Restaurant industry sounds off on re-election of President Obama

Whether they threw their support behind President Barack Obama and the Democrats or former Gov. Mitt Romney and the Republicans, restaurant and association executives agree it’s time for the two feuding parties to put aside their differences and find ways to build common ground on the critical issues facing the nation.

Tuesday’s fiercely contested national election left the Washington playing field generally unchanged, with President Obama poised for a second term in the White House and the Republicans and Democrats remaining in control of the House and Senate, respectively, in the upcoming 113th Congress.

As a result, Rob Green, executive director of the National Council of Chain Restaurants, said, the foodservice industry will continue to wrestle with many of the same issues it had been dealing with prior to the national election.

“It’s largely a status quo election,” Green said. “The issues don’t change. The makeup of Congress really doesn’t change. We’re looking at the same opportunities and challenges we did before the election.”

Critical industry issues include the sputtering economy; health care, immigration and tax reform; commodity inflation; labor policy; and the pervasive, nagging uncertainty that continues to hobble business growth.

Not surprisingly, though, many industry executives voice the most concern about the economy and the looming “fiscal cliff,” which takes effect in January and includes $7 trillion worth of tax increases — such as the expiration of the Bush tax cuts — and long-term spending cuts. Together, they continue to fuel the widespread uncertainty that has been hampering business expansion for the past several years.

“While this was a status-quo election, the current status quo for small business is unacceptable,” said Steve Caldeira, president and chief executive of the International Franchise Association. “With the elections concluded, the current Congress should act immediately to pass a short-term deal that would avert the fiscal cliff by extending all current tax rates until lawmakers in the new Congress can consider a comprehensive overhaul of the tax system.

“The partisan rancor, negative rhetoric and perpetual gridlock must come to an end so that we can begin to heal this country and get it moving again.”

Moving past political gridlock

Among other things, the uncertainty surrounding the economy will continue to weigh heavily on the consumer unless the issue is addressed quickly, executives say.

Sean Falk, whose Detroit-area-based company Wolfteam operates 12 Pretzelmaker, Salsarita’s, Mrs. Field’s Cookies and Great American Cookie franchises, said he hoped that if a new administration had been elected, it might have helped moderate some of the doubt surrounding the economy and health care reform. “But now I don’t know what is going to happen,” he said.

Falk said the ongoing economic instability is hampering small business owners' ability to grow. “As a business owner, I just don’t know how I am going to be taxed two weeks from now, let alone two years from now. I’ve got agreements on my desk to open four more locations, but I’m sitting on them because I don’t know what is going to happen. [Washington] needs to create some stability and pass more favorable business legislation.”

Jamie Richardson, vice president of government and shareholder relations for White Castle, also points to the fiscal cliff and tax reform as being critical issues that must be addressed quickly. “We need to find a way to work through these issues — they impact everything,” he said. Among other things, he added, “Our customers need to feel more stability, more certainty concerning what the financial future might hold. It’s a drain on the overall economic recovery as well as all businesses, and it needs to be resolved.”

Jim Greco, president and chief executive of Sbarro Inc., also advised the president and federal lawmakers to find a way to compromise on the highly charged budget issue. “I think generally that unless Obama moves to the center, there will be four more years of gridlock,” Greco said. “After [President Bill] Clinton won a second term — the first term was difficult — more things got done because he moved to the center and made peace with the Congress.”

His advice, however, is not restricted to the president alone. “House Republicans also need to compromise,” he continued. “I would tell [Republicans and Obama] that neither one of you will win if you hold rigidly to positions. And then the big loser is the country.”

And while executives worry about a perpetuation of the gridlock that has all but paralyzed Washington over the past several years, some nevertheless are optimistic about the industry’s chances for getting something accomplished in the new year.

The NCCR’s Green is hopeful about the possibility of addressing immigration reform over the next four years. “I think immigration will be explored,” he said. “There’s pressure building up for work in that space. I think this is the time to have a dialog on that issue. It’s a priority for the industry, and the planets might finally be aligned for action.”

Continuing the health care dialog

Green also said the industry’s dialog on health care reform with the administration and Congress will continue. “We’re hopeful that everyone will take a fresh look at it,” he said. “We’ve had positive conversations with the administration over [health care] regulatory issues. But health care continues to be a challenge because the law puts chain restaurants in the bull’s eye. We will continue to work very aggressively to fix the shortcomings in the law.”

But the looming health care law continues to trouble many restaurant operators. Tabbassum Mumtaz, the owner of Dallas-based Apex Restaurant Management, a franchisee of 172 Long John Silver’s, KFC, Taco Bell and A&W locations, said he is “scared … concerned. My initial reaction to the election is a lot of worry.”

Mumtaz said as a business owner, he continues to worry how health care will affect his business and his 4,000 employees. “Every concept today is struggling,” he said. “It’s very challenging to look at the numbers. Congress needs to understand the business mentality.”

Meanwhile, the National Restaurant Association is preparing to reengage with federal lawmakers in the remaining year and the new term. “With the elections now behind us, we are preparing for the situation we face in Washington, and across the country, in 2013,” said Dawn Sweeney, president and chief executive of the NRA.

“In the 2012 lame-duck session and beyond, Congress and the White House will be forced to work together on critical issues for our nation and for the restaurant industry…. The list of issues demanding action is long: health care, tax rates, tax reform, rising food prices, and a broken immigration system. None of these issues are going away, and inaction is not an option.”

In the meantime, industry executives are urging more restaurateurs to become involved in the political process. “It’s more important than ever that we become engaged and advocate on behalf of the industry,” White Castle’s Richardson said. “We need to show how [legislation] impacts each restaurant and the people who work there. We have to be ready to share a real-world perspective [with lawmakers].”

At the same time, operators remain hopeful that President Obama and Congress will do the right thing when it comes to finally sitting down and addressing the issues weighing heavily on the country.

“I’m not particularly happy with the outcome of the elections,” Sbarro's Greco said. “But that being said, I hope both parties do what Americans have done for 240 years now, and that is to put their differences aside for the good of the country.”

Contact Paul Frumkin at [email protected].
Follow him on Twitter: @NRNPaul