Welcome to Government Watch, a weekly Restaurant Business column focused on politics, regulation, legislation, and other governmental issues of relevance to the restaurant industry. This week's edition looks at where the industry's sympathies may lie in the race for the U.S. presidency, as well as the ongoing crackdown on operators who tried to cheat the federal government's pandemic relief programs. There's also a look at California legislation that could morph into limits on how restaurants use self-service technology.
With the presidential race now in the bell lap, restaurateurs are working through which candidate and party will get their votes come November. The clues suggest the industry may be as divided on the matter as the nation at large.
In a straw poll taken during the National Restaurant Association’s Public Affairs Conference in April, operators indicated they’d vote for Donald Trump over his Democratic rival by a 2:1 margin, a show of support whose strength surprised even the association’s government affairs team.
But the choice at that point was between Trump and Biden. Now, with 59-year-old Kamala Harris assuming the Democratic banner from 81-year-old Biden, the industry appears more torn.
Next week, for instance, 21 of the best-known chefs in the business will hold an event in support of Harris and running mate Tim Walz. The list of participants reads like the roster of presenters from the James Beard Awards: Tom Colicchio, Carla Hall, Jonathan Waxman, Susan Feniger, Suzanne Goin, April Bloomfield, Art Smith, to share just a sampling. It's called Cooking for Kamala.
Many have participated in a YouTube series, Cooking with Kamala, where they’ve collaborated with the veep in preparing some of her favorite dishes, which run the gamut from a tuna fish sandwich, made from a can, to masala dosa, whipped up with TV star Mindy Kaling. During the sessions, Harris talks about Native American rights and the challenges of running a small business with Jose Andres, along with the challenges of cooking with tofu.
Next Thursday, the chefs will hold a video call where they’ll prepare some of those specialties with running commentary for the dial-in viewers, presumably covering why the industry celebs intend to vote for Harris and Walz.
The observation that Harris worked in her youth at a McDonald’s, as did husband Doug Emhoff, is also being sounded more frequently, a clear effort to position the Democratic candidate as someone who’s familiar with the rigors of a roll-up-your-sleeves job.
Meanwhile, both Harris and Trump continue to court the millions of voters who work in restaurants by promising to stop the federal government from taxing what servers and bartenders collect in tips. The one cause with direct pertinence to the restaurant industry is shared by both candidates, negating that issue as a point of difference.
Why restaurants should be watching a California retail-tech bill
The promises to halt the taxation of tips were sounded initially by both Oval Office aspirants in appearances before crowds in Las Vegas, a city rich in tipped hospitality workers. One of the unions representing the gambling mecca’s foodservice workers broke new ground last year in weaving protections into their contracts against being outmoded by technology. The provisions included a requirement that employers give workers a six-month heads-up before adopting tech that eliminates jobs, and affording the human staff an opportunity to influence how labor-saving digital systems are used.
Now a similar drive to empower workers threatened by technology is emerging in California. The state Senate has approved a bill, SB 1446, that requires retail operations to meet certain obligations to their workers if the stores switch to self-checkout stations.
For instance, for every two self-checkout stations that are provided, at least one human facilitator needs to be on hand to help customers. And any customer who prefers to be checked out by a human must be afforded that option.
A key provision is the requirement that employees potentially affected by the installation be alerted to the change at least 60 days in advance.
The bill requires the actions at this point solely from supermarkets and drug stores. But the dynamics that brought the suggested protections for retail workers are every bit as evident in the restaurant business, where self-service kiosks are now commonplace. Indeed, California’s $20 minimum wage for fast-food workers has many restaurant employers turning to the self-checkout stations as a way of keeping labor costs in check.
If California’s fast-food industry were as heavily unionized as its supermarket business is, restaurants might not have been left outside the Senate bill’s scope. The question restaurant operators there should be asking themselves is how long that benign oversight would last if the state Assembly should approve the bill and send it to the state’s pro-labor governor for enactment.
Pandemic crooks are still getting their comeuppance
The pandemic officially ended in May 2023, but restaurateurs who tried to cheat the nation during its time of crisis are learning the legal system is neither forgetting nor forgiving their transgressions. Last week, for instance, Salt Lake City restaurateur Giuseppe Mirenda was sentenced to a year and a day in prison and fined $250,000 for conning the federal government out of nearly $2 million in Economic Injury Disaster Loans.
The advances were extended via a program aimed at helping small businesses get back on their legs after being throttled by society’s shutdown. Mirenda, aged 29, applied for six loans over a three-month stretch in 2020, apparently misrepresenting the facts to help his cause. He would’ve taken almost half a million dollars more if his additional applications hadn’t been rejected.
It’s not clear if he spent any of the money on his five restaurants, all of which are located in Utah. About $1.1 million was used to purchase homes in both West Jordan, Utah, and Las Vegas, and additional proceeds went toward the purchase of a BMW and a Jaguar.
The U.S. attorney for Utah said Mirenda has repaid $680,000 of the funds he received, and that the two houses he purchased were seized and sold by the government for about $1.3 million.
In addition to serving jail time and paying a quarter-million-dollar fine, Mirenda will have to serve three years of probation.
Another initiative to kill the tip credit is slapped down
The restaurant industry continues to beat back efforts to kill a jurisdiction’s tip credit through ballot initiatives. The most recent victory came in Portland, Maine, where proposals were afloat to let voters decide in November if the state’s minimum wage should be raised to $20 an hour and the tip credit gradually phased out.
Lobbied hard by both restaurant servers and their employers, Portland’s City Council voted this week to designate the initiative proposals for further study, essentially taking them off the table for now. Among the arguments the civic lawmakers heard was that residents voted against killing the tip credit just two years ago, after the state passed a ban and then rescinded it under pressure from servers a few years earlier. How many no-go’s were needed?
With the turn of events in Portland, only voters in Massachusetts are scheduled at this point to vote yea or nay on keeping the tip credit.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.