May 14, 2024 Resource

California Price Transparency Law, SB 478

On May 8, 2024, California Attorney General Bonta released guidelines for the price transparency law (SB 478) set to take effect on July 1. With this new law, restaurants can still charge a fee above the listed price for an item if that selection is delivered. The goal of the legislation was to ensure that consumers know exactly how much they will be paying ahead of ordering.  

The Digital Restaurant Association (DRA), a non-profit focused on helping local restaurants thrive in a digital world, is focused on transparency, especially delivery fees. SB 478 aims to tackle fees that are added to Californians’ bills at the very end of a transaction. While the DRA supports the intent, the bill is missing the main culprit in misleading consumers by charging hidden, high delivery fees by the big delivery apps like DoorDash and UberEats. Currently, the big third-party delivery platforms charge restaurants additional delivery commissions and fees while advertising to consumers “low or free” delivery.  

Many times restaurants have to add some of these commission costs to the cost of their menu items.  It makes it look like the restaurant is making more money from an online order, when all they are trying to do is break even.  A new California bill, SB 1490 sponsored by Senator Durazo and supported by the Digital Restaurant Association will bring additional transparency and equity to online food delivery.  The proposed legislation would provide disclosure of all fees and commissions charged by big food delivery platforms including specific rates for marketing, order processing and delivery; and would allow restaurants to opt-in to the disclosure to consumers of the itemized breakdown of the transaction including purchase price, fees/commissions charged to the restaurant, any fees charged to the customers and tips. SB 478 is directed at restaurants when it should be directed at the delivery apps. SB 1490 will remedy that.