It was a typical day for Congress, but not for the nearly 600 restaurateurs who were there to make the industry’s case on three crucial concerns. Between debates about aid to Ukraine and whether the speaker of the House should keep his job, lawmakers opened their doors to the army of citizen-lobbyists, eager to hear what they’re not being told by the pros pushing competing interests.
It was hard not to miss the restaurateurs-turned-influencers within the labyrinths of the Congressional office buildings. Organized by state, the operators traveled in packs from one of their elected officials to another. All told, they presented the industry’s point of view to 215 of the nation’s 535 congressmen and senators.
The restaurateurs had taken three days out of their workweeks to participate in the National Restaurant Association’s Public Affairs Conference, a standout example of what anyone on Capitol Hill would know as a fly-in. Many industries conduct one. Few are as large as the restaurant gathering, which is now in its 38th year.
The attendees spent half a day in preparation for their visits on Capitol Hill. That educational piece began with a colorful overview of the political situation from two Beltway veterans, Republican Dana Perino and Democrat Harold Ford Jr., co-hosts of Fox TV’s popular commentary program, “The Five.” Their conversation was moderated by a third authority, National Restaurant Association EVP of Public Affairs Sean Kennedy. His unofficial title could be head industry lobbyist.
A deeper dive into the restaurant-relevant issues currently before Congress was presented by other members of the association’s government affairs staff. The conference focused on three of those concerns:
- Passing legislation that will ultimately bring down swipe fees.
- Preventing delivery charges, passed-along swipe fees and automatic gratuities for large parties from being banned as “junk fees.”
- Leaving the federal tip credit in place.
The industry’s stance on each of those matters was spelled out by the NRA staff, which also provided each citizen-lobbyist with a cheat sheet of points to stress with lawmakers.
The attendees also got a crash-course on lobbying, with plenty of insider tips from the NRA’s seasoned team.
For instance, operators were advised, keep in mind that many of the federal elected officials have never run a business. Revealing how much a restaurant actually pays in swipe fees is helpful, but the absolute figure may not be meaningful to the listener. Comparing it to an expense the lawmaker is more likely to understand, like rent or healthcare costs, is even better.
And don’t be surprised if the congressional staff member who hears your arguments looks as if he or she was still in middle school, the attendees were told. Supporting a senator or representative remains a job for the young.
Taking the Hill
The heart of the conference is the full day of visits on Capitol Hill. State restaurant associations set up as many congressional meetings in advance as they can, but the plans can be upended by an unexpected political developments. On the Wednesday of the Public Affairs Conference, those disruptions included the escalation of hostilities in the Middle East and the ongoing fight over what aid the U.S. should provide to Israel and Ukraine.
The logistics are tough. The Texas Restaurant Association, for instance, had arranged 40 meetings for its 50-plus-member delegation. Yet it allowed a restaurant journalist to tag along as a silent observer.
Many of the attendees had never participated in the fly-in before, and a significant number had never previously been to Washington, D.C., never mind inside the Capitol. “I’m not a lobbyist,” Lupita Corbeil, VP of HR for San Antonio-based Denny’s franchisee Den-Tex Central, apologetically informed Texas Rep. Beth Van Duyne.
As Corbeil and others were to learn, a citizen-lobbyist can be the most effective sort if they’re also a constituent.
“It’s one thing for the National Restaurant Association to say swipe fees have doubled over the last decade. It’s another for you to say how much you’ve paid for swipe fees,” association CEO Michelle Korsmo told attendees in opening the conference.
Corbeil obliged, and heeded the advice about drawing comparisons, by divulging that her company’s 70 Denny’s stores pay $1.5 million a year in swipe fees, or more than the $1.3 million the franchise spends on healthcare coverage.
That grassroots illustration prompted Rep. Pete Sessions, a Republican who’s served 25 years in Congress, to ask if Corbeil and Texas Restaurant Association Chief Public Affairs Officer Kelsey Streufert would educate his staff on the issue via video. They obliged him by recounting right there on tape how sky-high processing fees are severely hurting the restaurant business.
Attacks by the opposition
Restaurants’ opponents on reining in credit card processing fees were spooked enough by the prospect of rank-and-file industry members stating their case that they mounted a pre-emptive strike.
