Speaker 1: Welcome to Bloomberg Intelligence. BI provides research on industries, companies
Speaker 1: and expert topics, delivering key data from BI analysts and
Speaker 1: they're given industry. Now Here is your Bloomberg Intelligence research team.
Speaker 1: Welcome to Chopping It Up Episode nine. I'm your host,
Speaker 1: Mike halon On, the senior restaurant and food service analyst
Speaker 1: at Bloomberg Intelligence. My pleasure to introduce my guest today,
Speaker 1: Joe key Faver. Joe is a founding partner of Aligned
Speaker 1: Public Strategies of Full Service Public Affairs and Creative Firm,
Speaker 1: and he's the host of the Weekly Working Lunch podcast.
Speaker 1: So you can find Joe's weekly restaurant pod on SoundCloud
Speaker 1: and Restaurant Business. Thanks for doing this, Joe, Mike did
Speaker 1: to be your pa, did to talk to you. Happy news,
Speaker 1: Happy New Year to you as well. Um so Joe's
Speaker 1: might go to guy when it comes to politics. Uh
Speaker 1: So that's what we're gonna get into today. So you know,
Speaker 1: let's start out by asking what happened to the red wave?
Speaker 1: And the red wave we're talking about an EBB tide.
Speaker 1: There was no red wave. Um, you know, I think, um,
Speaker 1: you know, we were gonna we're in a kind of
Speaker 1: a big political transition in the country where UM UM,
Speaker 1: the technology of detecting voter moods and voter intensity has
Speaker 1: not kept up, and so polling is is probably as
Speaker 1: UMS inconsistent over the last five years has ever been UM,
Speaker 1: and the technology really hasn't caught up to to UM,
Speaker 1: you know, actively measured voter attitude. So what happens is
Speaker 1: no one really knows right. And it's funny how everyone's wrong,
Speaker 1: but everyone's saying, well, my polls are right with everybody else.
Speaker 1: The poles are rocks. This is crazy that UM. You know,
Speaker 1: I think it's difficult. It's going to be increasingly difficult
Speaker 1: for the publicans two, you know, whether whether they win
Speaker 1: here or win there, to create a working majority. You
Speaker 1: see what's happening this week in Congress. I mean, they
Speaker 1: can't even get a leader that I doesn't even sworn
Speaker 1: in yet. And you know, I'm not I'm not trying
Speaker 1: to be partisan, but you can't help being part of
Speaker 1: that when you're talking about this stuff. It's you know,
Speaker 1: it's it's they find themselves in a position where if
Speaker 1: you get remember, you know, for the first time, and
Speaker 1: I think American history a major political party did not
Speaker 1: have the political platform and an election cycle. The Republicans
Speaker 1: had no platform, you know, and that doesn't give you
Speaker 1: a blueprint for governance, right, And so they've they've they've
Speaker 1: kind of become the anti governments part of you seeing
Speaker 1: that playoff in Washington right now. So what that means
Speaker 1: is for voters, to answer your question, there's not a
Speaker 1: lot to glomb on to except for, well, that is
Speaker 1: the other guy, right, and that is not a that's
Speaker 1: not a winning long term strategy. It wasn't a winning
Speaker 1: long term strategy this time. And I think what what
Speaker 1: they're finding and whether you know, who knows what in
Speaker 1: the back room, what's going on. But you know, Americans,
Speaker 1: you know, for better for worse. We can talk about
Speaker 1: we want limited government, we want this, but they like
Speaker 1: to see Congress legislating. They like, you know, polling after polls,
Speaker 1: polling for you know, generations, they wanted to see Congress legislating.
Speaker 1: And Congress, whether you're whether you agree with or not,
Speaker 1: I agree with what they did in the last two years.
Speaker 1: They were legislating. And so I think there was a
Speaker 1: well spring of support out there um that punditry didn't acknowledge.
Speaker 1: And I think the Republicans you know, just ran some
Speaker 1: terrible candidates to just ran some terrible candidates, and these
Speaker 1: races can can can be very personal, you know, and
Speaker 1: and a real popular person that doesn't have real popular
Speaker 1: views can can win, and an unpopular person that has
Speaker 1: you know, popular views can lose. And I think they
Speaker 1: just combination of all those things. Mike, So that the
Speaker 1: long winded answer to a short question. But um, there
Speaker 1: was no way and as such, there's no politt there's
Speaker 1: no mandate to govern going forward, which is difficult for
Speaker 1: your you know, your clientele, the business community, restaurants, you know,
Speaker 1: they want to manage risk, right, they want it. They
Speaker 1: want some level of clarity, good or bad, and different
Speaker 1: as to how to plan for what's coming after them
Speaker 1: in this current environment does not allow restaurants executives to
Speaker 1: have any sense of certainty about what the next couple
Speaker 1: of years looks like. That's great, thanks, And you know,
Speaker 1: I guess that leads me right in my next question. Right, So,
Speaker 1: what does the Republican House and a democratic setting me
Speaker 1: for restaurants as stimulus done, and and what what can
Speaker 1: we expect over the next two years? Well, you know,
Speaker 1: it remains to be seen certainly, certainly in the first
Speaker 1: you know, let's say that's the bude up in the quarter.
Speaker 1: So the first six months of the new Congress, you're
Speaker 1: going to see especially if um, if McCart he pulls
Speaker 1: out this, you know, he is contorting himself and conceding
Speaker 1: by the minute and depending on what he gives away.
Speaker 1: You know, I think what you're gonna see from the
Speaker 1: Republican House is just investigations. They're not gonna be in
Speaker 1: the governing and legislating and talking about the tax law.
