Trump making tips tax-free would be ‘huge’ for the restaurant industry: Robbie Felice

All right, what is the restaurant term for nomas these days? Hooters. The latest to abruptly close dozens of restaurants all around the world in the face of higher prices, hammering not only their diners, but the restaurants themselves. This on the heels of Red Lobster filing for bankruptcy, Cracker Barrel looking at some Closings of its own. So we thought we'd assemble a group of top restaurant tourists to get a sense of what's happening in their shops and what they're seeing with their customers, including Andrew Gruelly, chef and restaurant owner and Hunt in California. We've got Robbie Felice, the James Beard rising star, chef Laura Ray Dickey back with us. Dickey's BBQ Pit CEO Laura Ray ended with you begin with you because you're everywhere and and you can feel the pinch pretty much anywhere, I guess, as can your customers. How do you deal with this? You know, it's tough times. It truly is. It's maybe the toughest that I've seen in my career, but there's always hope because we have great folks in the restaurant. What we can absolutely feel though is inflation all over the place. We can absolutely feel the rising cost of Labor and we're seeing that, you know, and, and we definitely have seen that pinch and especially in markets with the highest minimum wage requirements and especially in markets where we have just overall the toughest inflation. Our California market is very much out of control compared to some of our other markets, but we are seeing it. It's tough times, but we're, you know, we're very off, but it is certainly challenging. Andrew, you're dealing with that in California, I believe in Huntington, right? Can you tell us a little bit about that? And of course, the higher hourly wages that have gone into effect in your state. Well, everything's gone up. I mean, it's not just the higher hourly wages, it's the fact that you can't even hire anybody that's the problem is because everybody thinks big daddy government's going to come bail them out, number one. Or if you're looking for entry level workers, they all think they're going to be the next YouTube star, Mr. Beast. So nobody actually wants to work. If they do come in and work, they work for maybe one day and then they quit and they don't show up the next day after that. Plus you got to spend so much money trying to avoid the lawsuits because nine out of 10 employees in California are going to sue you under the PAGA, you know, debacle. So it's just an absolute diaper fire in California. And then you got people talking about, oh, you know what? The, the inflation went down by one point when it's like, OK, we only failed this month, but we failed a little bit worse or better than we did the previous month. It's still a failure. So what do you do? I mean, you move out of states where it's crazy or you actually educate people, right? I mean, that's what we're doing is, is that we're in a really great area in Huntington Beach, and we're educating consumers about how we're serving the right types of food and why the costs are the way that they are. And you actually make it more of a community environment and get people in there like a real public square talking about things. And you just give good food, good customer service, but you got to work it yourself. I ran 35 restaurants prior to this, but I'm only going to open one restaurant right now. Not in California or not in any of these cities in which they're trying to drive businesses out. So you got to make strategic decisions. Robbie, what do you do? I've said it before, I'll say it again, kind of got to get creative, you know, give people value for what they're coming in for. Give them something that gets them excited to spend money at your establishment. You know, these guys both said it said it great that there is a lot on us these days. And I think that giving people the ability to come in, spend money, get value for their money, that's what's on us as business owners. You know, you, you all are destination dining spots in different ways. So, so your customers are loyal to the extent that they can be. But I, I want you to to listen to something Donald Trump came up with when he was campaigning recently. Maybe it would affect your workforce if this came to pass. This is Donald Trump talking about service workers. I will eliminate taxes on tips for restaurant workers and hospitality workers. You know, they earned it. A lot of people don't get tips. You don't like the service, you don't give them anything, right? But somebody does a good job, they're supposed to pay tax on it now. So we're ending that immediately, effective immediately when we get in. How would that affect you, Robbie? It would be definitely would be huge for the restaurant industry. I think that, you know, bringing staffing in this would help a a great deal and I could see it definitely being a huge win for restaurants. You know, Laura, I do wonder in in your case, of course, it it it, it could cut a variety of ways, right? I mean, that might be an incentive for workers to stay longer or it might not be. So how would a move like that affect your staff? Actually, I think government's hands opportunities is a great thing. It would definitely benefit for us. And we're not a minimum wage tipped restaurant. Everyone in our restaurants are above minimum wage and we're not at a tipped rage by any means. You know, we have a higher minimum wage, a higher than minimum wage hourly for everyone in the restaurant. So we're not at 2:13 or, or anything like a tipped employee and they would still benefit. So again, it allows us to be competitive. It allows us to truly incentivize great service. It's great retention for our folks that have to come in to work to really incentivize. It does all really good things. So we're very pro government's hands off gratuities. That's great for everybody involved. How about you, Andrew? You, you mentioned earlier, I mean, you, you, you could still pay top dollar and, and, and whatever California requires or various California cities require. But it's keeping the help that, that, that, that, yeah, the devil of time with I would imagine, whether there's a tax on those tips or not. Yeah. I mean, look, it's a great campaign slogan, but we all know it's not going to happen because even if the state's lost that tax revenue, then they're just going to put it right back on the business. I, I guarantee you that if they remove taxes on tips, which by the way, I don't think people realize that you that the business pays, pull full payroll taxes on the tips themselves. So the amount that we have to pay, our servers are making upwards of 60 to $85 an hour some nights. We're paying taxes on all of that. So yeah, it's great. I mean, remove the payroll tax so that the server can put more money in their pocket. I totally agree with that because I actually think that they, we, they need to be paid more in a lot of cases, especially minimum tipped wage restaurants. But The thing is, the governments are going to say, well, we lost that revenue, so now we're going to double it. And the restaurants are going to have to pay payroll taxes on that to cover up for the loss. I guarantee you. As if COVID weren't tough enough on you guys, right that that was just a preview coming attractions, guys. Thank you all very much. Continued success because you're somehow bucking the trend. Andrew and Robbie and Laura Ray in the meantime.