Credible pundits and poll watchers are currently in agreement on two fronts regarding the upcoming election. First, predicting who will win remains a statistical toss up largely dependent on the outcomes in seven key battleground states. Second, we likely won’t know the outcome for several days, or possibly weeks, once again. Setting aside political opinions or preferences, what real impact will the election’s outcome have on the restaurant industry?
Key issues for restaurateurs include how each candidate’s policies might affect the drivers of consumer demand, as well as the costs of doing business. Boosting consumer demand and lowering capital and operating costs are generally perceived as beneficial for the restaurant business. But it’s not that simple. These conditions often create opposing pressures that counter the benefits over the longer term. For example, increased consumer demand may result in more new restaurants opening, leading to heightened competition and loss of traffic share. At the same time, increased demand and cost for restaurant labor and services may drive input cost acceleration, squeezing margins.
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This cyclical ebb and flow of influences is constant, and doesn’t necessarily indicate a change to the issues restaurateurs have always faced, both locally and globally. Wages, immigration, food costs, energy costs and interest rates have fluctuated over the decades and across regions, and are associated with the normal course of business. The primary drivers of change are set more by local mandates, as opposed to national elections. Operators should pay close attention to local election outcomes, as shifts in the balance of municipal boards and state legislatures will have more direct near-term impact on them than wider national issues. While federal policies can influence the broader business environment, it's local governments that tend to target the restaurant sector directly.
Consumer sentiment about the economy is an important driver of broad consumer demand, and can sometimes outweigh fundamental changes in indicators. For example, inflation rates have slowed to pre-pandemic lows, and incomes are growing, but when surveyed, many consumers report they don’t yet “feel” improvements. Ultimately consumer sentiment tends to lag behind actual economic improvement. Moreover, regardless of who wins, after the election, roughly half of Americans will feel happy and optimistic, and the rest, pessimistic (or even angry). Who is happy and who is sad will be clear, but neither will overwhelm the other to cause an uptick or downturn in consumer sentiment or broad restaurant demand. Disappointingly, a considerable portion of the population remains apathetic, and this trend is likely to continue.
Regardless of the outcome, restaurants are uniquely positioned to celebrate the victors and console the vanquished. We are the go-to providers for in-person, social interaction and our importance as the social “glue” for our communities has risen in an increasingly transactional and digital age. As such, it is critical that we pay attention to how people feel on every occasion, and strive to make a positive difference.The post-election window and 2025 presents us with this heightened responsibility, and strategic opportunity.
Finally, candidates and their supporters typically provide emotion-laden sound-bites and anecdotes to make their points about what they will do, and why one is better than the other. Amid attack ads and promises, it’s easy for to us forget that presidents don’t actually have the power to make laws, and that they are restricted by our constitution in what they can do by executive order. New federal laws require House, Senate, and Presidential approval, and that process can take months or years - or never at all if the chambers are split.
When challenged, executive orders fall under judicial scrutiny, so changes that actually do affect consumers on a broad scale will be slow in arriving. Hot-button election issues that restaurateurs care about (like tip credits, minimum wage, small business incentives, taxes, immigration, healthcare mandates and economic growth) are unlikely to be resolved quickly at the federal level, particularly in the era of political gridlock, which is likely to continue at least through this election and into the next two-year congressional term.
From a business perspective, post-election, we should remind ourselves and our teams daily that, as restaurateurs, we are ideally suited to help our communities feel better, to feel restored, and to make a difference through our kindness and hospitality toward others. And that’s something to celebrate, no matter who wins.
For additional reading I found this article helpful for setting expectations for our restaurant clients.
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