Speaker 1: The Senate will be pushing those types of things. Obviously
Speaker 1: the White House wills, but I think you're gonna see
Speaker 1: a stalemate. I think the big pieces for a restaurant
Speaker 1: is the activism of the Biden administration. At the regulatory level.
Speaker 1: We will go full on, and you know they are
Speaker 1: doubling down. You saw this week he re nominated a
Speaker 1: whole splew appointees to the e o C and other
Speaker 1: other other governing bodies. Um not Jessica Lumin to wage
Speaker 1: an hour, but we expect that any any time now.
Speaker 1: She's fairly you know, for that position, she's fairly uncontroversial.
Speaker 1: Into Republicans. Um, So they're gonna they're gonna double down
Speaker 1: and there you know, they can't govern legislatively, They're gonna
Speaker 1: govern regulatorially. And we've already seen that in the first
Speaker 1: few year the Biden administration. But with this n LYB
Speaker 1: National Relations Sports and Doing is some pretty unprecedented stuff.
Speaker 1: I mean, they have been pedal to the metal and
Speaker 1: that's not gonna abb anytime soon. Is there any regulations
Speaker 1: on restaurants, um, you know outside of the n l
Speaker 1: RB and and kinda. Um, the change the changes we
Speaker 1: may see in franchise law will get to that later,
Speaker 1: but are there any regulations that the restaurant industry should
Speaker 1: be particularly concerned about right now? Yeah, we're in the
Speaker 1: middle of a rulemaking process on a joint employer at
Speaker 1: a number of agencies, and the restaurant industry estarch, the
Speaker 1: franchise business community needs to watch that very very closely. Obviously,
Speaker 1: the the powers that be want to um, you know,
Speaker 1: have shared responsibility between Mike Talent franchise Z and Company
Speaker 1: X franchise or on workplace violations, labor protocols, unfair labor practices.
Speaker 1: Right now. You know, in our current world, you know,
Speaker 1: the company's kind of field that have from the franchise z.
Speaker 1: The current administration wants that wants to remove that shield
Speaker 1: and make that joint liability because it's easier to go
Speaker 1: after make it up McDonald's corporately than it is to
Speaker 1: go after my kalon the you know, three unit franchise
Speaker 1: z UM. So you're gonna see in every different every agency.
Speaker 1: It was the Department of Labor, National Labor Relations Board. Uh,
Speaker 1: you know, other agencies will have their own joint employer rules.
Speaker 1: So this is a you know, this is three or
Speaker 1: four agencies were playing this. We obviously independent contractor and
Speaker 1: the restaurants don't employ a lot of independent contracts and
Speaker 1: stuff when it comes to some stared services maintenance services,
Speaker 1: the building and so forth. But all the laws around
Speaker 1: independent contractors are getting rewritten. I think other pieces that
Speaker 1: are important to restaurant tours. You know, we talk about
Speaker 1: the A twenty rule and and and regulations around work,
Speaker 1: you know, off the kind of off the clockwork, but
Speaker 1: non skipped work for tipped employees and where is that
Speaker 1: where is that guiding line? So there's gonna be more
Speaker 1: energy in that space. Well, so it's a very you know,
Speaker 1: labor is number one for these for this administration, and
Speaker 1: we're the number one labor intensive industry. So there's there's
Speaker 1: really nothing that you know, the Labor Department and its
Speaker 1: sub agencies where it's OSHA, whether it's you know that
Speaker 1: are doing that doesn't directly affect restaurant tours. I think
Speaker 1: some of your bigger business model issues that we've seen
Speaker 1: that the industry has worked on in the last couple
Speaker 1: of years paid leave, for example, nothing's going to happen
Speaker 1: federally at you paid leave. The Republicans have pivoted, not
Speaker 1: insignificantly on this issue. There's a model that both um UH,
Speaker 1: Vermont and New Hampshire have adopted with Republican governors and
Speaker 1: Democratic legislatures. That's kind of a shared responsibility type of
Speaker 1: model between employees and employers and and having private interests
Speaker 1: bid on running those kind of those uh those those
Speaker 1: insurance funds is paid leave funds. I think that's a
Speaker 1: model that if anything happened in the federal level, which
Speaker 1: is highly unlikely, it would be something like that you've
Speaker 1: seen on the far political right. Instead of opposing paid
Speaker 1: leave and this is kind of post pandemic, but opposing
Speaker 1: paid leave from a business perspective. They're embracing paid leave
Speaker 1: as a pro family issue. So there's energy on the
Speaker 1: right for the first time in a number of different ways.
Speaker 1: In the paid lead issue. I don't think there's a
Speaker 1: window in this particular Congngress for that. Um. But you'll
Speaker 1: see states you know existing, You'll see states that have
Speaker 1: paid lead programs to make them more robust. Um. I
Speaker 1: don't think there's gonna be any accent on minimum wage
Speaker 1: at the federal level, um um. You know, issue enough
Speaker 1: to go back historically over the last three years for
Speaker 1: many of the minimum wage uh increases, we've had Republicans
Speaker 1: in charge of you know, one House of Congress or
Speaker 1: the White House when they've happened. So never say never,
Speaker 1: but highly unlikely on the wage stuff. I think. I
Speaker 1: think the regulatory piece is where companies really need to
Speaker 1: be watching, and they have been for you know, the
Speaker 1: last two years have been a good lesson than that,
Speaker 1: gotcha all right? So there's been some back and forth
Speaker 1: in California over the last week regarding the fast acts.
Speaker 1: So where does that stand right now? So there's gonna
Speaker 1: be a hearing so to bring the audience up to speed. Um.
