La directora ejecutiva de la Asociación de Restaurantes de Texas habla sobre el valor de la membresía, las propinas y la iniciativa de cuidado infantil

Emily Williams Knight [00:00:00 - 00:00:40]

If you're at a point where something that was your very most popular item and you're making a substantial change to what that is, take it off the menu. Just take it off the menu. If you have something now that you cannot afford to make or it is such a difference from what the customer's used to, just simply say for a short period of time due to the supply chain challenges, this is coming off the menu.

 

So, again, it always comes back to being honest and transparent. But if you buy something and are used to having a sandwich that's this big and you've had it for ten years and without knowing it, you ordered it, it's 25% more and it's half the size. That is a brand broken promise, and it's hard to recover from that.

 

Announcer and Gene Marks [00:00:43 - 00:00:58]

Welcome to Paychex THRIVE, a Business Podcast, where you'll hear timely insights to help you navigate marketplace dynamics and propel your business forward. Here's your host, Gene Marks.

 

Gene Marks [00:00:59 - 00:01:40]

Hey, everybody, it's Gene Marks, and welcome back to another episode of the Paychex THRIVE podcast. Thank you so much for joining us. Hey, need some advice, tips, help in running your business? Want to make sure that you're staying up to date, even seeing some prior episodes of this podcast? Sign up for our newsletter. It is excellent. If you go to paychex.com/thrive, we'll make sure you're getting it in your inbox. I guarantee it will improve your business.

 

Let's talk. I've got Emily Williams Knight with me today. Emily is the president and CEO of the Texas Restaurant Association and the Texas Restaurant Foundation. Emily, thank you so much for joining me. All the way from Dallas, right?

 

Emily Williams Knight [00:01:41 - 00:01:42]

Yeah, absolutely. Thank you for having me.

 

Gene Marks [00:01:43 - 00:01:47]

Yeah. By way of Connecticut, I guess. Did you want, how long have you been with the association?

 

Emily Williams Knight [00:01:47 - 00:01:51]

It'll be five years this summer. Right before the pandemic hit, I joined.

 

Gene Marks [00:01:51 - 00:02:02]

Yay. Timing is everything. So, you hit the association, like, I guess, in the summer of 2019, and then, like, what, like, seven months later, the pandemic hits, right?

 

Emily Williams Knight [00:02:02 - 00:02:28]

Yeah, we started hearing about it in December, and so I was just newly getting my feet wet across the state, learning all the parts of the legislature, and then we started to hear there was something going on across the seas. But I had come out of a global job, so it was very interesting to me to imagine what was happening, and so maybe I had a little bit of a sense early that this was gonna come our way and it wasn't gonna be good. But I certainly landed in the right spot at the right time because we spent the next two years, getting out of the pandemic?

 

Gene Marks [00:02:28 - 00:03:03]

Yeah, it's funny. Do you remember, like, it was like January, February of 2020, and we were seeing, like, reports on the news, like, from Italy, you know, and people screaming and yelling and, you know, calling out to each other from their windows? It was, like, terrifying. We were like, oh, my God, this is absolutely coming. Yeah, it was really. It was really something. So, how did you manage through the pandemic? I mean, Texas. If I was to list the states in this country that it was probably good to be, you know, running an association of restaurants - compared to all the other states - Texas, Florida, seems like two good ones, right? 

 

Emily Williams Knight [00:03:03 - 00:03:04]

Absolutely.

 

Gene Marks [00:03:04 - 00:03:13]

Yeah, tell me, and you must talk to some of the other of your compatriots that are at your level from different states to know what your experience was.

 

Emily Williams Knight [00:03:13 - 00:04:06]

Yeah. You know, I feel certainly very fortunate to be in a pro -business, I would say very business-friendly state when it occurred. I happened to be, and I'd come out of, actually, Washington, DC, where I sat through the first vote of, at the time it was called coronavirus, got back here, thought, okay, looks okay. It was early March. Flew to Cabo with my family for spring break, thinking it's very close. And then I got the call from the governor's office saying, essentially, we've got to make a decision and we've got a partner.

 

And so, we, from that day, which was about the 14th of March, I worked hand in hand with Governor Abbott and his team, and we reopened restaurants in six weeks, which is almost unheard of across the country. But I really think it speaks to committing to a partnership and committing to fight on behalf of, at the time, about 55,000 restaurant owners across the state, which we felt like we represented. And if we didn't create the plan, it might have been many more months, like a lot of states before we were reopened.

