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Goodbye, Ruby Tuesday: an Indictment of the Corporate Restaurant Industry

 


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Goodbye, Ruby Tuesday: an Indictment of the Corporate Restaurant Industry

The closing of so many chain restaurants is one of the few bright spots in an utterly dreary economic state. Corporate restaurants are a bane to American society. Making a buck is never wrong, but these companies have done so by enslaving workers, knowingly poisoning their customers and sabotaging small business. We should not be lamenting the fall of the corporate restaurant industry, but rather celebrate it by be prosecuting the CEO’s and politicians who conspired to create the nefarious beast.

The Big Bad Wolf – Mom and Pop Under Siege

One of the major differences between a locally owned restaurant and a corporate one is passion. Individuals who operate an eatery do not do so because they define success in monetary terms, they trend towards the romantic. They do what they do because they love it. Their mission is providing a memorable dining experience. They are often idealists, easy prey for corporate sharks.

Corporations who operate restaurants, on the other hand, are often run by people who have never worked in food service. They could just as easily hold the same position at a rental car company or furniture manufacturer. Their connection to the actual business they conduct is minimal at best. Their mission is not to insure a memorable dining experience but rather to manage the brand name.

In the battle to earn our dining dollars, the national chains have cut menu prices so low that shortcuts have been employed to control food cost. By importing much of their food from underdeveloped countries with poor health records and literally manipulating foods on a molecular level they have created a grocery list that seldom fluctuates in price and scarcely resembles the food it claims to be.

Twenty years ago the Dow Jones Industrial Average was 2168; it has in recent years topped 12,000 (an increase of over 550%). Likewise the average home went from $91,600 to $315,000 (a 244% increase) and the $24,450 annual income has more than doubled to over $50,000 a year. Since 1988 the US minimum wage has seen six pay increases with a seventh scheduled for July 2009. In that same time span the average cost of a chain restaurant entrée has only increased about 33%.

Since corporate restaurants pool the revenue from several locations they have a significantly greater source of capital to spend on advertising than locally owned establishments. Chief among the focus of this marketing barrage are the menu prices that seem to defy the laws of economics. Mom and pop shops have no recourse but to lower their prices to compete with those seen on TV placing their profitability in grave jeopardy.

The big chains exploit their buying power more than the current corporate whipping boy, Walmart, has ever done. A chain with 500 units can negotiate a price-per-pound on chicken that is of poorer quality than what the sole-proprietor serves. Though this is legal in every way the morality of the practice seems to change with the political climate. To compete on pricing many single unit owners are forced to use products that are below their personal standards thus losing their identity.

As a further kick to the metaphoric crotch, the chains use their substantial marketing budgets convincing the public that their steak dinner is in every way superior to a more expensive one at the local steak house. Teams of lawyers are employed to insure that the verbiage used does not meet the legal definition of false advertising. The same effort to satisfying the letter of the law is not put towards fulfilling the spirit of it.

The deceptive marketing does not end with inflated claims of meal quality but also inflated claims of service quality. Phrases like “When you’re here, you’re Family” and images of actual chefs working in the kitchen give diners a false impression that they will receive fine dining service at casual dining prices. Nothing could be further from the truth.

Do the corporate bosses want their units to provide poor service? Of course not, they know better service means more sales. But at the same time they have learned a little something about the American public, they will endure almost anything. Though their stated goal is great service, they’re unwritten goal is adequate service, translation - no complaints to the home office. Call it the ostrich approach to customer service, the issue only exists if it can be seen. As long as the service is not bad enough for the consumer to contact the home office then it couldn’t have been that bad. “Shut up, eat and get out. ”

Of course, for this strategy to work the eradication of the individually owned restaurant is critical. No one needs any extra-milers mucking things by raising expectations. After all, low standards are easier to achieve.

Biting the Hand that Feeds

Not only have they assaulted locally owned restaurateurs by dishonestly manipulating pricing but they have done so at the expense of the nation’s health. The foods they produce are loaded with saturated and trans fats, copious amounts of unneeded sugars (this combination is the chief cause of our obesity epidemic) but they have also pummeled us with a bevy of chemicals that we are only now beginning to learn are more dangerous than a dirty bomb.

Because of negligible regulations in the Far East it is actually cheaper to sell foreign shrimp than domestic. What does this mean for the consumer? Cheaper prices. It also means poor quality and an increased health threat. The other victim is a loss of our collective identity.

