Job growth on the menu Approximately 135,500 jobs are expected to be added in Orange County during the 2008-2018 time frame. Of those, more than 9,100 – or nearly 15 percent – are expected to be food and beverage servers, making it the fastest-growing occupation in the county. Bruxie alone has created 160 full- and part-time jobs in O.C. since opening its first location in 2010.
Many more jobs are needed, though, to restore the pre-recession employment rate. Besides the poor economy, job creation in the business sector has been further stalled by California’s aggressive regulatory environment and high income taxes. The high cost of doing business has earned the state the title of the Most Unfriendly Place to Do Business. In Chief Executive magazine’s eighth annual survey of the Best and Worst States in which to do business, California ranked last for the eighth consecutive year.
The California Restaurant Association, which serves as a voice for the industry, works to keep restaurant operators informed about the latest rules and regulations affecting their businesses. It also serves as a major voice for the industry, advocating on behalf of the sector at the federal, state and local levels.
“A lot of the issues and debates have moved from Washington to the state capitals to the major metropolitan areas,” says Jot Condie, president and CEO of the California Restaurant Association.
Many of the major metropolitan areas are leading the way in the arena of aggressive and creative policymaking. Santa Clara County and the city of San Francisco, for example, have passed “toy bans” that prohibit restaurants from giving away toys in kids’ meals in an effort to curve climbing obesity rates. This November, San Jose residents will vote on Measure D, which increases the minimum wage 25 percent to $10 per hour starting on March 1, 2013.
A proposition for California Statewide, voters this month will determine the fate of Proposition 30, an initiative that would raise new state revenue through temporary increases in the state sales tax and the personal income tax on those who earn $250,000 or more per year. And the biggest mandate that’s looming on the horizon, the Patient Protection and Affordable Care Act, requires employers with 50 or more full-time employees to provide healthcare coverage. (Part-time employees are also included in the calculation: Two part-time employees will count as one full-time employee.)
“Restaurant owners have to absorb many of those costs because they know if they increase prices too much, they will reduce customer traffic,” says Condie. “It’s eating into their profits, and it’s making the viability of surviving as a restaurant owner tougher and tougher each year.”
Profit margins for the restaurant industry, which usually range between 3 and 5 percent, are tighter than the margins in many other businesses. At the height of the recession, many restaurants operated in the red. With limited or no access to capital, some owners turned to their personal savings and took out second mortgages to stay afloat.
“People are managing their [food bills] more carefully when they go out, hence the popularity of happy hour, small plates and a lot of specials,” says Phyllis Ann Marshall, founder and president of FoodPower Inc., a Costa Mesa-based consulting firm. “There’s a decline in traditional restaurants in regular beverages, appetizers and desserts, so the profits are not there for the restaurants.”