Latest news with #restaurantindustry
Washington Post
2 days ago
- Business
- Washington Post
D.C. has too many restaurants. It's time for some to go.
The debate about the elimination of the special minimum tipped wage, as was noted in Marc Fisher's May 23 op-ed, 'In D.C.'s new world of eating out, when is a service fee a tip?,' ignores an inconvenient truth: D.C. has too many restaurants. I live in the Palisades. In my neighborhood, within three blocks of my house, there are six restaurants. If I extend that range to a still-doable 15-minute walk, there are four more. But I don't have a drugstore within that three-block radius, or a hardware store, or a bookstore, or a full-service grocery store. Restaurants make so much money that they can afford to pay higher rents than other kinds of stores, and the result is less variety in the local commercial market.
Telegraph
3 days ago
- Business
- Telegraph
Trump is about to send tipping culture into overdrive
'When I get to office we are not going to charge taxes on tips, on people making tips,' Donald Trump promised on the campaign trail. 'If you're a restaurant worker, a server, a valet, a bell hop, a bartender, one of my caddies –your tips will be 100pc yours.' The billionaire president has stayed true to his promise. The bulk of the tax cuts outlined in Trump's 'big, beautiful' tax and spending bill, currently before the Senate, reward the wealthy. But one populist clause within the legislation is a plan to scrap federal tax on tips – one of Trump's key campaign pledges. The tax break is popular with US service workers – everyone from hairdressers to restaurant staff – but may not be so popular with customers. American tipping culture is already in overdrive, and people hate it. A policy that was once the sole domain of the restaurant and hospitality sector has rapidly proliferated since the pandemic. Takeaway coffee orders now prompt demands for a few bucks extra and even stopping by a news-stand for a paper or some gum can lead people to pay an extra 20pc on their bills. Many Americans have noticed this creep and don't like it. As one Reddit user put it online: 'What the f--- am I tipping for? Is it not bad enough that I just paid over $5 (£3.7) for a small bottle of water?' Trump's tax break is likely to push a wave of new jobs to adopt restaurant-style tipping policies and will incentivise businesses to restructure their employees' pay, so that they receive a larger proportion of their income from tips. Maurice Obstfeld, former chief economist at the International Monetary Fund, says: 'Number one, this is going to induce new employers to classify more compensation as tips.' It may already be happening. Chris Bakke, a San Francisco entrepreneur and investor, wrote on X recently: The message, which may have been a joke, was in response to news that the US Senate had passed the No Tax on Tips act – a bipartisan bill proposing a tax deduction of up to $25,000 for cash tips. It is separate to the president's proposals, showing the broad support for the policy across the political spectrum. My barber just offered me a $1 haircut if I tipped him $50. — Chris Bakke (@ChrisJBakke) May 20, 2025 $15bn bill Both Republicans and Democrats present the policy as a boost for blue-collar workers. However, economists warn that people could end up with lower baseline pay as a result of the changes, putting more pressure on customers to top up earnings. That means even more social pressure and financial pain at the checkout. The plans laid out in Trump's tax and spending bill offer the same level of tax break as the No Tax on Tips act. Under the current law, staff are required to report tips to their employer if they total $20 or more in a single month. Businesses then include the tips in salary calculations – withholding federal income tax, social security tax and Medicare taxes. The new exemption will only apply to tips paid in cash, not by card. Workers must earn less than $160,000 per year to qualify and be working in occupations that 'customarily' receive tips. The US Treasury will publish a list of these occupations when the bill is passed into law. The total cost to the public purse will be around $15bn per year. The impact on American consumers and tourists visiting the US will also be huge. Abir Mandal, senior policy analyst at the Tax Foundation, says tax exemptions on tips will create 'perverse incentives' for employers. It will encourage businesses to make employees source more of their wages from tips, with a lower proportion from their salaries. Expectations for tips could also become far more widespread, and bigger. Chris Edwards, a tax expert at the Cato Institute, a libertarian think tank, says: 'I think different job types will shift their types of compensation. You can think of all kinds of professions where it could become more normal.' Luggage handlers at airports are an obvious potential example, says Mandal. 'They are given a salary. You can give them like $1 or $2 for carrying a bag, but in general they are paid a wage. If this thing takes off, perhaps their income could be reconfigured so that they would make a lower wage but expect a larger tip per bag.' Covid tipping point Tipping has always been the norm in US restaurants, but something changed during the pandemic. More people had food deliveries and wanted to show their appreciation for drivers, widening the tipping net. At the same time, wage growth accelerated sharply as the economy reopened but restaurant bosses and other small business owners struggled to match it. As a result, demands for tips grew. 'The expectation of tipping has grown quite dramatically,' says Stephen Barth, an attorney and hospitality law professor at the University of Houston. 'It was already growing and then during Covid it expanded exponentially.' The share of bakeries asking for tips has soared from 36pc to 49pc in the five years to July 2024, for example, according to analysis of payroll data by Gusto. Among coffee shops, the proportion has jumped from 56pc to 72pc. 'For a lot of small businesses, they run on very tight margins, which means that owners couldn't always raise wages. Tips let them pay more to their employees without hitting their budgets,' says Nich Tremper, senior economist at Gusto. The growth of electronic payment terminals, such as Square, has also made it easier to request tips. Whereas with cash it was up to a customer's discretion, now they are confronted with a menu of tip options and have to actively opt out. Even some card machines now have this as the default option. Tips are even now entering shops. The share of retail businesses using tips as part of their employees' pay nearly doubled in the five years to July 2024, rising from 3.86pc to 6.6pc. One in six health stores, 16.2pc, now pay their staff partly in tips. If Trump's bill passes, tipping will become even more important to staff wages, but potentially also more irritating to give. 'Only cash tips will be untaxed if this legislation passes. There may be added pressure on consumers to pay tips in cash. It'll make things awkward. And people already hate tips in America,' says Mandal. The change to federal tax policy is likely to trigger a wave of similar policies at a state level, he adds. States typically try to conform their own taxable income in line with federal policy. That may sound good for workers. But Barth says it amounts to just a 'subsidy for employers'. The tax break will reduce pressure on employers to raise wages and companies could actually cut workers' base pay as a result, demanding they make up the difference through tips. It hits at the heart of what many customers dislike about the recent transformation in tips. What was once a way of showing appreciation for good services has transformed into an expectation with no real link to the quality of experience. If you don't tip, it's not a sign that you're unhappy with the service – it's a signal you're a bad person. Obstfeld is scathing: 'This was a campaign promise that was made to essentially pander to voters and the economic rationale for it is basically nil.' The public may soon share his anger as demands for tips mount up.
