Will Donald Trump Help the Restaurant Industry?
Donald Trump promised during the 2016 Presidential Election to “Make America Great.” So what does that mean for the United States Restaurant Industry? With over an estimated 14 million employees (12 million of whom were born outside of the United States), the Restaurant Industry has just begun to climb out from the 2008 recession in recent years. The rise of food trucks and fast casual dining have helped increase stagnant sales and bring the total spending for dining out to over 782 billion dollars in 2016.
Will Donald Trump help the restaurant industry? Or hurt it?
Donald Trump, who has promised to curtail immigration, repeal the Affordable Care Act (Obamacare) and roll back perceived restrictions on big business, has been met with excitement by some in the restaurant industry and with anger and fear by others. The industry itself is as politically divided as the rest of America between free trade and loose regulations by Republicans to fair wages and consumer protection policies by democrats. No matter where you sit on the political spectrum, one thing is clear, the restaurant industry booms when the American Middle Class booms.
It lags when the middle class lags. Trump's claim to Make America Great, holds the promise of a bright future for many restaurant owners, but the early actions of this new president have many people concerned about the future of the American workforce.
Restaurants Need the Middle Class
It’s no secret that any successful restaurant needs a base of customers with plenty of expendable income. As seen after the latest recession, dining out was among one of the first things cut from family’s budgets. Trump has promised to bring back the American Middle Class and that is important because it’s from the Middle Class that the current restaurant landscape was built. Strong household incomes during the 1980s and 1990s, with two working parents and ample discretionary spending helped family style concepts like Olive Garden and Applebee’s change the way Americans dined out.
Following the 2008 recession, when Americans lost their jobs, savings, and homes, the restaurant industry saw a slump in sales. Stagnant wages over several years led to slow growth and changes in consumers tastes.
Consumers were no longer looking for cheap all-you-can-eat food. They wanted healthier options at affordable prices. This paved the way for chains like Chipotle and Panera, whose price points were higher than standard fast food, but still cheaper than traditional sit-down establishments and family dining concepts. Consumers were no longer willing to part with their money unless they felt like they were getting the most bang for their buck including fresh ingredients, innovative serving styles and hip interiors.
The middle class continues to be the restaurant industry’s largest demographic, so it’s no surprise that any president who promises to help the middle class will gain support of many restaurant owners. The question remains though — will Trump really be able to bring in much-needed jobs to areas hardest hit by unemployment and exiting US companies? Will he increase the Middle Class to the levels from previous decades?
Restaurants Need Immigrants
It’s estimated that 2/3 of all restaurant workers are born outside of the United States. Ask any restaurant owner in cities like New York, Seattle, San Francisco or Chicago if immigrants are needed to run a successful restaurant? Most likely the answer will be a resounding yes. Immigrants often work in hard-to- fill low-wage positions. Trump's recent ban on immigrants from seven predominantly Muslim countries set off alarms all over the restaurant industry. Restaurant owners all over the country declared their establishments to be “sanctuary restaurants” for their immigrant workforce, signaling to the White House that the attack on Muslim immigrants would not stand.
Many restaurant owners also took part in the recent “Day Without an Immigrant” to highlight to the Trump Administration the importance of immigrant labor to the United States economy.
Restaurants Need Regulation
One of the biggest complaints of large restaurant conglomerates and the NRA (sometimes referred to as the “Other NRA”) is that there are too many federal restrictions on business. The Fair Labor Standards Act (FLSA) is one law that the NRA has lobbied strongly against. According to the Office of the Federal Register “The FLSA guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee's regular rate of pay for hours worked over 40 in a workweek.” Changes that were temporarily suspended in December 2016, guarantee time-and-half pay to any salaried employee earning under $47,476 a year.
Broken down this looks like: $913 a week or $22 hour for a 40-hour week. Beyond 40 hours, that worker would be entitled to time and half. The NRA is fond of pointing out that the new minimum salary for overtime pay is double the current salary threshold of $23,660. Opponents point out, through simple math, that if a restaurant manager at a corporate chain earns the current minimum salary of $23,660 and works 50 hours a week (pretty standard for a restaurant manager) they make $9 an hour, before taxes.
Depending on where you live, work and your personal philosophy on what constitutes a livable wage, $9 an hour for managing a business is either a fair wage or worker exploitation.
Restaurants Need Affordable Healthcare
One area that every modern president in the past 30 years has failed to adequately address is the need for affordable health insurance for small businesses. While the Affordable Care Act was a good start to this nationwide problem, it did not help businesses buy affordable insurance for their employees. Trump has promised to repeal Obamacare and replace it with “something great,” but the reality looks as though that isn’t happening anytime soon. Republicans, despite having six years to devise a better healthcare plan option for the uninsured, have failed to produce any tangible results thus far.
For the time being this leaves small business owners and their employees’ uninsured or underinsured.
The Restaurant Industry Is Politically Divided
The restaurant industry is a microcosm of the United States, in that it is heavily divided between conservative/big business ideology versus liberal/independent owners and labor organizations. It’s no secret that the National Restaurant Association is a republican lobbying machine. It has continually lobbied against any increases to the federal minimum wage, labor overtime rules and consumer protection efforts such as menu labeling. At the opposite end of the spectrum is the Restaurant Opportunities Center (ROC), a watchdog group whose mission is to “Improve wages and working conditions for our nation's 12 million restaurant workers”, which champions a $15 minimum wage and other fair labor standards for restaurant workers.
As with many labor policies, depending on who the audience is, Trump's potentially reduced regulations may be greeted with cheers or jeers.
Trump’s first nomination for secretary of labor, Andrew Pudzer, a former CEO of Carpinteria-based CKE Restaurants Inc., parent company of Carl’s Jr and Hardee’s with a questionable history of labor violations within some of his restaurant chains withdrew from the nomination. In a surprise move, Trump has nominated R. Alexander Acosta as Labor secretary and if confirmed, Acosta would be the first Hispanic in Trump’s cabinet. This may be Trump's way of trying to soothe organizations and political opponents.
Some labor groups applauded the nomination of Acosta, who is seen as a better candidate for worker’s rights than Pudzer.
It’s important to remember that the restaurant industry is hugely diverse. It encompasses million dollar chains like McDonald's and Starbucks; it is also represented by fast casual, family dining, fine dining, and food trucks. Policies that serve one segment of the industry well don’t always translate to other segments. Donald Trump is poised to create a business-friendly climate that has the potential to boost the bulk of the restaurant industry, via the middle class. However, the cost of profits may come at the expense of fair wages and civil liberties.