As restaurateurs manage the day-to-day requirements to keep their operations afloat, looming in the backdrop are federal regulations that have direct impact on their business. The National Restaurant Association (NRA), led by Scott DeFife, executive vice president policy and government affairs and the industry’s chief lobbyist on Capitol Hill, has identified four key issues that demand attention. As these issues play out in the political arena, DeFife looks to educate restaurateurs on what that impact might be, possibly even stirring advocacy among the association’s members.
According to DeFife, the top four issues for full-service restaurants are:
1. The proposal to boost minimum wage. Within the restaurant sector, NRA research shows that labor costs account for about a third of sales. While the effort to up the minimum wage is seemingly focused on quick-service restaurant workers, it also impacts the full-service sector, says DeFife. “It’s bigger than just the minimum wage, it’s a reputational attack on our industry’s business model,” he says.
Although minimum wage is not the prevalent pay within the full-service sector, there is concern of having to starting new, inexperienced workers at a higher rate. “If that entry wage level is $10 or $12 per hour, human resource hiring practices may have to change,” says DeFife. “Our members won’t be able to cover the floor with as many people in the front of the house, and may only look for people with higher levels of experience.”
Currently, there is legislation before the Senate and House to increase the federal minimum wage by 30 percent, from the current $7.25 an hour to $10.10; triple the minimum cash wage for tipped employees to $7.07 (from $2.13); and automatically increase the wage according to inflation in subsequent years. The legislation will come to a vote in March.
2. The Affordable Care Act. With the ACA still a work in progress, restaurateurs are still trying to assess the impact. “We are working on changes to ACA that provide relief to not just small businesses, but to larger businesses as well,” comments DeFife. “The restaurant industry is unique to other industries, in that operations run on a low-margin, high-labor cost business model. Also, the demographics are unique—workers tend to be younger, part-time, transient, and seasonal—it’s a different cohort than is working 9-5 at an accounting firm. The definition of what is full time is a key element in how the ACA will be implemented.”
The NRA is working with federal agencies to bring some flexibility into the implementation of the act. It is looking to change the law’s definition of full-time from 30 hours a week to 40; simplify the calculation to determine if a business is considered large under the ACA; and repeal provisions that require companies with 200 or more employees to automatically enroll employees in a health plan within 90 days unless that employee specifically opts out.
3. Immigration reform. While immigration reform bobbles in and out of the news media’s line of sight, the NRA hasn’t lost sight of the issue. “It’s a top issue for our organization,” says DeFife. “We see in the media ebb and flow of support, but we are keeping the pressure on, trying to keep the ball moving forward.”
Immigrants are a vital force within the restaurant industry, says NRA, and the association is hoping that Congress will consider legislation to address the issues of greatest concern to the restaurant industry: a clear path to legalization for America’s 11 million undocumented workers, national implementation of an accurate and reliable employment verification system, and improved border security that doesn’t interfere with legal travel and tourism.
4. Menu labeling is another key challenge, with promises that federal standards for the practice will come out soon. “We are expecting that something will break in the spring—whether it be March, April, or May, we aren’t sure. But sometime this spring, we will have federal menu labeling regulations,” says DeFife.
Those standards, which will apply to chain restaurants with 20 or more locations, will address how restaurants make calorie and other nutrition information available on menus and will supersede a number of conflicting state and local regulations on menu labeling. The NRA has asked the FDA to give restaurants at least 12 months to comply once final regulations are released.
Stay tuned for future articles that provide updates as these issues unfold, and are perhaps resolved.
By Joann Whitcher