 

Gene Marks [00:04:06 - 00:05:23]

Yeah, it's, um. Yeah, it's funny. Like two stories of my ... First of all, I'm from Philadelphia. We were locked down a few times during the pandemic. It was awful. And. And then people were not even allowed to go to restaurants in Philadelphia unless they could prove that they were vaccinated, which I also was ... it was tough. It was really tough for the business owners here.

 

And, um, also said, I spent a few weeks with my wife in Stockholm, Sweden, in January, because, of course, why not go to Sweden in January of all times? Right. But no, I talked to a few people who own restaurants in Stockholm, and they were telling me that, if you remember, Sweden got a lot of push back because they really remained open. The one guy that I did speak to, and I've actually went to his restaurant with my wife, and him and his wife, were saying that, like, in Stockholm, the decision was left up to the people and the business owners, whether locked down or not.

 

There was a pandemic going on. So, a lot of people decided to lock down, do you know what I mean? Because they wanted to be safe. But you must have really undergone a lot of, I mean, a lot of push back from not only your members, but people in the media and others, right?

 

Emily Williams Knight [00:05:23 - 00:06:25]

Yeah, we believe, I mean, we really felt like we were at the center. So, I was on from, whether it be BBC, CNN, FOX, pick your channel every single day. People had all their eyes on Texas because we also have 30 million people. And so, the size and scope of the state is massive, and it's also very diverse, right? The size geographically.

 

And I'd say we definitely had parts of Texas that ignored the governor's dictate. That's something we worked with, but we felt exactly maybe like Sweden, which was, let's get the businesses that want to reopen, the right to reopen, give consumers the right to visit those restaurants, and in the meantime, help those restaurants with everything possible, like alcohol to go, the ability to sell groceries, get them PPP and RRF. We worked a lot at the federal level getting an aid until they were reopened, and so, we felt like that's exactly the Texas way, which is personal choice. But in the crosshairs - mask, no masks, vaccine, no vaccine - right? We got …

 

It was a difficult time to be a leader, I can assure you, in a state like ours. But looking back now at the economic vibrancy of our state, a lot of it is how we came through the pandemic.

 

Gene Marks [00:06:27 - 00:06:38]

Looking back on it now, I mean, it's been now, what, four years since the pandemic broke out. How do you think your industry has changed? What do you think your members have learned?

 

Emily Williams Knight [00:06:39 - 00:08:39]

Gosh, that's a great question. I think that we learned a lot. We learned, first of all, that we always talk about restaurateurs being the most resilient, creative people, and we saw that day in and day out. I mean, you had restaurants that overnight, about 35% of our restaurants could not make a penny on the 18th of March, and they had to figure it out. And so, I think what we saw was this unwillingness to give up and unwillingness to quit, which is the spirit of why you become a restaurateur.

 

I think the things that we learned is that employers looking at employees holistically, not just for the hours they serve, you see, that relationship really had strengthened through an awareness of overnight in our state, we had close to 800,000 people unemployed. And so, with restaurants having to just literally let staff go overnight, with no plan for those people, the restaurant had no plan. And thank goodness we had a lot of federal support at that point to help those individuals. But it changed the dynamic. So, I think one is sort of the relationship with employees, and now you see things like TeleDoc and other healthcare benefits we're bringing to employees, wages are significantly up. The way we schedule employees has been modified. There's just a lot that has been really good about that partnership.

 

I think the second is the consumer behavior has really dictated some of the changes in the model for restaurants. And so, consumers were used to getting what they wanted when they wanted it, through delivery to go, pull up, get my food. I don't want to talk to anyone. I don't want to interact. That kind of frictionless interaction, that has stayed, and that's something that restaurants have had to incorporate into their business model.

 

And I think last is really just around quality and experience for the restaurants. They're still, four years later, under extraordinary cost pressure, inflationary pressure from the consumer, from labor and the goods that they have to purchase. And so, for them, it's really figuring out, is it about an experience I'm going to create on site, or is it a value play? And anyone in the middle right now, they've really got to figure out which side of the camp I'm on or to kind of maintain that differentiation, they're going to need to survive.