Nowhere is this assault on legacy more evident than in the communities along Alabama’s coastline. Bayou La Batre, Coden, Alabama Port, and Heron Bay are all classic fishing villages. They are windows to our past not just as a community but as a nation. Prior to the industrial revolution America was an agrarian society, farmers and fisherman.

The flood of foreign shrimp on the US market has plunged prices so that shrimpers struggle to show a profit. Thusly, the American wild shrimp industry is in a crisis of Great Depression proportions. This comes on the heels of the decades old battle over TED’s (Turtle Extraction Devices) which, though protecting an endangered species, greatly reduce productivity on the boats.

As if all of this weren’t enough along comes hurricane Katrina. While the national media was focusing on the manmade drama in New Orleans places like Bayou La Batre were largely ignored. The Bayou’s hardship did not result from laissez faire but rather was purely an act of nature. And the destruction was even more absolute as residents lost both their homes and their livelihood.

Adding salt to the wound is that these are largely family owned businesses, another American tradition besieged by progress. Families that have fed their children, built their houses, and earned their living from the Gulf are now facing extinction.

What is worse, the big chains have known that their food was dangerous for decades yet they have gone on producing them and even going so far as to further deceive the public by creating so-called “healthy menu choices” that they know were anything but.

Although consumers have benefited financially from low restaurant prices, there have been casualties, literal casualties. Product quality particularly has greatly suffered from inexpensive menus. In order to lower food costs companies have been importing substandard products. Many of these imports fail to meet minimum USDA standards but are seldom inspected because of the sheer volume that is swamping our ports. The result is that less than 1% of the seafood imported from overseas is actually being inspected .

Imported, farm raised salmon for example is often teaming with the additive canthaxanthin a carcinogen which is band from use in the US. Foreign shrimp is full of another deadly chemical, chloramphenicol that causes human aplitic anemia, a lethal blood disorder. Once again, 99% of imported seafood is not inspected for these chemicals despite the peril. Moreover, domestic beef is given perilous amounts of growth hormones and poultry often contains the antibiotic compound roxarsone which contains arsenic.

As it turns out you may be better off walking around with a rod of weapons grade plutonium in your pocket than indulging in the all-you-can-eat shrimp at Red Lobster.

America’s Modern Slave State

The onslaughts on the general public and small business are not the only transgressions of corporate restaurant chains as their workers (servers, bar tenders and the like) are the only profession in the entire nation that are not paid minimum wage. Try, if you can, to imagine how your life might change if the state you live in passed a law that said your employer now only has to pay your profession $2.50/hour. The rest of your income is solely up to the generosity of strangers. Additionally, the government makes you pay taxes on these charitable contributions regardless of whether or not you actually receive them. As if that were not enough, you also have to work every holiday without receiving overtime or holiday pay. And you can forget about sick-leave all together.

Now let’s sweeten the pot a little by informing you that if someone who is inebriated happens to enter your work area you are now personally responsible for every action that person takes until they sober up. Regardless of whether you provide them with alcohol or even conduct business with them in any manner you are still criminally liable for their actions.

It sounds preposterous does it not? This is the 21st Century; the conditions just described sound like something out of a Dickens’ novel. At best this is an extreme example of the deplorable human rights violations in some war-torn African nation. One thing is for sure, this could never happen in America.

Sadly the circumstances illustrated do exist today and right here in River City.

As it turns out the restaurant industry is exempt from US Federal minimum wage laws . Each state is free to set whatever minimum wage they deem for bartenders, bussers, servers, and even hostesses as little as $2.13 an hour. A few states are enlightened enough to guarantee these workers the same minimum wage as any other profession. Most do not. In fact only eight states currently require the same minimum wage for restaurant workers as everyone else. The remaining 42 states allow companies to legally pay their workers less than what economists and society have agreed is a fair wage.

In Alabama for instance the server wage is $2.13 an hour or one third the current minimum wage. Florida is scarcely better at $3.50 an hour. Montana and Minnesota have two minimum wages for servers (both are below the national minimum) – one for big business and a lower one for small. The corporations argue that this punishes them for being successful while small businesses insist the better servers opt for the chains leaving them to pick through the leftovers. In Nevada full time restaurant workers are actually forced to choose between a fair wage or health insurance.

A gratuity is a bonus for a job well done; a little something extra for going beyond the norm, or at least it used to be. By making servers rely on tips to pay their wages and then taxing those tips, the government has in effect made it a law that everyone must tip at least 10% regardless of the quality of service. Whether a 10% tip is left or not the server still pays taxes on it. Consequently, anyone who fails to leave 10% is in reality stealing from the server.

