Tag Archives: Industry Overview

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Picking up the NRA’s Tab: The Public Cost of Low Wages in the Restaurant Industry

A day before the National Restaurant Association descends onto Capitol Hill for their annual lobby day, Restaurant Opportunities Centers (ROC) United releases a new report detailing the high public cost of the full-service restaurant industry’s low wages.

Although the restaurant industry is one of the largest and fastest growing economic sectors in the country, restaurant workers occupy eight of the ten lowest-paid occupations reported by the Bureau of Labor Statistics; at least five of these are in full-service. The lowest wage in the country is the federal tipped minimum wage which has been frozen at $2.13 an hour since 1991.

In effect, because the sub-minimum wage requires customers to pay the bulk of a tipped worker’s wages and through extraordinary levels of full-service restaurant workers being on public assistance, the full-service restaurant industry receives a double subsidy from the public.

Key findings include:

  • Nearly half of the families of full-service restaurant workers are enrolled in one or more public-assistance programs.
  • The cost of public assistance to families of workers in the full-service restaurant industry is $9,434,067,497 per year.
  • Tipped restaurant workers live in poverty at 2.5 times the rate of the overall workforce.
  • Restaurant workers as a whole experience poverty at a rate over twice that of the overall workforce – 20.9%.
  • Large full-service restaurant companies like Darden and DineEquity pay their workers so little that many of the employees of these companies rely on taxpayer-funded programs.
  • The taxpayer cost of a single Olive Garden is $196,970 annually.

With annual revenues of over $91 million, 750 staff, and nearly 40 congressional lobbyists, the National Restaurant Association (NRA) is one of the most powerful business lobbies in Congress and state legislatures. Its members are Fortune 500 restaurant corporations including full-service giants Olive Garden parent company Darden, DineEquity, Brinker International, Bloomin’ Brands, Cracker Barrell as well as fast-food companies like McDonald’s, YUM! Brands, and more.

Opposing raises for tipped workers — more than two-thirds of whom are women — is a particular priority for the NRA. As the leading force keeping the federal tipped minimum wage at $2.13 and lower than the regular minimum wage in 43 states, the NRA bears special responsibility for the gender inequities and sexual harassment produced by maintaining a two-tiered wage system which has resulted in the restaurant industry being the single largest source of sexual harassment claims to the Equal Employment Opportunity Commission and 90% of female tipped restaurant workers reporting they experience sexual harassment on the job.

ROC United is spearheading ‘One Fair Wage,’ a multi-state and national campaign to raise the lower, tipped minimum wage to 100% of the regular minimum wage, effectively eliminating the two-tiered wage system.

Find the full report here. 

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The Great Service Divide – National

Today, Restaurant Opportunities Centers (ROC) United, ROC-Michigan, ROC-Chicago, and ROC-New Orleans released a new report, “The Great Service Divide: Occupational Segregation and Inequality in the US Restaurant Industry,” an in-depth study of occupational segregation and discrimination on the basis of race and gender, which analyzed the hiring practices and promotional policies of 273 fine-dining establishments located throughout three principal majority-minority cities: Metro-Detroit, Chicago, and New Orleans.

Find the full report here.

Separate executive summaries available for Metro-Detroit, Chicago, and New Orleans.

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Darden: At the Drop of a Dime

Darden currently pays 20% of its 150,000 employees the federal tipped minimum wage of $2.13 an hour. Darden: At The Drop of A Dime comes as more than 7,000 people, including more than 5,600 Darden employees, have signed on to the petition, “Darden: We Want A Seat at the Table,” requesting that the leadership of Darden and Starboard Value listen to their concerns for the restaurant’s future.

Starboard, a major shareholder in Darden Restaurants Inc., recently proposed proposed several labor cost cuts to Olive Garden, including laying off up to 1,600 employees, increasing part-time scheduling, and passing more work onto subminimum wage employees.

If Darden passed the entire cost of the wage increase to customers, the menu price increase would be negligible. For example, the cost of Olive Garden’s Tortellini al Forno would increase by 10 cents, Longhorn Steakhouse’s Spicy Chicken Bites would increase by 10 cents. In fact, the average check at Olive Garden would increase from its current $16.75 to $17.10.

Darden Restaurants Inc., parent company to Olive Garden, Longhorn Steakhouse, The Capital Grille, Yard House, Bahama Breeze, Seasons 52, and Eddie V’s, is the largest full-service restaurant company in the world. It has faced increasing negative media attention as Starboard Value, an activist hedge fund and shareholder, is angling to take complete control over Darden’s board. Starboard recently proposed several labor cost cuts to flagship brand, Olive Garden, including laying off up to 1,600 employees, increasing part-time scheduling, and passing more work onto subminimum-wage employees.

