The Department of Labor
updated overtime regulations, increasing the threshold to
$58,656
annually in two steps. Small business restaurant owners will face higher operating costs, with concerns raised about regional discrepancies. Food and labor costs are significant expenses for restaurants, impacting their pre-tax income.
Key Highlights:
* The
National Restaurant Association
and
Restaurant Law Center
expressed concerns about the rules regional discrepancies and frequent automatic increases
* Food and labor costs account for approximately
33 cents
of every dollar in sales for restaurants
* Non-controllable costs like credit card swipe fees and occupancy costs make up about 29% of sales for restaurants
Original Press Release:
Washington
,
April 23
--
National Restaurant Association
issued the following news release:
Today, the
Department of Labor
(DOL) issued a final rule updating overtime regulations. The rule will significantly increase the overtime threshold to include all employees making up to
$58,656
annually. The rule will take effect in two steps, with an increase in July of this year and another in
January 2025
.
Sean Kennedy
, executive vice president of Public Affairs for the
National Restaurant Association
issued the following statement about the change:
“This rule will exponentially increase operating costs for small business restaurant owners who are trying desperately to maintain menu prices for their customers. And because DOL created a one-size-fits all rule based on national income data, rather than regional data, this change is going to disproportionately impact restaurant owners in the South and Midwest.
“The Association and
Restaurant Law Center
pushed back on a significant increase following so soon after an increase just four years ago. Business conditions have changed significantly for restaurant operators in that time. It’s unfortunate that DOL did not heed our concerns, especially as it relates to regional discrepancies and the burden of automatic increases every three years.”
Read the full
National Restaurant Association
and
Restaurant Law Center
joint comments here(https://restaurant.org/getmedia/7e19e08d-faeb-44b6-9c32-013e0b34b207/Overtime-Comments.pdf)
Background on the unique operating perspective of restaurants:
The typical small business restaurant runs on a 3-5% pre-tax margin. Food and labor costs are the two most significant line items for a restaurant, each accounting for approximately
33 cents
of every dollar in sales. Other expenses – typically non-controllable costs like credit card swipe fees and occupancy costs – generally represent about 29% of sales. For the vast majority of restaurant operators, these three categories increased significantly in recent years.
According to analysis by the
National Restaurant Association
, in 2019, pre-tax income represented approximately 5% of sales for a typical restaurant. For a restaurant with annual sales of
$900,000
, this translated to pre-tax income of
$45,000
.
About the
National Restaurant Association
Founded in 1919, the
National Restaurant Association
is the leading business association for the restaurant industry, which comprises more than 1 million restaurant and foodservice outlets and a workforce of 15.5 million employees. Together with 52 State Associations, we are a network of professional organizations dedicated to serving every restaurant through advocacy, education, and food safety. We sponsor the industry's largest trade show (National Restaurant Association Show(Opens in a new window)); leading food safety training and certification program (ServSafe(Opens in a new window)); unique career-building high school program (the NRAEF's ProStart(Opens in a new window)). For more information, visit Restaurant.org(Opens in a new window) and find @WeRRestaurants on Twitter
[Category: Hotels, Restaurants & Leisure, Consumer Services, Regulatory and Legal]
Source:
National Restaurant Association
