Rachael Smith built a life in the restaurant business for more than 30 years. It was in Monterey that she owned The Salty Seal. In May 2025, she opened The Salty Otter Sports Grill in downtown Santa Cruz with all the money she had saved. After that came the logo. The reviews came next.
The logo in question was a happy river otter riding a surfboard. It was unique, specific, and personal. Smith made it herself. She used a generative AI tool to make the base image and then used her design background to color and improve it for a long time. She has worked with computer graphics for 26 years. This wasn’t a machine-typed prompt at midnight. It’s not like someone typed in some words and hit the button,” she told Lookout Santa Cruz. Still, the one-star reviews started coming in within weeks. It’s not about the food. It’s not about service. About the picture.
Take a moment to think about that. A woman with decades of experience in the field who is putting her own savings into a local business is review-bombed because of a choice in design. Something someone wrote about the restaurant said that if they couldn’t “make the effort to create a logo,” they probably wouldn’t “make the effort to cook good food.” That is a huge jump, and it tells us a lot.
Smith eventually got rid of the bright logo and put black text on a white background. She called it a breaking point on Instagram. “A lifelong dream has been crushed by a group of locals,” she wrote. Something really makes me feel bad about reading that sentence.
The changes happening in Santa Cruz and San Francisco’s restaurant scenes aren’t just about how things look. It’s about who pays the price when getting angry is the normal reaction to something new. People who own small businesses in cities in the United States often say that their profit margins are “razor-thin,” which doesn’t do justice to how tight they are. The San Francisco Chamber of Commerce says that it is one of the most expensive places in the country to run a small business. Someone spraypainted graffiti on top of the menu display that the new restaurant Grind & Unwind put up on Haight Street just to let people know they were open. It was taken down by the owner.
The 24-year-old Mohammad Ali runs a doggy daycare in SoMa called We Wuff. He used AI tools to make cartoon dogs for his windows because he couldn’t afford or time to do weeks of design work or hire local artists. He used Claude to come up with ideas and Google’s image tool to make the pictures. Because printing in San Francisco was too expensive, he even had the stickers made in India. It was easy for him to understand: time is money. When you’re a young business owner trying to keep your company going, that makes a lot of sense.
The bigger problem is that this tension isn’t talked about honestly enough in the conversation. People who are against AI-generated images often say that the problem is a matter of principle: local businesses should always support local artists. That’s a good value to keep. But it doesn’t take into account how poor the people being criticized are. Not every business owner can afford to have original art made. Creative people say they want to protect people like these: small businesses, first-generation business owners, and people who have put all their money into a downtown sandwich shop or sports grill.
It’s funny that, even after all the reviews, The Salty Otter still only has a 4.2-star rating on Google. Most of the people who ate there liked it. Most of the time, the loudest critics hadn’t even walked in the door. It’s important to notice a pattern: online anger often punishes before it judges, and small businesses that don’t have PR teams or budgets for crisis communications take the punishment directly.
All of this doesn’t mean that images made by AI can’t be criticized. Some of it is really bad—uncanny textures, proportions that don’t make sense, and the kind of visual noise that shows no one was paying attention. No one should defend a design choice that shows a misspelled “Christian Ronaldo” holding a pizza slice at a shop in San Francisco. But there is a difference between not doing something right and strongly disagreeing with a whole group of tools. A restaurant owner in Santa Cruz ends up replacing her custom-made logo with a blank black screen by blurring the line between the two.
People who are leading the backlash against AI in small business branding may think it’s the right thing to do. However, it is important to consider who is responsible for the effects. AI firms don’t do it most of the time.
