Yes, prices on each item should increase. This is just a sneaky way of avoiding doing that. A bunch of dick head restaurant owners tried doing shit like this when my city passed a law making $15/hr the minimum wage with no exemptions for tipped workers. Restaurant owners like Tom Douglas had to raise prices but didn’t want to so they tacked on an extra fee and claimed it was a living wage fee but you were still expected to tip just as much. If I was certain that money was actually going to workers, I might be okay with it but there is nothing forcing them to give it to workers. Also, it is straight up admitting that you were paying starvation wages before.

People expected tons of restaurants to close after the minimum wage went up. None really closed and prices are fairly similar to most large cities. Some place did love to a no tip model with higher prices but generally it has been the same where you to 18-20% on the cost of the bill.