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What the election results mean for restaurateurs

Experts: Upheaval in Washington may not result in industry-friendly policies

If restaurateurs view Tuesday night’s election as an unqualified triumph of the industry’s political interests, they’re setting themselves up for an unpleasant surprise, warned a panel analyzing the results for a roomful of chain executives.

The panel of analysts told attendees of the People Report Best Practices Conference on Wednesday morning that they’d be mistaken to read the wholesale turnout of Democrat officeholders at the federal and state levels as a turnover of lawmaking to the industry’s allies. (Editor's note: Peter Romeo moderated the panel discussion.)

EARLIER: Click here for a blow-by-blow account of Tuesday night's election results.

“The Republicans are more sympathetic to our business needs,” said Roz Mallet, a Texas franchisee of Buffalo Wild Wings and Smashburger. “But they’ve just been elected. Don’t assume they’ll be with us on all the issues that are important to us.”

The industry should be concerned in particular by the success at the polls of the Tea Party, the anti-incumbent, far-right political movement, warned Joe Kefauver, managing partner of Parquet Public Affairs, a Orlando, Fla.-based political consulting firm.

The Tea Party “seems to fit the Republican glove very well,” said Kefauver, who previously worked in the government affairs offices of Darden Restaurants and Wal-Mart. But “it's anti-big business,” he said, as opposed to a Republican stance usually characterized as pro-business.

In the audience were representatives of such big restaurant businesses as Brinker International, Carlson Restaurants Worldwide, Domino’s Pizza and Applebee’s.
Kefauver warned that the Tea Party is particularly at odds with the restaurant business on the issue of immigration reform. 

The industry has pushed for moderation in dealing with the high number of illegal immigrants who reside in the United States — measures like transitioning them to citizenship and not turning employers into enforcers of immigration law. The Tea Party is more sympathetic to the “fence builders,” the factions that advocate aggressively policing the nation’s borders and catching residents who are in the country illegally, Kefauver explained.

He said the industry could lose ground in its drive for moderation because so many ultra-conservatives were voted into office on Tuesday, particularly at the state level. He noted that lawmakers in several states have already drafted strident immigration bills similar to Arizona’s controversial crackdown measure, which has led to boycotts of the state by conventions and tourism groups.

Regardless of what happens, Mallet said, “your best defense is compliance” with the rules.

Kefauver noted that the elections enabled Republicans to recapture the U.S. House of Representatives, while Democrats retained control of the Senate by a slim majority and a Democrat occupies the White House for at least two more years.

“If you were a big fan of gridlock before, you’re going to be a very big fan of what’s going to happen now in Washington,” he said. 

A number of the federal candidates voted into office Tuesday night have voiced sharp criticism of the health care reform bill that was pushed into law earlier this year by the Obama administration. Many analysts have speculated that the turnover in Congress will likely prompt a reconsideration of the law before some of its most controversial components are put into effect in 2014.

The National Restaurant Association has calculated that health care costs for big restaurant companies would likely rise by 40 percent if the law isn’t modified, revealed Mallet, who is serving this year as treasurer of the trade group.

Yet she cautioned that restaurateurs shouldn’t assume from last night’s results that they’ve dodged that blow or escaped reform.

“The idea that health care reform is necessary is true,” she said. “This bill is not reform.”

Instead of relying on the incoming Republicans to hammer out something more realistic, “we will all have to be active,” she said.  “We really have to be involved at every level to get the message out that health care is important to us, but that the current law is too costly.”

Kefauver predicted the Obama administration would try to avoid congressional roadblocks by wielding its regulatory discretion.  For instance, instead of pushing legislation that might open more workplaces’ doors to unions, Democratic leaders might use agencies like the National Labor Relations Board instead. Three of the board’s five members are appointed by the president.

Michael VanDervort, a labor and employee relations strategist for the Publix supermarket chain, indicated that the Democrats’ losses wouldn’t deter unions from stepping up their efforts to organize more labor-intensive service businesses like restaurants.  He explained that the service sector provides an attractive target because “the jobs can’t be outsourced overseas.” The membership and war chests of organized labor have been shrinking in part because so much of the manufacturing sector, its traditional stronghold, has shifted overseas.

“The orchard is bare, so they’re coming after what jobs are left,” agreed Kefauver. 

On any sort of labor issue, “one of the best ways of protecting ourselves against regulations we don’t like is doing the right thing” for employees, Mallet said.
She advised members of the audience to control their destiny by meeting with their lawmakers and being involved in the political process at all stages.

“I woke up this morning wondering if everyone who got elected realizes the importance of reviving the economy — it’s all about jobs,” she said, urging the restaurateurs in attendance to make sure that message is heard.

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