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$30 hamburgers

While Taffer is critical of California’s intervention in restaurant business practices, he said that he doesn’t believe in surcharges.

He argued that, ultimately, this should be a consumer decision, as the consumer will see the check and “speak with their wallet” — meaning they’ll make their preferences known through their spending habits.

“For Taffer's Tavern, we chose not to go with surcharges, we just dropped it onto the menu charges,” he revealed in the FOX Business interview.

This approach can often result in higher menu prices; a change Taffer believes consumers are beginning to accept, noting, “The consumer is starting, dare I say, to get used to the $30 hamburger.”

Taffer highlighted the inflation in dining out costs, stating, “Prices are incredibly high now — a hamburger in some markets cost what a steak used to cost.”

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Restaurant math

According to Taffer, restaurants face significant financial pressures, with a third of revenue going toward food and beverage costs, another third to labor, and 10% to 15% to administrative and other expenses.

As a result, restaurants simply “don’t have a lot of margin to play with,” he told FOX Business.

This sentiment is echoed by Andrew Wiederhorn, chairman and founder of restaurant operator FAT Brands, who warned that dining out costs would rise in response to minimum wage increases.

“Someone's got to pay for it and the restaurant operators don't have the margin for that,” Wiederhorn cautioned. “So, prices are going to go up.”

Taffer concluded by emphasizing the importance of transparently covering costs through menu pricing at his restaurants.

“Let's do it honestly, let's just do it through the menu,” he suggested.

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Jing Pan Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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