Restaurant And Hospitality News – June 29, 2015
By Christine Kern, contributing writer
In news this week, the Supreme Court ruling upholding the ACA has the NRA and NCCR pushing for changes, AAA forecasts Independence Day travel to reach 41.9 million Americans on holiday, and Darden is taking steps to improve its financial position.
National Restaurant Association Calls For Changes In Wake Of Supreme Court ACA Decision
Last week’s momentous Supreme Court decision, upholding the Affordable Care Act, in a ruling regarding the use of subsidies has led trade groups representing restaurant operators to call for changes to the legislation. Both the National Restaurant Association (NRA) and the National Council of Chain Restaurants issued statements in which they continued to push for reform of the ACA measure that expands healthcare coverage, arguing that it will increase costs and complexity for restaurant owners. “While today’s decision by the Supreme Court is one of great importance to the dialogue on health care coverage across the country, there are issues with the current law that need to be addressed,” Dawn Sweeney, president and CEO of the National Restaurant Association, said in a statement. “We are concerned that the issues impacting restaurants and the employer community at large have yet to move forward in Congress. Certain provisions within ACA like the definition of full-time employment at 30 hours, the lack of clarity regarding reporting requirements, auto-enrollment, the inconsistency of defining ‘seasonal employment’ and the process of determining which businesses are considered ‘large’ under the law, have placed an enormous amount of undue burden on American businesses large and small. We have worked tirelessly with Congress on behalf of our membership to find bipartisan solutions to these very real problems and will continue to do so as the discussion on health care continues.” In the NCCR statement, Executive Director Bob Green stated, “NCCR opposed the ACA when it was passed by Congress and we still do. The ACA’s employer mandate and unique coverage requirements inflicts negative impacts and unworkable costs on chain restaurants and its thousands of small business franchisees.” He continued, “Reform to our nation’s healthcare system is desperately needed, and now that the court has ruled we look forward to Congress revisiting the law to bring about greater health benefit affordability for employers and improved access to affordable health insurance coverage for employees.” He asserted, “NCCR stands ready to work with lawmakers on bipartisan reforms to achieve that result.”
AAA Releases Independence Day Travel Forecast
According to the latest AAA Independence Day Holiday Travel Forecast, some 41.9 million Americans plan to celebrate with a holiday getaway, good news for the travel and hospitality industries. This represents the highest number since 2007, and a 0.7 percent increase from the 41.6 million people who traveled in 2014. For the report, the holiday travel period is Wednesday, July 1 through Sunday, July 5. “This Independence Day, more people will get in their cars, board airplanes, and take busses, trains and cruise ships to celebrate our nation’s freedom with friends and family,” stated Marshall L. Doney, AAA President. Gas prices are well below last year’s levels, and paired with rising income and a strong employment market, Americans now have more disposable income to spend on travel. The survey found that nearly 85 percent of travelers plan to drive to their holiday destinations, while holiday air travel is expected to increase 1.5 percent to 3.21 million leisure travelers. “Although some consumers are using their recent savings on gas to pay down debt and save, overall, Americans are planning to travel in record numbers,” Doney explained. “Independence Day gas prices are expected to be the lowest in five years, a welcome sign for the 35.5 million people planning a holiday road trip.”
Darden Takes Steps To Improve Financial Standings
In two separate moves, Darden is taking steps to improve its financial status, as the Olive Garden is moving away from deep discounting in favor of value platforms and Darden Restaurants Inc. revealed that it will spin off much of its vast real estate holdings into a real estate investment trust or REIT, according to company spokesmen. “This strategic real estate plan is the result of a comprehensive review of alternatives to best take advantage of our real estate portfolio,” Darden CEO Gene Lee said of the spin-off plan in a statement. “While a significant amount of work remains in order to proceed with the REIT transaction, we believe this plan will result in a more optimized capital structure and will create long-term shareholder value.” In regards to the Olive Garden pricing shift, Darden CEO Gene Lee explained, “The majority of the deep discounting we are referring to is the $9.99 promotional platform that we were running last year. We were running a lot of $9.99-$10.99, 11 to 13 weeks, in fiscal ’15. We refer to anything below $11.99 as deep discounting. We’re still going to have to have some value platforms across Olive Garden to drive the business.” Lee assured that “‘Never Ending Pasta Bowl’ is not going away.” Additionally, the 846-unit chain has been helped by the economy, he noted. “I do think the consumer is looking for less discounting activity than they were a year ago or two years ago,” Lee said.