Democrats take House, Senate, industry concerned

 
Nov. 8, 2006
Five years from now, the American restaurant landscape could look completely different. Menus could bear calorie counts. Trans-fats might be banned from all ingredients. And your fry cook might be earning more cash than a private in the U.S. Army.
 
Whether this future becomes reality may very well hinge on this year's elections.
 
On Nov. 7, Democrats swept Republicans from power in the House of Representatives and moved to within one seat of victory in the Senate. The sharp rebuke of Republicans and their leader, President George W. Bush, even led to resignation of Defense Secretary Donald Rumsfeld
 
"I'm obviously disappointed with the outcome of the election, and as the head of the Republican Party, share a large part of the responsibility," Bush said.
 
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Many political analysts believe voters went Democrat because they are tired of the Iraq War and President Bush.
 
"It's a shame the election became a referendum on a president and his policy," said Geoffrey Hetrick, president and chief executive of the Ohio Restaurant Association.
 
Six states approve wage hikes
 
Ballot initiatives in six states to raise the minimum wage in six states — Arizona, Colorado, Missouri, Montana, Nevada and Ohio — all passed. According to preelection surveys conducted by the National Restaurant Association (NRA), operators expect those wage increases will hurt their businesses.
 
"The people who want to raise minimum wage must have never written a check to cover labor," said Ed Tinsley, chairman of the NRA.
 
The NRA said voters who thought that they were approving a one-time increase in their state minimum wage will be surprised when they learn that each of these measures contained complicated indexing provisions that trigger automatic yearly wage hikes. 
 
Restaurant chains like Chipotle Mexican Grill and Buffalo Wild Wings say they're really concerned about the minimum wage hike. "We pay well over minimum wage anyway," said Steve Ells, Chipotle founder and chief executive. Buffalo Wild Wings CEO Sally Smith said in an investor conference call that the chain is prepared to increase menu prices to offset the increase.
 
Brad Rocco, owner of Bexley Pizza Plus in Columbus, Ohio, starts his entry level employees at $7.50 an hour. "This hike won't hurt me," he said, "but I didn't vote for it."
 
Rocco didn't like the state's 3-percent annual increase on minimum wage or how the ballot was written. In Ohio, Arizona and Colorado, minimum wage hikes were written into the state constitution.
 
Tom Foulkes, vice president of state relations for the NRA, predicted setting the wage hike on autopilot will be detrimental in the long run. He said minimum wage increases should be debated on the floor, not voted on.
 
"Cramming a complicated economic issue like raising the minimum onto an already cluttered ballot is no way to enact sound economic policy," Foulkes said.
 
It didn't make the Ohio Restaurant Association happy either.
 
"There's very little operators can do to absorb these (increased labor) costs," Hetrick said. "In some cases, you can pass food cost to the customer, but not in highly competitive markets."
 
Hetrick said only 4 percent of Ohio restaurant operators actually pay minimum wage.
 
"Wages are more or less based on laws of supply and demand," Hetrick said. "We know historically in Ohio that most employers in the foodservice sector are paying 7 dollars or more to find attractive entry-level workers."
 
Congress
 
Steven Anderson, NRA chief executive, said despite the results, his group will continue working closely with the federal government.
 
"The National Restaurant Association will aggressively promote and advocate our pro-employee/pro-employer public policy agenda, which is a major component of the Association's Cornerstone Initiative," said Steven C. Anderson, NRA's president and chief executive. "That agenda supports, proactively,
Steven C. Anderson, NRA president.
legislative initiatives that ensure that the restaurant industry continues as the cornerstone of our nation's economy, the cornerstone of the local community, and the cornerstone of career and employment opportunities."
 
Anderson said the restaurant industry's overall impact on the nation's economy is in excess of $1.3 trillion a year, or 10 percent of the country's gross domestic product.
 
"Whether a lawmaker has a 'D' or a 'R' after his or her name, we are confident that consensus can and must be reached to continue and expand the American Dream that is embodied in the restaurant industry," he said.
 
What's next?
 
A majority Democrat House does not bode well for restaurant operators, said John Gay, NRA's vice president of the government affairs division. He predicts Democrats will allow more challenges on minimum wage, legal reform and on obesity issues.
 
"There will be more hearings about menu labeling," Gay added.
 
Gay envisioned a scenario where the government might take on "Big Food" as it did with "Big Tobacco."
 
"That's really just speculation," Gay said. "But we have worked with Democrats for years and no matter how it turns out, we'll work through the challenges."
 
Earlier this year, the Republican-led House passed an immigration reform proposal focused mostly on border security. The Senate backed a different proposal, also backed by President Bush, which would allow many of the estimated 7 million undocumented workers to stay, and permit businesses to recruit workers for seasonal jobs. With Democrats in control of the House, the chances for a congressional compromise appear more likely, the National Immigration Forum's Angela Kelly told the Chicago Tribune. The ORA's Hetrick aggreed. "If we end up with a decent guest-worker program, that could clearly be a benefit of having a Democratic-majority House," he said. "But it's too early to tell."

Topics: Associations , Operations Management


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