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City Council Restaurant Oversight Hearing

By The NYC Hospitality Alliance

Today, the NYC Hospitality Alliance's Andrew Rigie and Rob Bookman testified at a Restaurant Oversight Hearing held by the City Council.

Rigie provided 11 regulatory reforms the City could swiftly enact that would help restaurants and nightlife establishments throughout the five boroughs, but he opened his testimony with the following comments:

“Contrary to what some in government think, the restaurant industry is not thriving. As a matter of fact, it is going through a challenging and transformational time. The large number of empty storefronts in your neighborhoods is a testament to this fact. The onslaught of expensive and complicated government mandates is relentless. Recent labor mandates alone for restaurants in New York City include doubling the tip wage in a mere three years. We’ve had six consecutive, annual minimum wage increases; a $300 increase to the minimum weekly rate for salaried employees; paid sick leave; higher taxes and insurance; healthcare expenses, and compliance costs. These increases also place upward pressure on all wages because more experienced employees request raises in order to earn more than their entry level colleagues.”

My name is Andrew Rigie and I am the executive director of the New York City Hospitality Alliance (“The Alliance”). The Alliance is a not-for-profit association representing thousands of restaurants throughout the five boroughs. Thank you for the invitation to testify at today’s restaurant oversight hearing.

Contrary to what some in government think, the restaurant industry is not thriving. As a matter of fact, it is going through a challenging and transformational time. The large number of empty storefronts in your neighborhoods is a testament to this fact. The onslaught of expensive and complicated government mandates is relentless. Recent labor mandates alone for restaurants in New York City include doubling the tip wage in a mere three years. We’ve had six consecutive, annual minimum wage increases; a $300 increase to the minimum weekly rate for salaried employees; paid sick leave; higher taxes and insurance; healthcare expenses, and compliance costs. These increases also place upward pressure on all wages because more experienced employees request raises in order to earn more than their entry level colleagues. 

Between 2010 – 2015 annual employment growth averaged 6.5% at full service restaurants in New York City. But in the last 3 years, since these cost increases, we are seeing a massive slowdown.  It appears we’ll end 2018 with less than 1% growth. The worst since the great recession. This decline is directly tied to these pressures and rising costs.  Between 2012 – 2015 growth in Full Liquor and Beer & Wine Licenses was nearly 23%; and today, annual growth has plummeted to the low single digits. In a recent survey conducted by our organization, 75% of restaurant respondents said they will reduce employee hours in 2019 and almost 50% indicated that they will eliminate jobs as a result of mandates.  Employment at limited service restaurants also paints a similar and concerning picture.

While we have achieved meaningful regulatory reforms over the years, there is still excessive red tape and fines. For example, fines levied by the Health Department are still tens of millions of dollars higher than they were in the early aughts. This is after years of outrage about excessive regulations and over-enforcement by members of the City Council. 

While we appreciate today’s Restaurant Oversite hearing, the industry is frankly exhausted from years of talking and we demand action. We hope today’s hearing will be a catalyst for it. The following is a list of regulatory reforms and policy ideas that would provide restaurants’ relief and spur economic activity and job growth.

  1. Allow restaurants the option of adding a clearly disclosed surcharge to prices, which is allowed everywhere else around the country, and even the rest of New York State. 
  2. Eliminate the unjust and inequitable commercial rent tax levied on thousands of businesses south of 96th Street in Manhattan.
  3. Most commercial tenants such as restaurants pay a portion of their landlord’s property tax, which poses significant financial burdens. The City should give tax credits to businesses to offset this expense.
  4. The Department of Finance should explicitly allow the amount of a restaurant's FICA Tip Tax Credit to be an allowable subtraction from that business’s taxable income. 
  5. Restaurants are labor intensive and employ people of all backgrounds, experience, and skills, some of whom may not find work elsewhere. The city should give tax credits and incentives to restaurants related to employing New Yorkers. 
  6. Eliminate the unfair and unique liquor excise tax imposed by the City on all license holders. Advocate at a State level to reduce the liquor license fee in the NYC so that the fee costs the same for all establishments, regardless of where in the State they operate. The fee should not be double when operating in NYC.
  7. City agencies that regulate restaurants should be required to review all of the violations they issue. They should then identify violations that don’t pose an imminent hazard to the public and provide warnings and cure periods for those violations before issuing a fine. The Council passed such a law 6+ years ago, but it was largely ignored by the Bloomberg Administration.
  8. Require all proposed laws and regulations with a fine be analyzed to determine if a warning or cure period should be provided.  
  9. The Health Department’s ‘Letter Grade’ inspection system should provide due process to restaurants by having a judge’s ruling determine the frequency of inspection, instead of an inspector’s accusations, which is how the system currently works.
  10. Scaffolding (sidewalk sheds) play an essential role in protecting people from falling debris from building construction. But scaffolding left up unnecessarily for extended periods of time has a devastating financial impact on restaurants and bars. Pass a law requiring scaffolding to come down promptly.
  11. Require DEP to provide a 30-day notice to restaurants for non-emergency water shutdowns that will impact their business. Too often, businesses get less than 48-hour notice, which poses serious burdens on restaurants that have reservations and parties scheduled.

In addition to these 11 proposed reforms, we have many more that we’d be happy to discuss with you. Thank you for your consideration and we urge the City Council to act on these proposed restaurant reforms swiftly. 

Respectfully submitted,

ANDREW RIGIE l EXECUTIVE DIRECTOR I NYC HOSPITALITY ALLIANCE


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