The Restaurant Industry, along with most in the business community, have reacted positively to the Trump Administration’s Promise to reduce regulations. Requirements have continually expanded for more reporting, disclosures, and expenditures in areas that have gone beyond the basic requirements of core business operations and food safety to include a variety of new regulatory demands.
Compounding these challenges is the fact that new regulations have been introduced at an ever accelerating pace, from every level of government (i.e. Federal, State, and Municipal). For regional and nationwide operators just keeping track of the requirements in countless jurisdictions can be a challenge.
For restaurants, industry-specific requirements also apply. Nutritional disclosures which vary from one municipality to another, composting and recycling requirements, and other new regulations often expand regulatory efforts into entirely new areas not previously touched.
The Trump Administration has promised to reduce this burden. One recent mandate introduced requires the Federal Government to eliminate two regulations for every one new regulation introduced. Of course, many of the new regulations are at the state and municipal level. Consequently, it remains to be seen how significantly the total regulatory burden will be decreased.
Consumers are likely not to be overly concerned in many cases. Of course, it will be as important as ever for restaurateurs to be conscientious in the manner in which they run their businesses, especially in the area of food safety and cleanliness. The industry has suffered in many cases over the years from various incidents, and these cases have brought about demands for new regulations, declining sales, and even bankruptcies.
The most recent example involved Chipotle Mexican Grill, which suffered six (6) food safety scares in the span of one year from 2015 to 2016, including cases of norovirus, E. Coli, and salmonella. The brand has still not recovered from declining sales as a result of these events.
Earlier examples include the Mexican Chain Chi-Chi’s, at one time one of the USA’s largest brands. An outbreak of Hepatitis A in 2003 ultimately led to the bankruptcy of the once dominant concept. In 1993 Jack In The Box had an E. Coli outbreak that sickened 600 people and killed 6 others. The company’s parent lost $138 Million as a result of this incident, and the company’s stock dropped by 30%. Looking abroad, Yum! Brands China saw sales drop by over 20% in 2013 in its KFC Stores after concerns arose over high levels of antibiotics in chicken and worries over Avian Flu. In 2016 the company began to spin off ownership in its China KFC Restaurants, once considered a key growth opportunity.
Developments that result in lower regulatory requirements are cause for celebration for the restaurant industry, which has faced a number of other challenges in recent years. Keeping in mind the negative impact of incidents at chains like Chipotle, Yum! Brands KFC, Jack In The Box and Chi-Chi’s, smart operators will remain on guard to maintain high standards and best practices, to avoid repeats of these events and calls for new regulation. In the meantime, the industry can celebrate the anticipated reduction of regulatory burdens.