Speaker 1: Just before the new year. UM, the the the state
Speaker 1: UH said hey, we're going with this regulation as of
Speaker 1: January one. We're gonna started forth in it. And the
Speaker 1: business from you said, hey, wait a minute. We were
Speaker 1: told by current law and validated by you the state,
Speaker 1: that if we uh uh submitted the appropriate number of
Speaker 1: signatures that this basically creates to run our own ballot
Speaker 1: initiatives on winding this law, that it creates a stay
Speaker 1: situation where this law will not go into effect. That's
Speaker 1: the guidance you've given us. That's the guidance we've had,
Speaker 1: you know, forever in this state. And for reasons not
Speaker 1: yet clear, we can speculate and we'll go into that
Speaker 1: to why. The state said, math seddle the medal. We're
Speaker 1: gonna enforce this of January one. So the coalition, if
Speaker 1: you will, the Dating Restaurant Association, International Franchise Association, Chamber
Speaker 1: of Commerce, other organizations UH collectively UH filed suit to
Speaker 1: for a stay. Judge granted that day and the first
Speaker 1: hearing and I believe it's January, so the end of
Speaker 1: next week, UM, they'll be kind of first hearing in
Speaker 1: court as to how to proceed here. Um, so you know,
Speaker 1: we would all been speculating as to as to why, um,
Speaker 1: why the state? You know, it was political pressure from
Speaker 1: the STIU, of course it was, But does does the
Speaker 1: state really believe it had legal standing because most of
Speaker 1: the legal minds in the industry they had no legal
Speaker 1: standing here. Um. And it's pro form of you know,
Speaker 1: shameless giveaway to the union just to you know, it's
Speaker 1: done unconscidtable use the taxpayer money if they know they
Speaker 1: have no legal uh laid to stand on, yet they're
Speaker 1: going to drag the state and tax payers into court.
Speaker 1: So who knows what's happening. And maybe you know, they
Speaker 1: have lawyers to maybe they have a pathway. I don't know,
Speaker 1: but it's up in the air and we'll know more
Speaker 1: on January and we'll know how serious they are about
Speaker 1: trying to enforce this and what their cractionales are. But
Speaker 1: for right now, the next week and a half of
Speaker 1: the law is stayed. Um. And you know, my if
Speaker 1: I don't know, you know, you've been covering the industry
Speaker 1: a long time. I've been tivering the industry a long time. Yeah,
Speaker 1: this is this is some pretty big ball politics that
Speaker 1: the industry has been playing the last couple of years.
Speaker 1: You know what what Sean Cannon the n r I
Speaker 1: pulled off with the Restaurant Relief Fund is you know,
Speaker 1: unbelievable by partisan support for this industry, uh during during
Speaker 1: the pandemic and this activity in California is pretty pretty
Speaker 1: epic as well for us to get together as an
Speaker 1: industry raise a kind of money that we did play
Speaker 1: the ballot game, which we don't really play a lot, uh,
Speaker 1: get the signatures, get something on the bout and qualified
Speaker 1: and now we're in the court. So you know, it's
Speaker 1: it's a kind of new your day in the industry,
Speaker 1: and the industry you know, knows that they're against the
Speaker 1: ropes against a very very well funded opponent. We still
Speaker 1: tend to, you know, for you know, you add up
Speaker 1: the market caps of our big corporations, you get an
Speaker 1: astronomical number. We still have very short short crocodile arms,
Speaker 1: alligator arms relatives to our market caps are funding these
Speaker 1: kinds of things. But we're doing a lot better than
Speaker 1: we've ever done traditionally. So we'll we'll know on the
Speaker 1: third teams kind of what what the environment looks like
Speaker 1: where this judge will be. But the broader question for
Speaker 1: the industry is, you know, what does it look like
Speaker 1: if other states and cities, you know, pursue copycat legislation
Speaker 1: if you will, And and so the industry is mobilized,
Speaker 1: and there's a target. Listen about ten states, by the
Speaker 1: ten states where political winds are right in the political
Speaker 1: environment is right for a fact act type of bill.
Speaker 1: We see some at the municipal level right now. Mineapolis
Speaker 1: is kind of a hot pot where we may see
Speaker 1: some level of fast Act like legislation. We already have
Speaker 1: a similar kind of model in Detroit. The one in
Speaker 1: Minneapolis doesn't directly it's all employers, not a q SR
Speaker 1: specific thing. But this is this is the way man
Speaker 1: and um industry knows. I think soberly that the old
Speaker 1: days of HR twenty two in Congress, you know, it's
Speaker 1: those days have left us, and we're playing ball on
Speaker 1: the ballot in a lot of states, are playing ball
Speaker 1: municipally in a lot of states, and it's gonna cost
Speaker 1: a lot of money. Yeah. Well, it's great that, you know,
Speaker 1: the the industry, which is so fragmented. I think that's
Speaker 1: part of the reason why they haven't been able to
Speaker 1: join hands and and fight some of these regulations, UM
Speaker 1: and legislation in the past. Uh, it's great that they're
Speaker 1: starting to come together to fight for what's best for
Speaker 1: the industry. UM. So you mentioned, you know, Minneapolis being
Speaker 1: a municipality. UM and you also mentioned five to tend states.
Speaker 1: So what states do you think could be fast followers?
Speaker 1: And and are they gonna wait? I guess you know,
Speaker 1: obviously they're gonna wait until next week. But if this
Speaker 1: goes to referendum, are they gonna wait until the referendum
Speaker 1: comes through for them to start pushing harder on this?
