As Republican and Democratic leaders retrench in the wake of the game-changing 2010 mid-term elections — which saw Republicans pick up at least 60 new House seats and six Senate seats — members of the restaurant industry are concerned about the long-term impact the contentious race will have on their already stressed businesses.
A large cross-section of the foodservice industry counts itself among the sizeable group of Americans angered by Washington’s perceived lack of progress on the economic front over the past three years and by what they see as its business-unfriendly positions on health care reform, taxes and labor issues.
As a result, many industry members welcome the changing of the guard — in many statehouses across the nation as well as in Washington, D.C. — saying it bodes well for business. “I think it’s a win for free enterprise, a win for fiscal responsibility, a win for our industry,” said Craig Miller, the former president and chief executive of Ruth’s Chris Steak House who made an unsuccessful run for Congress in a GOP primary race in Florida.
Others, while acknowledging a much-altered political landscape, are somewhat more doubtful, maintaining that a divided 112th Congress presided over by a President with two years left in his first term will be able to achieve little.
“At the end of the day, we’re in a better place than we were before the election,” said Joe Kefauver, managing partner and principal for Parquet Public Affairs in Orlando, Fla. “But people should temper their enthusiasm. I wouldn’t start doing cartwheels down Pennsylvania Avenue. There are still a lot of fights to fight.”
Scott Vinson, vice president of the National Council of Chain Restaurants, agreed, adding that the parties already have begun to gear up for the 2012 elections. “There’ll be more gridlock and not much incentive for either side to compromise,” he said.
However, he added, Washington “could end up more business-friendly in the sense that no more crap is thrown at us — at least from the legislative side.”
Issues find new life…
Several key issues impacting the foodservice industry are expected to find new life with state or local policymakers or within regulatory agencies, including immigration, paid sick leave, card check and other labor issues.
“The issues don’t necessarily go away,” said Scott DeFife, executive vice president for policy and government affairs at the National Restaurant Association. “They just may confront the industry through a different channel.”
Union card check — as originally introduced in the Employee Free Choice Act — is one such issue, experts say. On life support since before the election, card check “is now dead” in Congress, said David French, vice president of government relations for the International Franchise Association. “This is a decisive defeat for the union agenda.”
However, “The National Labor Relations Board now has a majority of labor-friendly people on the board,” Vinson said. “So we could see changes that might be antagonist toward the employer community.”
…And new venues
Other labor-oriented concerns such as paid sick leave, parental leave and safety policies are likely to shift to statehouses around the country, Kefauver said.
Immigration is another critical issue that probably will migrate to other venues. The IFA’s French said he doesn’t expect immigration to make any further progress in Congress.
Most observers indicate that lawmakers in several states will feel compelled to address the issue themselves. “There’s definitely going to be a lot of state action, like we saw in Arizona,” DeFife said.
However, he added, “If two dozen states decide to take action and every state takes a different action, it will certainly increase the pressure from the business community for the federal government to take up the issue again.”
President Obama continues to voice his willingness to address comprehensive immigration reform.
Another midterm casualty of the President’s agenda is his energy policy. The Climate Change bill — also referred to as “cap and trade” — had been passed by the Democratic-dominated House in 2009. The measure, which was crafted to help conserve resources, was expected to increase energy costs for restaurants and other businesses.
“The election was good news for chain restaurants in that ‘cap and trade’ is now off the table,” Vinson said.
Taxes are another subject on the minds of many operators. There is a general consensus among pundits that the tax cuts passed under President George W. Bush in 2001 and 2003 will be extended for at least a year or two, but to what degree is unknown.
Before the election Obama and many Democrats had said they would be willing to continue to give those tax breaks to most Americans, but they opposed extending the cuts to the 2 percent of the wealthiest Americans — those individuals making more than $200,000 annually or families making more than $250,000.
More recently, however, “We’re starting to hear that Democrats may be willing to relent,” Vinson said.
For the most part, the industry favors leaving the Bush tax cuts in place. “I hope they’re extended,” said Frank Guidara, president and chief executive of Uno Chicago Grill in West Roxbury, Mass. “The public is certainly not interested in getting its taxes increased at this point.”
But even in these confrontational times, not every issue sparks a partisan response. DeFife notes that food safety does not divide along party lines. “So I don’t think this election has altered the course dramatically for food safety,” DeFife said.
Rx for health care
The one issue that has unquestionably polarized Congress — and the American public — is health care. While restaurateurs had expressed support for some form of health care insurance reform, many fear the bill that finally was passed — called the Patient Protection and Affordable Care Act — will cut sharply into earnings and potentially force them to raise menu prices, eliminate jobs and slow growth.
Just one day after the elections, victorious Republicans already had set the mechanism in motion to repeal the law — although few believe they will be able to round up enough votes in the Senate to succeed. And Obama has vowed he would veto any bill threatening to roll back the law.
“‘Obamacare’ won’t disappear,” Guidara said. “But hopefully we’ll see some modification.”
One unpopular consequence of health care reform was the passage of the 1099 provision, a rule that would require businesses to fill out a 1099 form for every noncredit card business expense beyond $600. Both Democrats and Republicans agree that if implemented the requirement would create mountains of paperwork for small businesses.
But the provision’s removal would have major consequences. It was designed to raise $17 billion over 10 years to help pay for health care reform, Vinson said, so “under the current rules, if Congress votes down the provision, they will have to find the money elsewhere. And this Congress has said there will be no more tax increases.”
Yet, the issue that continues to lie at the heart of the nation’s economic woes is the need to create more jobs — and on that topic, restaurateurs are unified.
“This has not been a good three years for Americans, specifically the working class,” said Daniel Halpern, president of Jackmont Hospitality in Atlanta. “We need to create some jobs in the U.S. I don’t think anybody has a monopoly on the desire to create jobs. Everybody is equally focused on that problem.”
Contact Paul Frumkin at pfrumkin@nrn.com.
