Leaders of Texas’ restaurant industry are in the midst of an eight-city tour to celebrate the business’ emergence as a mighty political force in a state known for its bare-knuckled lawmaking and governing. The point of the Texas Restaurant Association tour, subtitled “70 wins in 70 days,” is to assure rank-and-file operators their industry can take and throw punches with the toughest of the Lone Star power brokers.
What else would you expect from a state with more restaurants than all but one of the 49 others can boast?
Well, it could be another California, the oddball that out-restaurants Texas. If the Golden State were to be pushed out to sea as a separate country—and, no, it’s not happening, so don’t get all excited, chain execs--it’d have the fifth largest economy in the world.
Restaurants are an underpinning of that humming engine. Indeed, much of the industry as we know it today was pioneered in the state. Today, California eating places account for roughly 15% of industry sales, or one dollar of every six that are spent nationwide on dining out.
Why, then, is the business treated in the Golden State like a leaking sewer pipe? Sitting on the desk of Gov. Gavin Newsom are pieces of legislation, all but certain to be signed into law, that will significantly complicate a business that’s already a Rubik’s Cube to master.
One, AB 1228, is the stuff of nightmares. Starting next year, the minimum wage for fast-food workers will be set and then updated periodically by committee, a recipe for chaos per se. Lest you dismiss any apprehension as merely the fear that comes with doing things differently, consider that the first change has already been decided: A 29% hike in the minimum hourly rate for quick-service workers. And that’s without the new process even kicking in.
In this case, fear of change may be warranted. The committee, technically known as the Fast Food Council, will pit four representatives of the fast-food workforce against four proxies of the chain restaurant business, the employer side, in setting wages and workplace standards. A ninth member will be appointed by Newsom from outside the industry to cast what could be the deciding vote in the event of a tie.
If the governor could convince Solomon to take the job, the industry might be OK. But we’re more likely to see a political appointee whose thinking aligns with Newsom’s pro-labor stance. Neutrality could be a big “if.”
That set-up was the big concession thrown to the industry as a compromise with organized labor. Interestingly, those negotiations took place between industry groups and unions. Lawmakers weren’t even at the table, according to the actual participants. Rather, after a deal was hammered out, the legislators were told, “Here’s what you’re going to do.”
They were told to take a bill and rewrite it to embody the provisions of the deal, then pass it in a matter of days. And they readily complied.
AB 1228 isn’t the only bill in the stack of 900 on the governor’s desk that will affect California restaurants. One of them would mandate that restaurants and other employers increase the minimum paid sick leave due employees by 66%, or from three days to five per year.
Coffee shops will likely be challenged by a little-noticed measure that allows marijuana dispensaries to encroach on their turf. The pot shops would be permitted to start selling foods and beverages for on-premise consumption, and even to bring in performers for live entertainment. Customers could also light up there at their seats and settle in. But that street would only run one way: True coffee cafes couldn’t branch into the marijuana-selling business.
The industry gets similar disfavor in a bill aimed at curbing so-called junk fees, the surprise charges slipped onto bills by airlines, car dealerships and other businesses. Some news reports indicate that the curb on the extra fees would also apply to restaurant service fees, one of the innovations California has given the restaurant industry. But the law doesn’t list those surcharges as one of its targets.
But it does specify that third-party delivery services will get a pass of sorts. The bill states that those frequent targets of restaurants’ anger will not be required to reveal their charges before a customer places an order.
It’s likely just a coincidence that Uber and DoorDash are headquartered in the state.
Then again, so are Applebee’s, Taco Bell, In-N-Out, Jack in the Box, The Cheesecake Factory, IHOP and a host of others.
One of the peculiarities of California’s sometimes bizarre political process is that the bills passed in a blur by the legislature have to be signed by Newsom by Oct. 14 for the bills to become law.
Our expectation is that the governor will use a rubber stamp if need be to process all those measures the Assembly and Senate cranked out.
Organized labor and other traditional adversaries and critics of the restaurant business will be glad to provide one.