Speaker 1: How do you think that's coming? Yeah? Well yeah, so
Speaker 1: let me take it kind of methodical order. You know,
Speaker 1: right after the fact at path in California, right after
Speaker 1: it got in the process, within about half an hour
Speaker 1: of the final vote. Literally, Michael, I'm coming thirty minutes
Speaker 1: of the final vote. UM. The s c I you
Speaker 1: put out on Twitter a you know, Victory laps spiked
Speaker 1: the ball and listed about fish or seven states where
Speaker 1: they're taking their road show too. Next they're the ones
Speaker 1: that first said, hey, ain't saying nothing in the warm
Speaker 1: up that right, So we're we're looking at a lot
Speaker 1: of those traditional you know, blue trifectus states and maybe
Speaker 1: some of the new blue trufector states. Four states, uh
Speaker 1: now have four more states after the elections now have
Speaker 1: total blue control. Uh. So those are you know, Massachusetts
Speaker 1: and Maryland top of that list, but we're looking at Washington,
Speaker 1: We're we're getting our act together in Oregon, Illinois, New York,
Speaker 1: New Jersey area where you are, Maryland, massachusettskind of the
Speaker 1: usual suspects, um, but with Massachusetts and Maryland kind of
Speaker 1: added to that list now because of changing their leadership
Speaker 1: as well. So it's gonna be a busy year. UM.
Speaker 1: I do know that, um Um, the restaurant in you
Speaker 1: know association, National Restaurant Association, I say, are really working
Speaker 1: very well, very much in conjunction, very closely on this issue.
Speaker 1: And we're seeing a lot of uh you know, cooperation,
Speaker 1: a lot of money being spent, a lot of money
Speaker 1: being raised, and strategies put in place to really kind
Speaker 1: of bolstress going forward. And you know, it seems that
Speaker 1: SI you seems to have momentum here, but at the
Speaker 1: unit level, you know, what we're seeing is that the
Speaker 1: unionization momentum seems to have slowed at Starbucks. You know,
Speaker 1: the effort seems to be stalling here and about two
Speaker 1: seventy stores, they're not close to a C B A.
Speaker 1: You know, have the Union's lost some of the wind
Speaker 1: in their sales at the unit level or is this
Speaker 1: something that's just unique to Starbucks now? I think I
Speaker 1: think they have, you know, in the Starbucks. It's a
Speaker 1: good question and difficult want to answer. I mean, um,
Speaker 1: you know, with with an attrition rates in this industry,
Speaker 1: it's it's a no brainer for Starbucks to go into
Speaker 1: the old bean Smith four corners, you know, and just
Speaker 1: try to run the clock out on on on the process.
Speaker 1: Because you know, the first Starbucks votes were about twelve
Speaker 1: months ago. It's tweluf thirteen months ago. And if you
Speaker 1: look at those original stores, I bousically see what the
Speaker 1: turnover rates, how many of those those people that voted
Speaker 1: in that union lecture are still there? Right? Uh? And
Speaker 1: even in Starbucks and he does pretty well relative to
Speaker 1: the competitor's net space, it's still just average attrician. You've
Speaker 1: got a whole new cast of characters and in there
Speaker 1: two years later. Starbucks is smart to kind of stress
Speaker 1: the process out. They know the math um and so
Speaker 1: it has kind of dizzled a little bit. Um. But
Speaker 1: you know, it's interesting my dis your question at the
Speaker 1: unit level, it's it's fizzled a little bit. But I think,
Speaker 1: you know, like everybody's business model changes over time. Look
Speaker 1: look at look at Bloomberg's business model now versus twenty
Speaker 1: years ago. I mean night and day, right, the technology
Speaker 1: you guys are into, it's just a whole different company. Right. Similarly,
Speaker 1: the unions you know, for for fifties, sixties, seventy years,
Speaker 1: we're kind of, you know, my awfully focused on collective
Speaker 1: bargain graments c b as were the goal and and
Speaker 1: that's how you measured your success or not. How many
Speaker 1: places could you actually unionize? And over the last ten
Speaker 1: or fifteen years, I mean they have figured out, and
Speaker 1: probably more of the last five or ten years to
Speaker 1: be specific, they have figured out that they don't need
Speaker 1: c b as to win. I mean they're winning the
Speaker 1: conversation there they have they the labor community, I want
Speaker 1: the unit I'll say the labor community is a nonprofits
Speaker 1: and naturals groups, all the kind of stuff. They have
Speaker 1: won the conversation around our business model. Look at our
Speaker 1: business model now whis flat years ago? I mean, we
Speaker 1: used to laugh, we have bully laughed about fifteen bucks
Speaker 1: of that I'm crazy that was Now you can't get
Speaker 1: anybody fifteen bucks now, right, And this is happening before
Speaker 1: the pandemic. Obviously pandemic excited. But they've won the national
Speaker 1: conversation on our model. Most people don't think our business
Speaker 1: model is a great model, right, Um, And so whether
Speaker 1: it's paid leaves that they are, we're exposed in the
Speaker 1: pandemic and a lack of paid leave policies. Obviously the
Speaker 1: wage stuff is worse than from us. So they have
Speaker 1: forced so many changes to the business model this industry
Speaker 1: outside of a cb A that you know, by any
Speaker 1: means except for dues revenue they have they can be
Speaker 1: spiking their football and I don't know of any time
Speaker 1: you think about historically the relationship between the unions and
Speaker 1: the Democratic Party, you can go back and you can
Speaker 1: see George me you know, sitting at the desk of
Speaker 1: f d R right and and the unions have always
Speaker 1: had a close association with Democratic Party. But for most
Speaker 1: of the last hundred years the Democratic Party has been
Speaker 1: run by Southerners, and um, they don't have any relationship
Speaker 1: with unions. At all. The the union lack of a
Speaker 1: better term, dominance ownership of the current Democratic Party and
Speaker 1: the progressive direction of it is unprecedented. I mean they
Speaker 1: have one. They have they have literally intellectual uh control
Speaker 1: over a big swath agenda of one of the two
Speaker 1: major governing parties in the in the country. I think
Speaker 1: it's fascinating to watch. They've always been a big interest group.
