Restaurant industry reacts to Trump victory

Restaurant industry reacts to Trump victory

Uncertainty looms in wages and regulations at end of close race

Restaurant operators and franchise executives began digesting election results Wednesday and assessing the lasting impact of Donald Trump’s presidency on the industry.

Along with Trump’s election as the 45th president of the United States, which gave restaurant executives hope for the easing of regulations and executive orders, voters approved new minimum-wage increases in Arizona, Colorado, Maine and Washington.

Robert Cresanti, president and CEO of the International Franchise Association, called the election “historic,” but said that now “the real work begins.”

“The American middle class, upward mobility and opportunity have suffered from the years of political gridlock and business as usual,” Cresanti said. “This election marks a sea change in how the American people expect their elected officials to conduct themselves. We have to find the third way — not the Republican way, not the Democrat way, but the American way.”

Cresanti said voters rejected candidates who intended to govern “by regulatory fiat or impose policies that would destroy jobs and crush small businesses.”

He called on the new president to strike down regulations created through executive order and asked Congress to repeal burdensome regulations, specifically citing the National Labor Relations Board’s broadened joint-employer standard and the Labor Department’s overtime rule.

Dawn Sweeney, president and CEO of the National Restaurant Association, said the group congratulated Trump and looked forward to working with him “to protect and expand the contributions restaurants make” to communities.

“We are committed to working with both sides of the aisle to find solutions that grow our economy and help all Americans succeed in the workforce,” Sweeney said

Early Trump supporter Andy Puzder, CEO of Carpinteria, Calif.-based CKE Restaurants Holdings Inc., parent to the Carl’s Jr. and Hardee’s chains, told Nation’s Restaurant News, “This election was a victory for economic growth.”

The results were “a confirmation of free enterprise and a rejection of ever-expanding government, a belief that we can and should do better for our nation and our children,” he added.

The winners were “America's working and middle class,” Puzder said. “Now we need to come together. As President-elect Trump said: ‘To be historic, we have to do a good job.’”

The theme of unity was echoed elsewhere. Howard Schultz, Starbucks chairman and CEO, issued an open letter to employees saying that he was “stunned” by the results.

“We cannot know what the precise impact will be on our country and the rest of the world,” Schultz said. “I am hopeful that we will overcome the vitriol and division of this unprecedented election season.”

Schultz said Americans should honor the democratic process and give Trump the opportunity to govern.

“We can choose to answer the challenges of the day with kindness and compassion,” he said. “We can choose to listen, to understand and to act with respect. We can choose to live by the values that reside in each of us, and honor our commitment to nurture the human spirit with love, and offer everyone in our stores and communities a place of inclusion and optimism.”

Schultz added that “together is where our collective power lies,” a sentiment shared by Art Smith, chef of Blue Door Farm in Chicago and Southern Art in Atlanta.

“Congratulations President Elect Mr. Trump. We can build a better America together as one people,” Smith said in a tweet.

Even José Andrés, the Spanish-born chef who had a verbal dust-up with Trump over his immigration statements and pulled out of a planned restaurant in the President-elect’s new Washington, D.C., hotel, offered words of support in a tweet directed at Trump.

In down-ballot voting Tuesday, Arizona, Colorado, Maine and Washington approved phased-in state minimum wage increases.

Stephen Anderson, an analyst with the Maxim Group, issued a report Wednesday morning that said the largest impact would be on such brands as Chipotle Mexican Grill, Jack in the Box and Red Robin Gourmet Burgers because of their exposure in those states.

Maine and Flagstaff, Ariz., also voted down the tip credit for wages, measures supported by the Restaurant Opportunities Center United workers’ rights group

“With last night's results, Maine joins seven other ‘One Fair Wage’ states — including California and the entire West Coast — all of which have seen their restaurant industries flourish since eliminating the subminimum wage. Maine and Flagstaff are this movement's latest victories, but they certainly will not be the last,” said Saru Jayaraman, ROC United co-founder and co-director, in a statement.

Anderson of Maxim said it was unlikely, with Republicans holding majorities in both the House of Representatives and the Senate, that a federal minimum wage above the current $7.25 an hour would be enacted.

“Although President-elect Trump pushed for a $10 per hour minimum wage early in his campaign, he now appears to favor leaving this issue to the states,” Anderson noted.

Propositions approved on Tuesday called for raising the minimum wage in Arizona from $8 an hour to $12 by 2020; in Colorado from $8.31 an hour to $12 an hour in 2020; in Maine from $7.50 an hour to $12 an hour in 2020; and in Washington from $9.47 an hour to $13.50 an hour by 2020.

“We believe the prospects for an increase in the federal minimum wage are limited,” Anderson said. “We also do not rule out potential relief on healthcare and overtime labor costs for restaurant companies.”

Trump and Republican leaders have vowed to repeal the Affordable Care Act, or Obamacare, in favor of a currently undefined alternative.

“In our view, President-elect Trump’s stated desire to replace the current Affordable Care Act with a less regulated, more market-based solution would likely offer at least modest relief for restaurant-level labor costs if implemented,” Anderson said.

“We believe it is too early to measure the potential cost savings of a potential replacement for the Affordable Care Act, but we estimate the labor cost margin impact from the implementation of the act in the past couple of years at roughly 30 basis points to 50 basis point,” he said.

Anderson also said President Barack Obama’s executive order on overtime for exempt employees, set to go into effect in December, might be revisited in the Trump administration. Those regulations call for the exempt employee threshold for overtime pay to be increased to $47,476 a year, from the current $23,660 a year.

“Assuming an easing of overtime regulations, we estimate restaurant operators could see a labor cost margin benefit of about 20 basis points to 30 basis points, depending on the operator,” Anderson said.

Beyond the economic implications of the election, some foodservice leaders were generally sanguine about Trump’s election, such as chef and cookbook author Graham Elliot.

Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless 

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