Yahoo
7 days ago
- Business
- Yahoo
3 Stocks to Buy on Growing Restaurant Sales Amid Price Challenges
U.S. retail sales have had a roller-coaster ride over the past few months as tariff fears and high inflation have compelled consumers to spend cautiously. However, that hasn't stopped consumers from spending lavishly at restaurants and bars. Sales at U.S. restaurants and bars have grown at a solid pace, except for occasional hiccups. Also, trade war tensions have eased substantially, and inflation is finally showing signs of cooling, which are likely to boost the restaurant industry in the near term. Given this scenario, it would be wise to invest in restaurant stocks such as BJ's Restaurants, Inc. BJRI, Wingstop WING and CAVA Group, Inc. CAVA. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Commerce Department reported that sales at U.S. restaurants totaled $99.4 billion in April, up 1.2% month over month after increasing a solid 3% in March. Economists view dining out as a key indicator of household finances. The solid jump in April indicates that the economy is still on solid ground, and despite price challenges, consumers are willing to shell out more at restaurants and bars. The jump in retail sales is being backed by a steady rise in retail sales. Retail sales rose 0.1% in April after jumping 1.7% in March. Inflation has also started showing signs of cooling lately. The consumer price index (CPI) rose 0.2% in April after falling 0.1% in March for the first time since May 2020. Year over year, CPI increased 2.3%, the smallest gain since February 2021. The April reading suggests that inflation is on track to reach the Federal Reserve's 2% target. Also, consumers were worried about the impact of sweeping tariffs announced by President Donald Trump in early April. However, he has since temporarily paused the tariffs and said that negotiations are ongoing with several countries. This has somewhat eased trade war tensions. Also, investors are hopeful that slowing inflation could see the Federal Reserve resume its rate cut campaign in September, which definitely bodes well for the restaurant industry. BJ's Restaurants, Inc. owns and operates a chain of high-end casual dining restaurants in the United States. BJRI's menu offers a wide range of dining options, including everyday lunch and dinner, special occasions and late-night business. BJ's Restaurants' expected earnings growth rate for the current year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 9% over the past 60 days. Presently, BJRI has a Zacks Rank #2. Wingstop franchises and operates restaurants. WING's operating segment consists of the Franchise and Company segments. WING offers classic wings, boneless wings, as well as tenders that are cooked-to-order, and hand-sauced-and-tossed in various flavors. Wingstop's expected earnings growth rate for the current year is 6.3%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. WING presently has a Zacks Rank #2. CAVA Group, Inc. is a category-defining Mediterranean fast-casual restaurant brand, which brings heart, health and humanity to food. CAVA is based in Washington. CAVA Group's expected earnings growth rate for the current year is 38.1%. The Zacks Consensus Estimate for current-year earnings has improved 5.5% over the past 60 days. CAVA currently has a Zacks Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report Wingstop Inc. (WING) : Free Stock Analysis Report CAVA Group, Inc. (CAVA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Bloomberg
22-05-2025
- Business
- Bloomberg
Bloomberg Masters In Business: Ron Shaich
Barry speaks with Ron Shaich, co-founder of Au Bon Pain and founder and former chairman and CEO of Panera Bread. A key part of building that brand, today Shaich is a lead investor in Cava, Tatte, Life Alive and Level99, continuing a long and extensive career in the restaurant and fast casual business. He's credited with defining the fast causal segment. Shaich makes his investments through Act III Holdings, a more than $1 billion evergreen investment vehicle. Shaich has twice been recognized as an Ernst & Young Entrepreneur of the Year, selected as the 2018 Restaurant Leader of the Year and was presented the prestigious Nation's Restaurant News Pioneer Award as one of the most significant contributors in the history of the restaurant business.
Washington Post
21-05-2025
- Business
- Washington Post
In D.C.'s new world of eating out, when is a service fee a tip?
In 2022, D.C. voters approved Initiative 82, a ballot measure that makes restaurants take more responsibility for paying their tipped workers instead of having wait staff rely on customers' generosity. But after two years of operating under the new system, in which restaurant workers get a minimum of $10 per hour rather than the old tipped wage of about $5 an hour, there's trouble in the eateries of the capital city. Dining out in the District has become akin to flying on Spirit: The price is rarely the price. When the check comes, it's often so laden with explanations of new service fees — levied by restaurant owners trying to afford the new pay scale — that bills now rival CVS receipts in yardage.