Speaker 1: They've always been a big you know, every president is
Speaker 1: always addressed the NFL, A meeting everyhere, you know. I mean,
Speaker 1: but they run the show now, I mean they run
Speaker 1: the show and a bunch of states that used to
Speaker 1: be when I when I first started this industry that
Speaker 1: number one, I did it. I did it. The true story, Michael,
Speaker 1: I did an assessment when I was a Walmart Uh,
Speaker 1: how most powerful five most powerful unions need state capital
Speaker 1: and about going back, you know, twenty plus years. But
Speaker 1: in so many of them, the vast majority was the
Speaker 1: teachers Union. And now that the sd I you and
Speaker 1: some of the unions that that touch our industry the most,
Speaker 1: have resided prominence in so many state capital Sacramentos and
Speaker 1: the tip of the Iceberg, and they have really won
Speaker 1: the conversation. So it's at the unit level. You're Mike,
Speaker 1: you're my Kalent franchise d X. Your business model looks
Speaker 1: I don't know how it could look any different if
Speaker 1: you were unionized for five years ago versus not being
Speaker 1: ugunized now. It's not in a day if I and
Speaker 1: five years ago. And so they've kind of won in
Speaker 1: a lot of ways. I always say that they might
Speaker 1: have won the arbitration, but they on the conversation, Yeah,
Speaker 1: for sure. And I think part of it is is,
Speaker 1: you know, cultural right, Um, you know, I had a
Speaker 1: guest on the UH months ago saying, you know, they
Speaker 1: made unionization cool, right, And so I think that's the
Speaker 1: kind of helped them make some of the inroads at
Speaker 1: the at the union level, right. And we we have
Speaker 1: we have, you know, going back to the nineteen this
Speaker 1: is Gallup first started pulling this particular issue, union acceptance,
Speaker 1: union popularity. Never been hired there today and you know
Speaker 1: what forty plus years of doing that polling. So again,
Speaker 1: I think the more because we haven't had a strong
Speaker 1: union movement, so it's more hypothetical. And oh isn't this
Speaker 1: great blah blah blah? Would you get in the nooks
Speaker 1: and crannies of it and people start to you know,
Speaker 1: really understand what's going on. I would assume those numbers
Speaker 1: are gonna dropped significantly. Um. But when they realized that
Speaker 1: that the you know, that hourly label is going to
Speaker 1: be replaced by robotics, right, I mean it's just yeah,
Speaker 1: that issue in our in our industry, right is very
Speaker 1: under um kind of trade in terms of technology. So um.
Speaker 1: I think. So, I think one of the things harsh
Speaker 1: reality in our business that you know, people are going
Speaker 1: to be replaced. Yeah. And so I think you've got
Speaker 1: three kind of political currents that are kind of or
Speaker 1: four I should say, that are kind of presenting challenges
Speaker 1: for restaurant companies and restaurant exactly. Obviously, you've got a
Speaker 1: very informant, mobilized employee base that you've never had of
Speaker 1: the last fifty years. Right, You've got customers that are
Speaker 1: dialed in, you know, for better for worse on what
Speaker 1: informed customer base that often doesn't see eye to eye
Speaker 1: with the industry position. Right, You've got um, um, you know,
Speaker 1: the our general backstop for the last fifty years, the
Speaker 1: Chamber of Commerce Republican Party has left the building. All
Speaker 1: this has left the building and they're not. They're they're
Speaker 1: attacking corporate America's much as anybody is, right, and so
Speaker 1: you've got these these cross currents. Uh, You've got a
Speaker 1: completely cohesive Democratic Party on these labor model issues. I
Speaker 1: mean there is almost almost no except for Joe Mansion
Speaker 1: on the minimum wage issue, which was a deal waiting
Speaker 1: to waiting to happen. You've got complete cohesion in one
Speaker 1: political party on your iss she said, you've never had before.
Speaker 1: So if you're a restaurant company executive, that the political
Speaker 1: environment is so different over the last three or four years,
Speaker 1: and it has been seeing thirty or forty years, it
Speaker 1: all kind of looked the same, and it's it's hard
Speaker 1: for some of our folks. As a general rule. You know,
Speaker 1: we have a lot of exacts that are not politically
Speaker 1: dialed in. You know, we're not a regulated inditstry. We're
Speaker 1: not banking, we're not finance. You know, we're not energy
Speaker 1: that are just airlines that are just constant governments in
Speaker 1: your business every day. We tend to be a little
Speaker 1: arms and length, you know, and a lot of our
Speaker 1: executives grew up in that system and you know, aren't
Speaker 1: his you know familiar with the nuances of it. And
Speaker 1: I think, in my point being, we tend as an
Speaker 1: industry to be hell no on everything right now, would
Speaker 1: pose that would that we're at for anything, And I
Speaker 1: think time is kind of run out on that strategy.
Speaker 1: And I think you know, you see businesses, you know,
Speaker 1: making major major announcements in the sustainability space or the
Speaker 1: E s G space, and you know, the businesses are
Speaker 1: moving forward faster than kind of some of the political
Speaker 1: allies are. So my point being, I think we're running
Speaker 1: out of out of friends in the process if we're
Speaker 1: in transigent, So we've got to I think businesses have
Speaker 1: to come to the people and say, hey, here's a
Speaker 1: here's a paid leaves scheme that we can work with.