Some people do not know that the bulk of a server’s pay comes from tips and assume that restaurant workers make a fair wage like everyone else. And why wouldn’t they? After all, there is a federal minimum wage and excluding one profession from having to adhere is unethical.

Lobbyists working on behalf of the large restaurant cartels rely heavily on the argument that servers make very good money in the form of gratuities. In fact, that is the entirety of their argument – servers earn so much money on tips that their bosses should not have to pay them for their toil. So this begs the question, just how much money are we talking about?

If the money servers earn is as good as argued then surely they make in excess of $75,000 a year, maybe as much as $174,000 – the annual salary of a US congressmen. According to the US Department of Labor in 2006 the median hourly wage-and-salary earnings (including tips) of servers was $7.14/hour. In most cases, the hourly wage does not even cover their tax burden leaving them still owing the government money at the end of the year. The same government that says that their effort is not worth as much as other professions apparently does not feel likewise about their tax obligation.

Still many may contend that servers make great money for no more work than they do. After all, all they do is take your order and bring you food that someone else cooks and drinks that someone else mixes, right?

In addition to clearing their tables and cleaning them for the next party, they also have what is called side work. Side work consists of tasks that must be performed to keep the restaurant running smoothly. Many of these duties are simple and occupy little time like rolling silverware into napkins. Others include considerable labor like hauling heavy buckets of ice from one end of the building to the other, vacuuming large sections of food-embedded carpet, mopping floors, preparing foods, cleaning bathrooms, and scraping bubblegum from underneath tables.

Side work comes in three forms and almost every restaurant requires its servers a certain amount as part of their daily performance. The three types of side work are opening (performed before the shift), running (performed during the shift), and closing (performed after the shift). Although the restaurant must pay the server a regular minimum wage for side work performed prior to opening the same is not said for closing side work which typically constitutes the most arduous and time consuming chores. Federal law states that one hour after a server’s final customer leaves the employer must then pay the employee the standard minimum wage.

Thanks to the way the wage law is written employers are actually allowed to pay less than minimum wage for one full hour despite the fact that the employee makes no tip for that labor. Some companies deliberately exploit this loophole by piling extra work on the tip earners that previously was performed by higher wage earners. Although this practice is entirely unethical, remarkably it is legal.

Some families are on budgets that prevent them from spending very much. These people may actually tip the standard 20% but they are forced to streamline their order. A standard 20% tip on the least expensive item is better than nothing, but it requires the same amount of effort as the most expensive dish and in some cases more. A server at The Olive Garden for instance actually does more work for customers who order the economical soup, salad, and breadsticks than for those who order a more expensive entrée.

The Olive Garden is one of the concepts owned by dining conglomerate Darden Restaurants, Inc. out of Orlando, FL. Darden also operates Red Lobster, Smokey Bones, Longhorn Steaks, and Bahama Breeze making it a classic example of the typical restaurant corporation. Darden owns and operates more than 1,700 restaurants across North America employing roughly 160,000 people. Darden is, in terms of revenue, the world's top restaurant operator.

But Darden is hardly the only player in the ultra-competitive multi-unit market. Brinker International, Inc. out of Dallas, TX which owns Chili's, On the Border Mexican Grill and Cantina, Maggiano's Little Italy, and Romano's Macaroni Grill is another titan of the industry with more than 1,800 restaurant locations in 20 countries. They, too, are one of the largest restaurant cartels in the US and as such are one of the largest employers of restaurant workers in the country.

Actual Olive Garden Check Stub

CLICK FOR LARGER IMAGE. Despite working nearly 30 hours this Olive Garden employee took home nothing after state and federal taxes were applied.

On average a server who works roughly 30 hours a week and earns 15% in tips will have a weekly paycheck totaling zero after taxes. Not only does Uncle Sam dip into servers’ tips, but many restaurants make them “tip out” their fellow employees. Servers must share their hard earned money with hostesses, bussers, dishwashers, and even bar tenders. Tipping out allows business owners to also under pay non-tip earning employees by classifying them as tip-earners. A server’s “tip out” is determined by a percentage of their sales for the shift and ultimately denies them of anywhere from 15% to more than 50% of their daily earnings.

So if the same argument used to justify paying servers a substandard wage is applied to other professions then school teachers would have to choose between making a living wage and having medical insurance. Corporate executives would be making $3.50 an hour with the rest of their pay coming from board members stuffing dollar bills into an old pickle jar. That would include men like David Goebel, the former CEO of Applebee’s International Inc. who took home $2.7 million in 2006 while paying his servers less than $3 an hour.

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