Restaurant Group Addressing Issues From Inspections to Minimum Wage
The California Restaurant Assn. has been helping the state’s eateries since 1906, lobbying and providing business support services such as insurance and discounted supply networks. Membership in the private, not-for-profit organization numbers around 15,000. CRA President and Chief Executive John Dunlap recently spoke about the group’s lobbying efforts and the menu of services it offers.
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Q What services do you provide for your members?
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A First of all, you should think of membership in the California Restaurant Assn. as being like a discount or benefit club, whereby you can show your membership to vendors and suppliers and it will have some value, such as better rates, discounts or special treatment.
We work with insurance companies, companies that process payroll checks, companies that sell lightbulbs. We even have a company that sells music licensing because the music that is played in restaurants has to come through proper music-licensing channels. We have a Realtor. We can get restaurant security systems installed.
Savings can go anywhere from 5% and up; sometimes we can get a 15% to 20% discount from wholesalers, suppliers, insurance brokers, etc. These are relationships that we have gone out and cultivated ourselves over many years.
The insurance issue is a big one for us. There’s a CRA insurance program, and it is the only for-profit subsidiary that we have. We sell workers’ compensation insurance, property liability and casualty products. Through our insurance broker team, you can buy health insurance for you and your employees. You can get the whole array of insurance products through our association and get better value.
Restaurant owners pay between $250 and $2,500 annually for membership, depending on their revenue.
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Q What advice do you have for people looking to open their own restaurant?
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A Just like the Boy Scouts: Be prepared.
Pay attention to the business side. Negotiate a good lease. Be in a good location. There are folks you can talk to that will help you find a location and a lease that will have favorable terms. You need to pay attention to the rate you’re paying per square foot and how many years your lease will be for.
Are there escalators in the lease: is it going to bump up? What’s the location look like, and what will it look like tomorrow? Is it on a street corner with a lot of traffic or is it in an industrial park that’s hidden away? What kind of traffic is there? What does the competition look like? Having a quick-service hamburger stand across the street from a McDonald’s is probably not a wise thing to do.
As for cuisine, you need to look at your food costs. What is going to be your signature item and what are you going to charge for it? How long is it going to take to prepare? You need to look at all those things.
You’ve got to remember it’s a buyer’s market out there. Every street corner today, it seems, has two or three restaurants. How are you going to stand out? How are you going to be different? Pay attention to what kind of cuisine you offer. Is it new? Is it original? Is it properly priced? How many meals are you going to offer a day? Is it going to be a breakfast/lunch kind of a thing or is it just going to be dinner? All of those things matter.
But first, learn all you can from someone else; don’t try to start a restaurant cold. Work for someone else and learn the business. Talk to people; ask questions.
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Q What are some of the issues that CRA has been lobbying for and against?
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A The governor just signed a bill we sponsored that will provide for uniform restaurant inspection standards. Prior to this, you had 58 counties with individual standards. The bill will especially benefit multiunit restaurants that have locations in different counties.
In County X, for example, if your hot water faucet wasn’t set at 109 degrees, you’d get dinged. But in County Y, it may not even have been on the inspection criteria. Now the state will provide guidance and direction to all the jurisdictions so they will be using the same criteria.
We’ve also been active in the workers’ compensation reform effort that’s been led by the Californians for Compensation Reform. Reform would ensure there’s adequate protections to stop small businesses and our members from being taken advantage of. There’ve been some abuses there. A workers’ compensation increase has been proposed and we’re opposing it.
We’re very active in other small-business issues. For example, we feel there’s been some abuses in the Americans with Disabilities Act. We’re calling for federal reform and there’s a bill in Congress that we have been advocating support for.
The goal of the Americans with Disabilities Act is to provide for equal access, but some of the lawsuits that have been filed are doing more to benefit trial lawyers. In San Diego County, 20% of all restaurants have had ADA suits filed against them.
Restaurateurs are smart businesspeople. They don’t want to limit the ability of a customer to come dine with them. They’ll do just about anything reasonable to ensure that they’ll want to come.
In addition, we want to see some modifications in inheritance taxes. And locally we’re opposed to current proposals for a living-wage ordinance in Santa Monica and new tourism taxes in Santa Cruz. The Santa Monica proposal is just being applied to one small area along the coast, and it’s punitive to people who happen to be in that area. Santa Cruz is going to have a bed tax for tourism applied to hotels which will limit tourism, and we think that’s a bad idea.
There’s also a proposal before the state Industrial Welfare Commission to increase the minimum wage, and we don’t want to see an increase to the levels they are talking about. We are calling for reasonableness.
Most restaurateurs are netting somewhere between 3% and 7% of the gross from their business. These people are not fat cats; these are small businesses that frequently fail. The U.S. Chamber of Commerce did a study not too long ago that showed that restaurants fail at a 28% higher rate than other small businesses. Added regulation, added requirements, added taxes all have a way of coming out of that 3% to 7%.
It’s our hope we will see a change in attitude in the regulatory community. Restaurants and other small businesses are not able to weather an increasing onslaught of new requirements, whether they be record keeping or requirements for new equipment or the labeling of genetically modified foods. We think those kinds of things are silly.
The California Restaurant Assn. can be reached at (800) 765-4842 or on the Internet at https://calrest.org.