Speaker 1: Let's let's give this away. Hey, here's a portable benefit scheme,
Speaker 1: let's have that conversation. Hey, here's a more proactive here's
Speaker 1: a a recycling thing that maybe we can we can
Speaker 1: work into our model that won't damage you know that
Speaker 1: we're her a business model in our in our operations.
Speaker 1: We've got to We've got to do that. We've never
Speaker 1: been really good in the industry of that, but we've
Speaker 1: we've got no, we don't have a lot of allies
Speaker 1: now to be that backstop that we used to have.
Speaker 1: And so I think it's the industries can have to
Speaker 1: pivot the way it looks at these issues and manages
Speaker 1: them going forward. That's not appeasing, that's just recognizing what
Speaker 1: the plane field is. Yeah, but they're on their heels though, right,
Speaker 1: Like I mean you mentioned at the beginning at the top,
Speaker 1: right about the Republicans, I mean, they left has got
Speaker 1: them on their heels and they're just the party of No,
Speaker 1: and and they don't really have a platform, and it's
Speaker 1: an issue, right. So it seems like the restaurants are
Speaker 1: kind of in the same place where they're just kind
Speaker 1: of playing defense and uh, reacting as opposed to being
Speaker 1: out in front and leading. So is there anything that
Speaker 1: you know, you had some great examples of how they
Speaker 1: can kind of contribute to the legislative process, But is
Speaker 1: there anything that they should be lobbying for? Yeah, you know,
Speaker 1: I've yes, I think there's some some big picture stuff
Speaker 1: that they should at least be starting conversations on to
Speaker 1: to get enough traction that you can officially move on
Speaker 1: the lobby. But you know, we have this. We've got
Speaker 1: a revamp how we look at labor in this country.
Speaker 1: We we have a we have a an entry level gap.
Speaker 1: The labor shortage was happening in our space long before
Speaker 1: the pandemic. I was, I was doing presentations in talking
Speaker 1: about labor shorter staffed, never never, you know, and then
Speaker 1: and then we we we did all this this immigration
Speaker 1: stuff in the wall and all this kind of stuff.
Speaker 1: Then we had the pandemic. You know, if you look
Speaker 1: at you know you're a finance guy. Look what what's
Speaker 1: happening in England with Brexit? I mean, who whose economies
Speaker 1: and worst shape in Europe? England because they know bodies,
Speaker 1: they know they cut their immigrations. Now they have their bodies.
Speaker 1: They're the worst inflation of any country. Conversive, we we have,
Speaker 1: you know, this dearth of of available staff that we
Speaker 1: wanted to work in our spaces. And it's like you're
Speaker 1: either you know, the entry level of the run of
Speaker 1: the letter or your or your white collar executive. You know,
Speaker 1: you're inside some company and we need to develop a
Speaker 1: class of worker. Um it's kind of project of working
Speaker 1: onto It's not not fullid based, but we need to
Speaker 1: we need to reform the labor model so that we
Speaker 1: can develop a class of worker that we can have
Speaker 1: some kind of pay scale around if you will have
Speaker 1: some kind of training regiment, apprenticeship regiment around, have some
Speaker 1: type of portable minimal safety, that portable benefit structure around,
Speaker 1: and then have the text code appreciate that and create
Speaker 1: this worker that's in this hybrid between what we have
Speaker 1: now the traditional FTE and a salary position. I think
Speaker 1: I think the economy, that modern economy has evolved passed
Speaker 1: our old fashioned way of classifying in treating work. I
Speaker 1: think it's a huge issue that this industry should be
Speaker 1: leading finding the next way. I don't have only answers
Speaker 1: about the next way is I just know that it's
Speaker 1: this gap. And so if you're twenty year old my
Speaker 1: kalent and you know you're you're you're walking into you're
Speaker 1: looking for your first job, We're gonna lose everybody to
Speaker 1: Amazon because we don't have We're not competitive on the
Speaker 1: wage front, we're not competitive on the benefit front, we're
Speaker 1: competitive on the training front, and we're losing people out
Speaker 1: of the industry. Isn't that we're losing Burger thing is
Speaker 1: not losing them to Popeye. It's we're all losing them
Speaker 1: to Amazon and other industries because there's this eCos structure
Speaker 1: around them that we have not formulated. And I don't
Speaker 1: think we're going to do that. I don't think companies
Speaker 1: are gonn do that on their own. But there's a
Speaker 1: way we can maintain our competitiveness by kind of creating
Speaker 1: that space in the labor code. And I think, you know,
Speaker 1: that would be a ten year process, but it's something
Speaker 1: we could actually contribute a great deal of that conversation,
Speaker 1: the expertise and before something and have a very different
Speaker 1: conversation about how wages and benefits fit in to the
Speaker 1: overall thing. That's a big issue I think. I think
Speaker 1: on the recycling, you know, how about we say, really,
Speaker 1: let's recycling comes this. You know green you know Bernie
Speaker 1: stand standal were an issue, but man, it's a it's
Speaker 1: a it's an economic issue. You're your governor, your mayor,
Speaker 1: you're running out of land and barry trash right, Chinese
Speaker 1: won't take our stuff anymore. We were we we have
Speaker 1: an economic need. We're going to deal with this stuff. Um.
Speaker 1: I think the industry, especially so much waste and it's coming.
Speaker 1: There's no way, it's not coming. So we can either
Speaker 1: kind of, you know, be in charge our own fate
Speaker 1: or we can let it happen to it. And we've
Speaker 1: seen with some of these producing responsibility bills in log
Speaker 1: In Maine and other places, it's it's happening. I think
Speaker 1: we have to control our own destiny in that space.
