It may seem hard these days for Dunkin’ Donuts franchise owners to catch a break, with everyone from the federal government down to the local city council taking aim at the quick service restaurant industry.
But Dunkin’ and other franchise owners got a big reprieve recently when the Food and Drug Administration gave the boot to a looming deadline that would have required calorie counts beside each and every menu item.
The step back from the calories counting craziness comes at a crucial time, with restaurant owners across the country scrambling to keep up with a flood of new government mandates that will only intensify as we head deeper into 2016.
Franchise owners face growing proposals by city and state governments to boost minimum wages, mandate paid sick leave, micromanage workplace schedules and require the disclosure of sodium as well as calories.
“It is very difficult for any single operator to absorb a lot of these mandates that are coming down the road,” according to David Henkes, advisory group senior principal for Technomic, a Chicago-based restaurant consulting group.
Calorie labeling on ice
Menu labeling isn’t exactly popular among Dunkin’ Donuts owners, not only because baked goods can contain high calorie counts, but also because the Dunkin’ menu has so many options. The cost quickly escalates for redoing a menu board that has the complexity of a Dunkin’ menu.
Quick service and other restaurant owners across the country have been gearing up for the imminent launch of calorie labeling regulations for years now, only to see deadlines come and go.
When Obamacare passed Congress in 2010, it mandated that quick service restaurants and others post calorie counts next to menu items.
But the devil as always is in the details. Faced with a backlash from the restaurant industry, the Food and Drug Administration (FDA) has yet to fully hammer out the rules – or critical guidance for restaurant operators – through which the new law would work. Last summer, the FDA pushed off the deadline yet again, announcing that restaurants, supermarkets, convenience stores and others would not be required to begin posting calorie counts until Dec. 1, 2016. Now, thanks to a bill passed by Congress and signed by President Obama, that deadline is likely to be pushed out to 2017 and possibly beyond.
Tucked into the recently passed federal budget is a provision that bars the FDA from spending any money to enforce calorie labeling until one year after “the Secretary of Health and Human Services publishes Level 1 guidance with respect to nutrition labeling and standard menu items in restaurants and similar food establishments,” writes Valerie Haber of Florida law firm RobinsonGray, citing the text in the otherwise obscure budget provision.
It is expected to take some time for federal health officials to publish the guidance document, which, in turn, is now needed to trigger the countdown towards the final launch of the new menu labeling rules. To sum up, all that means the deadline has likely already slipped into 2017, if not beyond, Haber notes.
Given the uncertainty surrounding which party will occupy the White House next term, the delay could very well become permanent should the Republicans win.
“Congress has substantially extended the time line for the U.S. Food and Drug Administration’s enforcement of the agency’s new rules on standard restaurant menu labeling,” Haber writes. “At this point, there is no date certain as to when compliance will be required.”
Minimum wage hikes challenged
Opponents battling a pair of high-profile minimum wage hikes in Seattle and New York are taking their cases to court.
The National Restaurant Association (NRA) says it plans to go to court to challenge a controversial Empire State minimum wage law targeting quick service restaurants.
Last spring, New York Governor Mario Cuomo proposed a $15 an hour minimum for fast food workers, which was soon rubber-stamped by a three member fast-food wage board made up of a top official of the Service Employees International Union (SEIU) – which is trying to unionize quick-service restaurants – a big city mayor, and an online retailer.
The restaurant association failed in December to convince the Cuomo-appointed Industrial Board of Appeals to scrap the new wage rules, but that cleared the way for NRA to file suit against Cuomo in state court.
“We are committed to helping the restaurant community continue to grow and create jobs across the state and plan to take legal action against this arbitrary mandate which is contrary to law,” the NRA says in a statement.
In fact, the restaurant group is already in court challenging a move by New York City to require chain restaurants to label items that are high in sodium.
Meanwhile, the International Franchise Association (IFA) hopes to take its case against Seattle’s $15 an hour minimum wage law all the way to the U.S. Supreme Court.
The IFA contends franchise businesses are being required to raise their pay faster than other businesses. In particular, Seattle gave small businesses seven years to comply with the new $15 an hour wage, while ramping up that timetable to three years for firms with more than 500 employees.
But the new rules include a twist the IFA contends is unfair to franchise owners. Local franchises that are part of larger chains must ramp up to $15 an hour in three years, not the seven given to other small businesses.
As the IFA notes in its plea to the Supreme Court, the per-employee cost to a small franchise owner who has only five employees but is part of a national brand is $160 more a week. Compare that to the mom-and-pop restaurant who can continue to pay its employees $11 an hour for years more.
“Our appeal to the Supreme Court will be focused solely on the discriminatory treatment of franchisees under Seattle’s wage law and the motivation to discriminate against interstate commerce,” association President Robert Cresanti said in a statement, which states the IFA’s appeal has “never sought to prevent the City of Seattle’s wage law from going into effect.”
Washington, D.C. is the latest to toy with workplace schedules.
The District of Columbia City Council is debating whether to require employers to post shifts three weeks in advance while also forcing businesses to pay workers for four hours if the schedule changes at the last minute.
The proposal would require a written schedule within 24 hours of any changes being made.
Franchise owners would have to keep records of each shift for up to three years and offer work to current staff before hiring anyone new or bringing in subcontractors.
The new law would apply to restaurant chains with 20 or more locations nationally or retail outlets with five or more stores.
San Francisco became the first and to date only city to pass shift scheduling rules, making that leap in November, 2014.
Since then, similar proposals have been made in 13 cities and states, Bloomberg BNA has reported.
A challenging year ahead
Quick service restaurant owners are popular targets right now for activists and politicians of all stripes.
And 2016 is likely to see more government proposals that would do everything from dictate how you schedule your shifts to how much you pay your employees.
Add to that a tightening labor market that can make it difficult to fill jobs and you have a recipe for a challenging year ahead.
It all adds up to an urgent need to be prepared. David Henkes from Technomic sums it up this way, “[Franchisees] need to be making plans now on how to deal with some of these things.”