A day before the restaurant business descended on Capitol Hill, a bank consortium known as the Electronic Payments Coalition blanketed congressional staffers with an email intended to blunt the impact of the fly-in. It was titled, “A Staffer’s Guide to Meeting with the National Restaurant Association This Week,” and essentially dismissed the industry’s call for supporting legislation known as the Credit Card Competition Act.
That bill was written to rein in swipe fees by drawing more card processors into the field. Currently, nearly all transactions are handled by Visa or Mastercard.
Without competition, the duopoly has no motivation to temper rates, according to the industry. As operators repeatedly attested on Capitol Hill, those rates are seven times what a restaurant would pay in Europe. The banking business counters that the current rates are necessary to protect customers’ data from being stolen.
Educating instead of goading
Fly-ins are more about educating lawmakers than trying to sell them on a particular viewpoint, as members of the Texas Restaurant Association were repeatedly reminded. In addition to Sessions, at least two other congressmen from the Lone Star State asked the delegation to help them understand the issues that top the industry’s list of political concerns.
The Credit Card Competition Act, a 10-page bill whose technical language might leave a CPA in tears, topped that roster on the day of the fly-in. Lawmakers’ unfamiliarity with even its basic components was painfully evident.
One, for instance, tactfully suggested that restaurateurs who don’t like Visa and Mastercard’s fees can always limit customers’ options to paying with a Discover card. A restaurateur pointed out that Discover has only 3% of the market, meaning it has far fewer users than the Big Two. That option is just not feasible, he explained.
Another cited the banks’ contention that altering the network for processing credit card charges would result in chaos. A visitor noted that the system was changed for debit cards without a global cataclysm.
What’s a junk fee?
Also on the conference’s prioritized list of issues was dissuading the Federal Trade Commission from regarding all the fees that may be added to a restaurant tab as deceptive “junk fees” akin to the surcharge concert ticket sellers tack on as a “service fee.”
The Hill visitors stressed that they’ve been charging automatic gratuities to the check of a large party for as long as they can remember, without complaint from patrons. Yet the FTC now wants to ban that add-on as a junk fee.
The husband and wife team that runs the James Beard Award finalist Clementine in San Antonio recounted how a party of 22 guests once ran up a bill for $2,500, and then left only $75 as a tip. The couple subsequently added a surcharge for big parties, but now that insurance measure could be banned.
As they and others explained, the industry believes the FTC should carve out an exception in any ban for that fee, the extra charges customers pay for delivery, and the surcharge some restaurants assess customers who pay with credit cards. Ironically, some of the conference attendees noted, the latter is necessary to cover the high charges levied by credit card companies.
Several of the visited lawmakers said they were unaware that the FTC was even eyeing such a proposal, and a number of others acknowledged they did not realize that customary restaurant add-ons could be included in a ban.
Lobbying for carve-outs from an FTC rule is a two-step process because a federal regulatory agency is not directly accountable to voters. But the FTC’s five directors are under congressional scrutiny. The idea was to convince lawmakers to pressure the directors.
Keeping the tip credit
Also on the NRA’s list of topics for conference attendees to bring up with their elected officials was the preservation of the federal tip credit.
That effort was more of a pre-emptive strike, according to the NRA’s Kennedy. Sen. Bernie Sanders introduced a bill some time ago to raise the federal minimum wage to $17 an hour and eliminate the tip credit, and similar proposals have surfaced from time to time. Few give the legislation high odds of proceeding to a vote, much less passing.
But the issue is of such importance that the industry needs to keep its defenses up, Kennedy explained. “Progress on legislation is sometimes measured in months,” he said. “It is sometimes measured in years.”
Texas restaurateurs had no trouble mustering numbers to support their advocacy of keeping the tip credit. Lawmakers seemed surprised by what they were told servers currently earn, with all the cited examples falling in the $20 to $40 per hour range. Debbie Glenn-Cross, proprietor of the landmark Red Brick Tavern, says she has one bartender who makes over $100,000.
But the legislators weren’t surprised to hear that servers like the greater earning potential tipping affords and don’t want to change the system. At least one congressional staffer admitted he just hadn’t understood how the tip credit works and had been confused by organized labor’s assertion that servers get a sub-minimum wage.
That sort of enlightenment is the objective of the Public Affairs Conference, said Kennedy.
“We are not this distant entity, a website and an email address,” he said. “It’s through this event that the National Restaurant Association is fighting for the little guy.”
Next year's Public Affairs Conference is slated for April 1-3.