In our 45 years of operations in Hawai‘i I have never seen a greater assault on the restaurant industry than at the present time.
Our Industry and Hawai‘i’s Economy
The industry is a major contributor to the state’s economy. Hawai‘i’s restaurant and foodservice operators account for over 96,000 jobs, which represent 15 percent of all employment in the state. Sales in 2017 approximated $4.6 billion, resulting in over $200 million in GET. Additional taxes on rent, food and beverage purchases, services and payroll contribute millions more to the Hawai‘i state economy. Our industry is not receiving the proper support and respect we deserve.
Minimum wage – Paid sick leave
Minimum wages have increased significantly during the past 4 years. Effective January 1st, 2018, it is now $10.10 an hour with a tip credit of 75 cents. By comparison, Florida, a similar tourist-dependent and retirement state, has a minimum wage of $8.25 an hour with a tip credit of $3.02. on the agenda for next year at the Hawai‘i state legislature are bills which would raise the minimum wage to $15 and require employers to provide paid sick leave.
Utilities – Electricity
Hawaii has the highest electric utility rates of all 50 states. The “Energy Cost Adjustment” on your bill is based on crude oil at $54 per barrel. Just since January 1, electric costs have increased 10 percent and gas prices increased 18 percent. The “Peak Demand” portion of your bill is a charge based on your highest 15-minute usage period during the entire month. If 500 families dining at home used their electric stoves, electric lights and maybe their air conditioners and dishwashers, the demand on the electric grid would be far greater than if these families were dining at our restaurants during our “Peak Demand” times. Restaurants should be exempt from Peak Demand charges.
Water and Sewer
Because of Hawai‘i’s antiquated sewer system, water and sewer charges are out of control. Our annual water (BWS) and sewer (ENV) bill has increased from $21,000 to $71,000 in just a few years. Mandated grease interceptors (GIs) have been installed at costs topping $100,000, in addition to which we must incur the ongoing expense of periodic grease and food particle removal. Restaurants with GIs discharge relatively clean water compared to food establishments without GIs. Get ready, because non-residential rates are due to go up in 2019. Restaurants that have installed and maintained the mandated GIs deserve special reduced rates.
Hawai‘i state law requires employers to provide health plan coverage for all employees working over 20 hours per week. Because of the low hourly requirements, even part-time employees are covered. (The Obamacare requirement is 30 hours per week). As you know, premium costs never decrease, only increase. To deal with this expense, San Francisco restaurants, for example, have approached the issue of mandated employee health care by adding an “Employee Health” surcharge of 4.9 percent to guest checks. To offset escalating costs, a similar surcharge of 2.9 percent might be a solution for Hawai‘i restaurants to consider in the future.
I suggest that the Hawai‘i Restaurant Association band together to explore the following ideas:
- The State of Hawai‘i has issued 6,000 licenses for food service operations including 3,483 eating and drinking establishments. The HRA has 324 restaurant members. Now, with everyone feeling the pinch of the current business climate and with a $15 minimum wage looming, this would be a perfect time for a major campaign to recruit new members.
- We need to adequately fund our existing political action committee and our members who are working behind the scenes in getting our message across to Hawai‘i legislators. Contributions could be based on a percentage of sales.