Article
QSRs serve up legislative concerns
Operators talk with QSRWeb about the industry's top election-year issues.
September 22, 2008
As the 2008 presidential election draws closer, operators are thinking more and more about legislative issues and how they impact their businesses.
QSRWeb conducted a reader poll in which nearly 150 respondents ranked the top legislative issues facing quick-service restaurant operators. Those respondents listed immigration reform, minimum wage increases, biofuels, human resources issues and menu labeling as their top concerns, in that order.
We also asked operators and industry experts how those issues affected them. Here's what they had to say:
Immigration reform
Despite a soft economy, many restaurant operators are struggling to find willing workers.
TheU.S. immigration system doesn't reflectAmerica U.S.
Over the next decade, the number of jobs in the foodservice business will grow one and a half times as fast as theU.S.
Restaurant operators have different views on the need for reform.For example, Barry Sims, president and chief executive officer of Taco John's International, said that comprehensive, national reform is needed, especially legislation that allows more foreign guest workers.
"The cap on the number of workers that employers can bring into theU.S.
Fred Exum, CEO of The Krystal Co., agrees that reform is needed, but he stresses that employers need to do their part to hire documented workers.
"Those employers that knowingly and willingly violate ethical hiring practices should be held accountable," Exum said.
John Gay, NRA senior vice president of government affairs and public policy, recognizes the industry's need for workers, which could be resolved if reform allowed illegal immigrants already in the country to work.
While the country waits for national reform legislation, states and local municipalities are enacting their own regulations. The regulations can't address the root of the problem, "which is why we do not have a rational immigration system," Gay said.
Steve Chucri, president and CEO of the Arizona Restaurant Association, said operators inArizona
"It puts more liability on the restaurant owner to prove that they did not knowingly hire someone illegally," Chucri said. "Obviously, it put great fear into businesses across the board."
Minimum wage increases
The federal minimum wage increase — a three-step implementation that by next July will have increased the wage by 41 percent from 2006 — also is putting a burden on employers. In some states the burden is even higher — 24 states and the District of Columbia have enacted a minimum wage that is higher than the federal standard, while 10 states tie their minimum wage to annual inflation.
Local media outlets around the country have reported that employers cut staff or did not hire new employees, particularly among the teenage segment.
Sims said Taco John's has to navigate a variety of wage standards since it operates in 25 states.While most of the chain's franchise locations operate in states that follow the federal minimum wage, the company offers wages already at or above the new standard.
The most recent wage hikein July 2008 did not significantly impact the company's operations or hiring practices, Sims said.But not every chain was as lucky.
Krystal's Exum said that the chain has had to reduce staffing and cut labor as state minimum-wage hikes outpaced the federal minimum wage. This summer's second phase of the federal wage increase did not affect Krystal's operations since wages were already averaging above the new rate, but that could change next July.
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"With this being the second of a three-part increase, the effects will likely be felt more significant next year," Exum said.
Cicely Simpson, Dunkin' Brands director of federal and state government affairs said that in today's economy, any increase in costs affects its franchisees' bottom line. Still, the chain stresses to franchisees to seek out quality, committed employees over cost.
"When looking for that kind of employee, age or wage demands are not our primary concern," Simpson said. "As such, we have not heard of any of our franchisees reducing staff or hours of operation as a result of the federal minimum wage increase."
Biofuels
The use of ethanol as a fuel additive has gained tremendous popularity in recent years as a way to combat high gas prices. Unfortunately, increased ethanol use has helped to drive up corn prices, which in turn has driven up the cost of items ranging from beef to cheese to paper goods.
Food-to-fuel measures, which designate an increasing amount ofU.S.
"We can't control the weather" and other factors that contribute to rising commodities prices, Gay said. But government can control food-to-fuel and other measures.
Gay said the NRA supports the use of cellulosic ethanol made from plant waste, such as corn husks or cobs, which leaves food for consumers.
The NRA also supports a House bill that would increase to $1 a gallon federal tax credit for biodiesel made from recyclable restaurant oils. An increase in the credit, the association reasons, would encourage the converting of those oils into biodiesel.
Ben Lincoln, spokesman for McDonald's, said that slightly more than half of the chain's 14,000U.S.
"About 65 percent of the oil recovered from U.S. McDonald's is sold and recycled into biodiesel,"Lincoln
HR issues
Human resources issues cover various topics, from federal bills that would require paid sick leave to the need for affordable health care insurance.
The NRA opposes any legislation that mandates inflexible paid-leave policies because restaurants typically offer flexible work schedules. Many operators also offer sick leave through a paid-time-off benefit structure. A one-size-fits-all paid sick-leave mandate would threaten those employee benefits, the NRA says.
The NRA also supports market-driven health-care reform and hopes that Congress will address the issue. The association recently announced its support of the Small Business Health Options Program (SHOP) Act, which seeks to make health insurance more affordable and accessible for small businesses and the self-employed.
"If passed into law, this legislation will help alleviate the volatility of insurance premiums for small businesses and make coverage more affordable for owners and their employees," said NRA president and CEO Dawn Sweeney.
Menu labeling
A number of states and cities are considering enacting laws to require restaurant operators to post calorie counts and nutritional information. InCalifornia
The NRA fears that one-size-fits-all menu labeling laws may put an undue economic burden on restaurant operators.
Kathleen Anthony, spokeswoman for Jack in the Box restaurants, said that the chain has 900 stores that would be affected by theCalifornia
"It's too early to say how or if the legislation will impact our restaurant operations," she said.
Like many QSRs, Jack in the Box posts its nutritional information on its Web site and on printed brochures in its stores. Adding the information to menu boards would be burdensome, she said, but doable.
"Real estate on our menu boards is valuable, but we will take the necessary steps to comply with any menu-labeling legislation."
AssociationsTrends / StatisticsNational Restaurant AssociationIndustry ServicesPolicy / LegislationOperations
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