Speaker 1: And I think I think the energy kind of renewable
Speaker 1: energy space. You know, we're talking about natural gas bands
Speaker 1: and you know, I just think there's a lot of
Speaker 1: big picture issues that we that that we should really
Speaker 1: be um a voice in, and we still kind of
Speaker 1: play small ball on some of these unit level in
Speaker 1: Nicol what I would consider Nicol dimond just scheduling or
Speaker 1: you know, real breaks, all this kind of stuff, Like, man,
Speaker 1: we gotta revamp our entire labor structure if this industry
Speaker 1: is going to continue to survive and without being completely automated,
Speaker 1: because we're losing our workers to other industries. So I
Speaker 1: think that's a there's things that I think idea for
Speaker 1: you know, and and you know, for me, a federal
Speaker 1: minimum wages. It's like it's archaic, right is A is
Speaker 1: a sixteen year old that's starting at his first day
Speaker 1: Adam McDonald's worth what a two year old is at
Speaker 1: his first day at McDonald's. Is that sixteen year old
Speaker 1: working in say, Arkansas, you know, does he deserve the
Speaker 1: same pay as a sixteen year old in California? Right,
Speaker 1: So just having one blanket wage for the entire country
Speaker 1: doesn't make sense. And we know that you're really just
Speaker 1: legislating against those states that are you know, paying that
Speaker 1: have lower minimum wages uh statewide right. Um, So to me,
Speaker 1: it just seems like an archaic way to try to
Speaker 1: lift wages, right. That has to be a better way
Speaker 1: to do it. Yeah, And I kind of follow, even
Speaker 1: though I don't. I don't work in the space uber
Speaker 1: lift you. They're not my clients, but I do watch.
Speaker 1: You know, they are a hybrid of our labor model.
Speaker 1: You know, they are independent contractors as drivers by and large. Um,
Speaker 1: they're not full time employees that our employees. They are
Speaker 1: operating intentionally in this gray area. And you're seeing Australia
Speaker 1: played with some some ideas that there's a kind of
Speaker 1: a beta project going on on Ontario right now about
Speaker 1: a kind of portable benefits reasim for this class of workers,
Speaker 1: and some wrap around facing that, and you know, Uber
Speaker 1: and Lifts are probably doing it to retain drivers and
Speaker 1: keep regulators off the back, right. But in that model,
Speaker 1: there's there's there's So if you're that sixteen year old,
Speaker 1: you know, let'st's say you're an eighteen year old, you're
Speaker 1: high school graduate. You know, you're in school, you're you're
Speaker 1: training for X. You don't have healthcare, blah blah blah.
Speaker 1: If we could, if we could say, look, we're gonna
Speaker 1: classify Mike Calon as a schedule P worker whatever you
Speaker 1: wee I would call it. But here's that pay band.
Speaker 1: He can make between thirteen and sixteen bucks an hour
Speaker 1: depending on what he does. He's only gonna work thirty
Speaker 1: hours a week. But we're gonna contribute like Social Security,
Speaker 1: like any other employer, We're going to contribute some piece
Speaker 1: of his paycheck to a portable benefits scheme so he
Speaker 1: has paid lead where he can goes to see a doctor. Uh.
Speaker 1: You know, we're gonna work with the state in their
Speaker 1: workforce development training programs. We're gonna make sure Mike's and
Speaker 1: those that he's building skills so that all this wrap
Speaker 1: around around that worker. We could probably start retaining some
Speaker 1: workers in the future. Um, but we've got to get
Speaker 1: out of the box of thinking about just by human
Speaker 1: and ways to get in, which we've been doing for
Speaker 1: four years. So long, long winded answer to a short question.
Speaker 1: But those are those are things we think about. Yeah,
Speaker 1: some great topics. Um, all right, So I was reading
Speaker 1: an article this morning about shareholder proposals targeting political expending
Speaker 1: are expected to kind of ramp up this year. Um.
Speaker 1: You know, you know, I was thinking of Michael Jordan
Speaker 1: at the time. It's like, if you're a restaurant, I'd
Speaker 1: want to be Michael Jordan, right. I wouldn't want to
Speaker 1: make my political affiliations, knowing right, because I don't want
Speaker 1: to piss off half my potential customer base. But you know,
Speaker 1: maybe that's me. But what's your advice to your clients
Speaker 1: about making political donations in such a charged environment? You know,
Speaker 1: that's that's such a great question. I think there are
Speaker 1: ways to you spend either corporate dollars or personal political
Speaker 1: dollars or pack dollars ever you want to whatever jar
Speaker 1: you want to pull them to impact public policy. Uh,
Speaker 1: in a more effective way now than giving Congressman and
Speaker 1: Michael Halen five thousand bucks in this fundraiser. I think
Speaker 1: that's a that's a relative path, right, But there are ways,
Speaker 1: um to either through policy organizations, you know, partnering with
Speaker 1: the national governor. I'm just making it up. He's making them,
Speaker 1: you know, but you know getting you know, if instead
Speaker 1: of having a three hundred thousand dollars to a bunch
Speaker 1: of congressmen that are can't even pick a speaker, Um,
Speaker 1: why aren't you three hundred thousand dollars to the US
Speaker 1: Conference of Marriage to come up with a business friendly
Speaker 1: recycling program, you know, whatever that is. I think they're
Speaker 1: ways for dollars to impact the process other than the
Speaker 1: way of here's a check for we're gonna go off
Speaker 1: fundraising or I'm gonna stand around our studits in our
Speaker 1: cocktail and he's gonna tell us what we want to hear.
Speaker 1: And you know, Mike, I love the convenience story industry.