 

Gene Marks [00:08:40 - 00:08:55]

Yeah, it really did change a lot. I do have some questions I want to ask you about what the association is working on and what the demographics. Well, let me get to the demographics first before I ask some other questions. Tell me a little bit about the association. Like what, you know, who are your members?

 

Emily Williams Knight [00:08:56 - 00:10:56]

Sure. So, we, you know, it's interesting. We just hit a milestone, I think two milestones that we're really proud of coming out of the pandemic. And for us, the pandemic feels a long time ago, right, because we did open six weeks later. But there's a couple things.

One, we're now the largest employer, private employer in the state of Texas. We have 1.4 million restaurant and food service workers. So, it's about 11% of the state's employment. And with 30 million people with incredible growth.

 

Remember, people need two things when they move to your state. They need food and they need shelter. And so, our growth, even last year, we're the only state to have positive new restaurant growth. And so that is fueling the economy, which has brought us to about $106 billion in sales just last year in the state of Texas, and about 57,000 now restaurants and about 90% are considered small businesses – that's 50 employees or less.

 

When it comes to the demographic, it is always going to be the first place, the middle place, the last place you can find a job. So, the diversity remains incredibly important and really the vibrancy of the sector itself. But we're now at about 53% female and about 60% are under the age of 35. So, if you just think about the dynamics that that brings to the marketplace, but we are back to pre-pandemic levels of employment – so, 2019.

 

And I was just asked recently, Emily, what does the employment outlook look like? Well, even with all the technology advancement, by 2030, we're projecting another 225,000 jobs just in restaurants will be needed. So, the workforce development side of the work the association does has become critically important because we've got to be able to sustain, because we're $0.53 of your food dollar is spent here in the state, more than half of what you spend on food goes through a restaurant. And so, we've got to maintain the ability to keep that critical infrastructure. I call it feeding infrastructure, like electricity, water, food. That infrastructure is critical. And so that is something that we're looking at ahead to make sure we have the employee base to sustain these businesses.

 

Gene Marks [00:10:56 - 00:11:10]

You know what your demographics are in your market is? Do you know? I'm sure you do as well. Approximately what percentage of restaurants in the state actually belong to your association? Is it more than half or is it less than that?

 

Emily Williams Knight [00:11:10 - 00:11:52]

Yeah, it's probably about half. Now, we were very fortunate in the pandemic. I remember sitting with the board and making a decision that we needed to help everyone, not just paying members, and so we opened all of our services to every restaurant. And my sort of value proposition was to my team is that we can't let anyone fail. We're going to ... We're going to experience loss. We experience loss without a pandemic in our industry on a yearly basis, but how do we mitigate the loss of these small businesses? And so, by opening everything to everyone, we actually ended up growing membership, incredibly, coming out of the pandemic, because we could show value and not charge people at the moment, these new, smaller restaurants, when they really had nothing even to keep their doors open.

 

Gene Marks [00:11:52 - 00:11:58]

So, tell me about the value. I mean, say I'm running an independent restaurant somewhere in Texas. Why would I want to join your association?

 

Emily Williams Knight [00:11:58 - 00:14:14]

Yeah, I think the way I see it is there's two things, right? There's one is all the advocacy that goes on a daily basis. And coming out of the pandemic, we've had two legislative sessions. And so, we're fortunate, I think, that we only have our legislature meeting every two years and for a very defined period of time. And so, for us coming out of that, we took all the learnings from the pandemic and we created a lot of new laws and made sure a lot of other great ideas that weren't great for us were kind of stopped in its tracks. So, one is that you join because you want to have a voice in that legislation, but if you're a single restaurant operator in downtown El Paso, Texas, you really have no way to drive change. You have no way to raise your voice to the level of making new bills or stopping bad pieces of legislation. So, I think for us, it's aggregating. All of that has been a very important lesson coming out of the pandemic, and we do that for you, right?

 

So, we collectively bring the voice and the strength of the largest employer at over $100 billion to the legislature, and we represent the industry and get what they need to keep operating and be successful. So, I think that's one, the advocacy, and that extends to Washington, too. So, if you are our member, if you've got an issue with a license or a health department in Dallas, we're going to support you out of our Dallas office if we need to help you at the state level, but also at the federal level, one, membership, all three areas.

