‘I thought it was pretty egregious’: A California diner on a 5% surcharge added to a mandatory 20% tip

A Los Angeles diner reportedly owed an $8.25 surcharge alongside $33 in required gratuity, for $41.25 in added charges. According to The Nerd Stash, the diner, who posts as Redditup, put a picture of the phone screen on the r/LosAngeles forum. The restaurant is Üca Terraza in downtown Los Angeles, and both charges appear on the menu.

The user said the prices already seemed high for the amount of food served, and called the combination of an admin fee and a minimum tip “pretty egregious.” Together, the gratuity and the surcharge equal 25% on top of the food and drink total. The post’s title called the surcharge an “admin fee,” although the menu labels it differently.

On its menu page, the restaurant says every check carries a 20% gratuity and that a 5% surcharge applies to all food and beverage sales. It describes the surcharge as separate from a gratuity, intended to “help defray the cost of increased wages and benefits,” and says the restaurant keeps the full amount.

California rules on restaurant fees

California’s hidden fees law, SB 478, took effect July 1, 2024, and generally requires businesses to include all mandatory fees in the advertised price. The state attorney general’s office says restaurants, bars and similar food vendors are exempt from that requirement when they clearly and conspicuously display their mandatory fees wherever prices appear.

For most other businesses, the same page says that disclosing fees later, or advertising a base price plus a percentage fee, does not comply. That exemption came through a follow-up bill, SB 1524, which Gov. Gavin Newsom signed in June 2024. Under it, restaurants may add service fees and gratuities, but they must disclose charges that sit outside the listed prices and explain what each fee is for. Surprise charges at the end of a meal are not allowed.

Because Üca Terraza states both charges on its menu, that report described them as disclosed. Many commenters on the thread were not convinced and questioned whether the money reaches workers. The menu answers part of that: the 20% is called a gratuity, while the 5% surcharge stays with the restaurant.

Tips matter to servers, as when a server got a $2 tip on an $825 tab and described how it affected her income. Fees next to tips have also drawn questions from Los Angeles diners. In one case, a Sugarfish diner questioned a fee that was 16% of the food total at that restaurant.

Diners in Los Angeles have tracked these charges before. In August 2023, Redditors on the r/LosAngeles forum compiled a crowdsourced spreadsheet of restaurant surcharges, with listed fees ranging from 3% to 20%. Each entry reportedly listed the restaurant’s name, the percentage charged and the neighborhood.