Back in the media stone age, when content was delivered via dead-tree remains known as magazines and newspapers, an enterprising Restaurant Business editor decided to tally the number of times the restaurant industry had miraculously dodged its demise. It was also the era of multi-cocktail lunches, but that’s probably just a coincidence.
Our wag quickly ran out of fingers and toes in his Price Waterhouse-like tabulation. At the time, the industry was grappling with the rapid-fire adoption of no-smoking laws by one jurisdiction after another. “It’s going to put restaurants out of business,” elders of the trade sagely warned.
But a funeral was never needed. Our editor moved a bead accordingly on his abacus.
As always, the industry was contending with a proposal to raise the federal minimum wage. “That’d surely be a job-killer,” the alarmists tsk-tsked, “and it’s going to put plenty of restaurants out of business.”
Sure enough, the pay floor was raised, from $4.75 all the way to $5.15 an hour. But the apocalypse failed to materialize.
Nor did the business see its ranks shrink precipitously after the tax deduction for business meals was halved, the Americans with Disabilities Act went into effect and gloves were mandated for the sake of food safety.
Our editor gave up his counting, but he took to greeting every new legislative development mentioned during story meetings with a hearty and sarcastic, “It’ll put restaurants out of business!”
Those cited developments all had a dampening effect on the business, to be sure. But the industry’s warnings of mass closings proved grossly over-reactionary. Yet instead of waning, predictions of mass restaurant bankruptcies became a norm. If something was detrimental for the business, it was blasted as a sure-fire business killer. The restaurant industry became lobbying’s Chicken Little.
That tendency to predict the worst was turned against the business in its high-profile political battles of recent months—a stretch that brought some of the most impactful regulation and employer mandates the trade has seen in my nearly 40 years of covering it.
Before signing legislation that gives fast-food workers in California a 29% raise and provides workers with a say in setting their future pay, Gov. Gavin Newsom chided the restaurant business for always having its obituary ready. He noted how the industry practically had its grave dug when proposals for a $15-an-hour minimum wage were first aired. There’s no way a restaurant could pay that kind of money and still post a profit.
Today, the governor noted, most restaurants would love to pay only $15 an hour, and the nosecount of establishments has never been higher.
He was joshing the business, but the trade has truly suffered as a result of always resorting to scare tactics: Move ahead with this new law or regulation and you’re guaranteeing neighborhoods will lose jobs and much-loved restaurants.
Opponents can all too readily respond with, “Yeah, but that’s what you always say. And it hasn’t happened yet.”
They did so, quite effectively, before Chicago voted to phase out the tip credit.
Ditto in Washington, D.C., before residents there were asked to vote yea or nay on a referendum killing the employer payroll concession. Restaurants there predicted the worst. Organized labor blunted the opposition in part by noting the industry always claims to be on the brink of extinction.
The conversation needs to be refocused on the loss of opportunity, not the possibility of widespread shutdowns. Chicago is a case in point. Missing sorely from the last-minute conversations about the tip credit was input from the people who would be most affected, the servers, bartenders and hosts who count on tips. Had the industry gotten a microphone into those employees’ hands, lawmakers might have heard genuine and well-grounded fears of being unable to make ends meet.
They might have recounted how Maine re-instated its tip credit because servers’ incomes truly dropped there after the employer break was killed in 2018.
The Chicago aldermen might have heard a true account of what happened in Washington the first time it killed the credit via referendum. Back then, servers lined up at lawmakers’ doors to beg for legislation reinstating the credit, penciling out the negative impact on their income if the dissolution stuck.
The restaurant business is too vibrant and entrenched to suffer Armageddon from anything less than a global pandemic, and it didn’t do badly even there, all things considered. Predictions of its imminent demise just won’t fly.
But warnings of fewer people participating in its growth and prosperity is a much different matter. Otherwise, we may be counting how many times the industry hurt its own case by playing Chicken Little.