Restaurant And Hospitality News – April 4, 2016

In news this week, merchants still think credit card swipe fees are too high; one analyst predicts that raising minimum wages will force menu prices to rise; and the U.S. corporate travel market continues to be optimistic.

Merchants Push Again To Lower Credit Card Swipe Fees

In the midst of one of the most antagonistic lobbying battles in Washington, U.S. Sen. Dick Durbin (D-Ill.) filed a letter questioning whether the credit card swipe fees that large banks and card issuers charge are hindering competition in electronic payments, as Innovative Retail Technologies reported. Now, in a letter to U.S. government agencies last week, the National Retail Federation is adding fuel to the fires with a new statement regarding debit card swipe fees enacted by the Federal Reserve five years ago.

Innovative Retail Technologies reported that the NRF letter was sent as Durbin also filed a letter asking whether EMVCo is hindering competition in electronic payments. “In most cases, 24 cents per transaction represents a significant savings over the prior non-competitive pricing,” NRF SVP and general counsel Mallory Duncan said in a letter to the Federal Reserve, which is reviewing the cap based on requirements of the federal Paperwork Reduction Act. “However, it is still substantially higher than issuers’ incremental costs.” Merchants believe that credit transactions made using EMV cards should carry the same, lower swipe fees charged for debit transactions. 

Higher Minimum Wages Likely Mean Higher Prices For Restaurants

California just approved a $15 minimum wage, and New York lawmakers negotiated a similar deal, causing speculation about what this will mean for restaurant food prices, according to the Nation’s Restaurant News. Maxim Group senior equity research analyst Stephen Anderson postulates that restaurant chains nationally may be forced to increase menu prices as much as 1.4 percent annually to cover the rising labor costs established by this new legislation.

“We believe it is highly likely that restaurants will pass along the wage hike to customers, at least initially,” said Anderson in a report. “Over time, we can expect restaurant companies to invest more in technology, i.e. ordering kiosks at counters and tables, online/mobile ordering, staff management software, to offset these higher labor costs.”

California approved a landmark agreement to phase in an increase the state’s minimum wage to $15 per hour by 2022, and then tie it to inflation. Brown called the increase a matter of economic justice that would lift thousands of California families out of poverty. New York is also phasing in a $15 per hour wage at larger QSR chains, and Gov. Andrew Cuomo has proposed a broader $15 per hour minimum wage that would be phased in for New York City in 2019 and across the state by 2021. 

U.S. Corporate Travel Market Continues Post-Recession Improvement

While current U.S. indicators remain mixed, unemployment stands at an eight-year low and the strength of U.S. currency is encouraging overseas travel, bringing optimism to the travel industry, according to ehotelier.com. A new report from travel industry researchers, Phocuswright, U.S. Corporate Travel: Market Sizing and Trends, sizes the total corporate travel market in the U.S. including forecasts through 2017 and trends that influence it. Corporate travel has experienced steady growth over the past few years, and it is expected to continue to grow at a moderate pace through 2017. The study also found that travelers use mobile devices to search for travel components, with 55 percent of managed travelers searching for airfares and 44 percent for hotels on their smartphones.

The shift to mobile dependency means that enhancing mobile capabilities must now be the chief technological priority for travel managers. “Despite recent economic headwinds, corporate travel in the U.S. will continue to grow through 2017,” says Phocuswright’s director, research, Charuta Fadnis. “The rise comes against a backdrop of technological innovation and changing consumer behavior, both of which have transformed business travel. Mobile is a prime example. Its high penetration among travelers places it at the top of travel managers’ as well as travel companies’ priorities.”