Friday, September 16, 2011

No Free Lunch – Even For The Restaurant Industry

The restaurant industry hates taxes - unless it’s doing the taxing.

As I give you the following examples to illustrate my point, let me first clarify that I’m a card-carrying foodie. I eat out 10 or more times a week and I’m told I’m a good tipper. I understand that great food and great wait staff go hand in hand. I also spent a lot of time during a now-concluded four-decade career helping to make restaurants sustainable in three different communities.

Here are just three examples, though, of how the restaurant industry through associations, often controlled by chains and franchisees, seems hypocritical when it comes to levies on meals.

  • The restaurant industry levies (guilt and social norms are still levies) $44 billion in “tips” each year on diners ranging from 5% to 20% with tip inflation in some cities now reaching 25% even though numerous studies have revealed there is little or no correlation to good service in the minds of either the customers or the wait staff.image

  • The restaurant industry is also a major source of litter, generating a quarter of all 4-inch-plus litter items. Fast food operations alone are the source of a third of all packaging litter on roadways and this doesn’t count beverage containers or restaurants’ contribution to loading area and dumpster-sourced litter or that found in storm drains -- more than half of it in cities and counties alone, all of which levies billions on the public to clean it up.

Restaurants using billboards contribute to the desecration of their communities and states, foster scenic and economic blight (property near a billboard is depreciated as much as $40,000) and generate air and water pollution when roadside vegetation is clear-cut or swathed and even as admitted recently, poisoned, releasing carbon into the atmosphere and unfiltered storm water into ground water.

So what happens when the public attempts to recoup some of these hidden costs by adding a single penny on the dollar to the tab for meals? Remember, it should be of no concern to restaurants because like a tip, it doesn’t affect restaurants costs or revenues.

Restaurant industry hypocrisy was clearly illustrated in 2008 when my adopted hometown of Durham (ranked among the foodiest cities in America,) with active support from locally-owned restaurants, proposed a tiny 1% levy on prepared meals with the revenues to be dedicated to uses that would benefit the community but only in ways that would also, in turn, benefit restaurants.

Unlike similar levies granted other cities including Raleigh, Charlotte and Fayetteville and with no real strings attached and with little or no objection from the restaurant industry, Durham proposed to use the revenues from the 1% meals tax to:

  • Increase the 1/3 of all restaurant revenue that comes from tourism.
  • Reduce and control and remove litter including the significant contribution of litter via the restaurant industry.
  • Fund food-service education and career development programs,
  • Fund cultural facilities and organizations, patrons of which are well-proven to generate restaurant revenues.

Win-win-win, right? This was nowhere near the hidden industry-imposed levies I mentioned above and each of the uses were to be dedicated to things that directly benefit restaurants as well.

Wrong! Suddenly, to defeat the measure, tens of thousands of dollars from outside restaurants were funneled through a front created by the same folks who only months later “rebranded” as the Tea Party, a an existing movement that had fallen into public disfavor.

One of the more laughable claims was that the 1% tax on meals in Durham would hurt restaurant business, something that was easily proven invalid by merely looking revenues before and after such a tax was imposed in in Raleigh and Charlotte.

How could this proposed penny on the dollar paid by customers, two-thirds of whom (including commuters) are non-residents of Durham, be harmful to restaurants when the industry blithely passes along customary levies in the ways mentioned above that are a hundred times greater or more.

Fortunately, the I.R.S. is going to look into these groups and I hope they dig down into what was secretly channeled by restaurant chains and possibly the NC Restaurant and Lodging Association through the Americans for Prosperity chapter over in Raleigh during consideration of Durham’s 1% meals proposal which had been enacted in Raleigh with restaurant industry assent or backing and without a whimper from the Koch brothers.

It is also time for honorable restaurant owners to reclaim control of their industry, taking it back from chain-driven associations, while insisting on a more balanced, transparent and fair approach when it comes to levies on meals.

Restaurateurs, especially those run by owner-chefs, often innately grasp the importance of building strong, vibrant communities and they feel an obligation to do their share, especially when the benefits are win-win. They are also unfairly asked far too often by individuals, groups and businesses to provide their product free of charge

As diners, though, we need to make it clear to our favorite restaurants and especially chains, that we know we are paying the hidden fees or “taxes” imposed in part by customs like tipping, litter clean-up, counterproductive marketing practices such as outdoor billboards and by restaurant industry lobbyists.

We need to encourage restaurants to stand up in support of clean air and water, unique sense of place, litter control and removal, tourism promotion and sustainable culture facilities and organizations.

After all, there is no free lunch not even for the restaurant industry.

1 comment:

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I am so happy to read this. This is the kind of manual that needs to be given and not the random misinformation that's at the other blogs. Thanks for sharing this