Speaker 1: If you're the greatest employers a way a restaurant, I
Speaker 1: love the restaurant industry. You're the greatest. I mean, there's
Speaker 1: a wind up, right, It's just such an antiquated way
Speaker 1: to do stuff, and I think they're better used to
Speaker 1: our So I think a lot of companies. You've seen
Speaker 1: companies on our industry closed down their facts, right, Um,
Speaker 1: because in the way, in the wake of the Citizens
Speaker 1: United case, was that two thousands twelves? Maybe? Yeah? The
Speaker 1: driving force and American political money are find net worth
Speaker 1: an individual, you know, and when you know, millionaire X
Speaker 1: can write a thirty million dollar checking this fun a
Speaker 1: millionaire I can write a thirty minute what is company
Speaker 1: wise checking? Mike Hallen, it's a joke, you know, it
Speaker 1: doesn't even matter. So I think I think we have
Speaker 1: to re examine our political business model. Um, it's been
Speaker 1: you know, actress being for a long time. I don't
Speaker 1: think pack is the way. But you know, the restaurant industry,
Speaker 1: by and large, we we have and we just doubled.
Speaker 1: And I'm not complaining your point of fingers, but we've
Speaker 1: struggled for years to harness our biggest political striketh, which
Speaker 1: is our footprints. Right. There's no you can't draw a
Speaker 1: legislative municipal city council, you know, dog catch your district
Speaker 1: small enough that it has doesn't have a much of
Speaker 1: restaurant in it, right, and we if we could ever
Speaker 1: mobilize that grassroots army, we really wouldn't need to play
Speaker 1: with bouts, but we haven't been able to do that. Again,
Speaker 1: to your point where such a spread out industry, you know,
Speaker 1: I've always kind of said, we're not an industry. We're
Speaker 1: just an archipelago of billions of tiny little island out there,
Speaker 1: and it's hard to it's hard to be a nation
Speaker 1: sometimes when you when structures like that, and that's our grassroom.
Speaker 1: I've always said that we should, you know, we should
Speaker 1: organize ourselves more like an interest groups, more more like
Speaker 1: interest groups and trade associations because of our footprints so
Speaker 1: spread out. We're on a capital tensively labor intensive, and
Speaker 1: you know, I would I'd rather us act like the
Speaker 1: the the the National Rifle Association and stead of the
Speaker 1: National Restaurant Association in terms of being a grassroots army
Speaker 1: based you know entity and um, you know, a RP
Speaker 1: or whatever. It always thought that was a better model
Speaker 1: for us, but that would take thirty years to change too.
Speaker 1: But they we're always been working with the scenes like that.
Speaker 1: That's the case though, right, yeah, yeah, you know, And
Speaker 1: and so it's hard because you know, in a lot
Speaker 1: of a lot of industries, you know, the employees and
Speaker 1: the managers on a lot step want a lot of issues.
Speaker 1: We've never enjoyed that in the industry. We always tend
Speaker 1: to be kind of cross purposes with our employees on
Speaker 1: political issues. So it's harder. We've got a lot of
Speaker 1: operators out there and a lot of restaurateurs out there.
Speaker 1: We should have millions of voices on issues, you know.
Speaker 1: And then going back to fast Act, we're starting this conversation.
Speaker 1: You know, we had major, major employers that have major
Speaker 1: operations in California in five or six California based but
Speaker 1: did almost nothing on on on Fast actors of you know,
Speaker 1: weighing into the conversation and getting their franchisees or people
Speaker 1: into those meetings. We we didn't get out spent in
Speaker 1: California out lobby. We've got out political. We got out grassrooted,
Speaker 1: you know. And and um, that's that's the worry for
Speaker 1: these other states is in California if you think about it,
Speaker 1: and I know we're probably running over your time here,
Speaker 1: but um, there was while the political bar was very high,
Speaker 1: you know, in terms of the Union's strength in California,
Speaker 1: how much dominant they have over the government process there.
Speaker 1: That was the high water mark for our organization as well.
Speaker 1: I mean, we have lots of companies based in California.
Speaker 1: Every brand's got operations. We had, we have a huge
Speaker 1: industry footprint in California, and we didn't realize, you know,
Speaker 1: in this fight, right, we're not set up that way
Speaker 1: in Washington and Oregon. We're not set up that way
Speaker 1: in a lot of these New York, a lot of
Speaker 1: these states. And so we if we underperformed in California
Speaker 1: with the playing field as it was, man, we could
Speaker 1: be in a world of hurt in some of these
Speaker 1: other states. So it's be interesting to see how all
Speaker 1: this plays out. All right, Well, fingers crossed for for
Speaker 1: good outcomes for our restaurant listeners. Man, Uh, we're gonna
Speaker 1: leave it there. Jed, you're great, Thank you so much
Speaker 1: for doing this again. Where can um members of the
Speaker 1: audience find you if they're they're seeking your public affairs knowledge? Uh,
Speaker 1: feel free to call us that Aligned Public Strategies and
Speaker 1: it's Joe dot keep op or K E F A
Speaker 1: U v E R at Align Public Strategies dot com.
Speaker 1: Happy to uh engage any conversation, answer questions, whatever I
Speaker 1: can do to help move the ball forward. My friends,
Speaker 1: as do you. So appreciate all you do. Mike. Uh.
Speaker 1: You have a great gift of taking very complicated stuff
Speaker 1: and making it user friendly and simple. And I love
Speaker 1: reading your stuff because it's one of the few things
Speaker 1: I can understand. So I do appreciate all that you
Speaker 1: do as well. So good as you thing. I'm glad
Speaker 1: you find it useful. Man, Well, listen, you're the man.
Speaker 1: Thanks again for doing this. We'll speak soon, right, Thanks
Speaker 1: for listening, and all right, Joe, Thanks man, You're great.
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