The move hasn’t kept diners from lining up nightly for corn tempura and grilled beef tongue, but other restaurant owners are nervous about following Kiraku’s lead.
“Some people get really angry,” said Kiraku co-owner Sanae Saito. “Some post one-star reviews on Yelp complaining.”
As the costs of running a restaurant in the Bay Area continue to rise and profit margins remain low, owners are eyeing credit card surcharges as one potential way to save a lot of money — as much as $100,000 per year, depending on the size of the restaurant.
When a diner pays with a credit card, the restaurant ends up paying a processing fee that is usually somewhere between 2% and 4%, depending on the card. American Express is known for the highest fees, as are those with bonus rewards like airline miles.
“We’re tired of paying for vacations,” said Rich Azzolino, owner of Sotto Mare in North Beach.
Adding a credit card surcharge to checks wasn’t always possible. In 1985, California passed a law prohibiting businesses from charging customers more for paying by card instead of cash. Several businesses challenged that law on the grounds of free speech, arguing they weren’t able to effectively communicate their pricing. In January 2018, a federal appeals court ruled in favor of the businesses, setting a legal precedent for restaurants statewide.
Oakland’s Italian Colors was one of the legal challengers, yet the restaurant still isn’t charging customers to use cards. Chef-owner Alan Carlson said he gets phone calls constantly from fellow restaurateurs asking about the law and why he hasn’t acted on it.