Due to pressure from Starboard and shareholders, Darden’s CEO, Clarence Otis, and two top executive staff are set to resign with a severance package worth an estimated $65 million. Otis alone will receive more than $23,000 in cash severance alone every week for two years after his departure from the company. Meaning that Otis, after no longer being employed by Darden, will still get paid more every week than the typical line-cook, dishwasher, or server makes in an entire year.

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The Glass Floor: Sexual Harassment in the Restaurant Industry

In partnership with Forward Together, our findings of rampant sexual harassment in the restaurant industry garnered widespread media coverage and helped launch a national day of protests on the ground and online with #NotOnTheMenu.

Highlights of press coverage include:

Download the full report here.

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The Other NRA: Unmasking the Agenda of the National Restaurant Association

Today, Restaurant Opportunities Centers United, along with Alliance for a Just Society, Family Values @ Work, Food Chain Workers Alliance, Good Jobs First, Movement Strategy Center, and Real Food Media Project, release the most comprehensive examination to date of the National Restaurant Association and its top members. For the first time, it compiles information on the NRA’s public policy priorities, the extensive scale of their federal lobbying activities, the scope of their political contributions, as well as CEO compensation and usage of public subsidies among top corporate chain members.

“This report is part of the campaign to fight back against the National Restaurant Association’s destructive lobbying agenda,” said Saru Jayaraman, co-founder and co-director of ROC United. “We want to see elected officials back off from accepting the NRA’s contributions. Their corporate cash does more than quash workers’ rights — their influence is detrimental to our environment, public health, animal welfare and equality for women. For the first time, this report lays it all out, and we expect Congress to pay attention.”

This Tuesday and Wednesday, lobbyists from the NRA and its corporate members fly into D.C. for their annual conference and lobby days.

Highlights include:

  • The NRA’s political spending shows a highly partisan split – it’s given 83% of its federal contributions since 1989 to Republicans, compared to 17% to Democrats.

  • Data on the NRA’s “revolving door lobbyists”: many former chiefs of staff and legislative directors to members of Congress are on the NRA’s payroll. With 27 revolving door lobbyists last year, the Restaurant Association’s had almost twice as many as the National Rifle Association.

  • NRA has compromised the health and nutrition of millions of U.S. consumers — including children — by opposing public health policy measures like nutritional menu labeling requirements, limitations on the marketing of junk food to children, and regulation of sodium, sugar, and trans-fats in processed foods.

  • The NRA has successfully shepherded legislation that strips the rights of localities to vote on paid sick day legislation in nine states, and has helped introduce similar legislation in at least seven more.

  • Analysis on a loophole in the tax law allows corporations to deduct an unlimited amount of the cost of performance pay options from their income taxes resulting in US taxpayers subsidizing nearly $232 million in CEO compensation for the top 20 restaurant chains in the National Restaurant Association.

Today’s report release coincides with a full-page New York Times ad placed by leading food, environmental, women’s and labor organizations demanding members of Congress stop accepting the National Restaurant Association’s corporate cash.

Download the PDF here.


Impact of Raising the Subminimum Wage on Restaurant Sales and Employment

New research examining the strength of restaurant industries in states without a subminimum wage reveal that abolishing the tipped minimum wage is good for business and workers.

Key findings include:

● Above-average employment growth occurs in the seven states that have already abolished the subminimum wage (Alaska, Montana, Nevada, Minnesota, California, Oregon, and Washington).

● Per capita restaurant sales increase as the tipped minimum wage increases. Growth in tipped restaurant worker employment as a percentage of total state employment tends to be higher in the states that pay tipped workers above $5 per hour, and is higher still in states that have abolished the subminimum wage.

● Eliminating subminimum wage does not decrease employment. In fact, the restaurant industry projects employment growth over the next decade of 10.5% in the seven states without a tipped subminimum wage, compared to 9.1% in states with a subminimum wage.

● Since 2009, tipped restaurant workers have grown in importance as a percentage of total employed workers in $2.13 states, states where tipped worker wages are higher than $5.00, and states without subminimum wage—but growth of tipped restaurant workers as a percentage of total employment is highest in states without subminimum wage.

Find FACT SHEET: The Impact of Raising the Subminimum Wage on Restaurant Sales and Employment below or download here.

Find the press release here.

Find our full report, “Recipe For Success: Raising the Subminimum Wage Strengthens the Restaurant Industry” here.