 

I think the second part is really, especially on the independent side, is all the services and products that we can get at scale for smaller restaurants, everything from insurance to healthcare, you know, tax support, all the best practices, bringing discounted solutions because we can aggregate the entire state of Texas and get a small, independent, a lot of cost savings on their business.

 

And I think on the legal side, we do a lot of webinars when things change, right? Can I have a service dog in my restaurant? What happens on my patio? What am I doing about vaccines? All of that comes to the association. So, what I like to say, I guess Emily's way of positioning, is you get into the restaurant business because you have great food or great experience or both that you want to bring someone. Let us worry about everything else, the tax, the regulation, the law, the legislation. We do that for you, so you don't have to think about it. So, really that's why you join. I call it an insurance policy that you have in place when you open a restaurant to ensure you have what you need to be successful.

 

Gene Marks [00:14:14 - 00:14:36]

That's a great answer. So, okay, so political action, obviously in advocacy, and you mentioned at the very end, as well. The third big thing is just sort of like the legal side of it, the education side. What do you see as in demand from your members this year as you're putting together your sort of curriculum of webinars or events or content that you're providing your membership? What do you hear from them? Like, we need to know more about this topic.

 

Emily Williams Knight [00:14:36 - 00:15:51]

Yeah, it can be anything from educating them on pieces of legislation that are happening in Washington, like the tax bill that's currently sitting in the Senate. We do a lot on immigration and what's required from immigration. It's a very important cause for us here in the state. We were really involved on immigration reform. So, we talk a lot about what's required and not required.

 

There's tremendous amount of interest right now in things like the ERC, in the FICA tip credit, and we will educate people on how to get that money back because it's money right to the bottom line. We just had an entire webinar on service animals that had hundreds of people attend because when the laws change or food code changes, we feel like we are the ones that need to digest that very quickly. We get it out in a format that will help teams and they know they remain compliant. And we're asking, there's a lot of questions about artificial intelligence. So, our independent restaurants are wondering, what does this mean for me? What is generative AI? How can I use it? Should I use it? And so, there's a lot of requests coming in for that right now, too.

 

And then finally, cost savings. Where can I find cost savings? I'm getting killed. My margins are getting killed. Where do I find cost savings? And that's when we can bring experts in or even larger chains that can help benefit some of the smaller independent restaurants.

 

Gene Marks [00:15:51 - 00:16:01]

All right. That really, that really does help. It's Freddie, you mentioned about the service animals as well because I guess the rules probably are different by jurisdiction. Is it like a statewide thing?

 

Emily Williams Knight [00:16:02 - 00:16:34]

We're blessed in Texas. We preempt a lot of things at the state level. It's too big of an economy - I think it's 9th in the world now - to have a piece meal or patchwork set of regulations. Most of these key issues are preempted to be decided at the state. So, it's consistent. But federal law may trump, in some cases, things like service animals, but, you know, a restaurant owner makes the wrong choice or believes they're doing the right thing, even though it's against the law, can be detrimental. And so those are the types of things we like to educate these folks on in a very quick 30 minutes, webinar, and off they go, and they don't have to think about it again.

 

Gene Marks [00:16:34 - 00:17:00]

Got it. All right. I want to get, I want to go back to some of the things that you advocate for before we do. I want to get your thoughts on, not your personal thoughts. Let's say you're representing the association. So, the association's stance on certain issues that are affecting the industry. Okay. And also affect your customers and your consumers. So tipping, how do we feel about tipping nowadays? What is the general mood about this topic?

 

Emily Williams Knight [00:17:00 - 00:18:21]

Gosh, I guess summary, I think some: Here's how I'd like to describe tipping. I like to actually separate out because I think that tipping is a critical part of our business model. A lot of people come to work for us because of the flexibility and the ability to earn a great deal of money through their service, and I think we need to protect that. I think where we are seeing a lot of pressure is on the transactional side. And so, if I drive up and order a cup of coffee and I'm immediately flipped the screen over and my options are $2, $3, or $4, and I actually haven't experienced and haven't had my coffee or even interacted with someone, that's a tough ask, and that's where you see pushing back, right? That is a transaction where I ask for this, you give it to me. I don't believe I should tip. And I think what has occurred is that that space has grown. You can tip a pharmacy, you can tip at a bakery.

 

It's endless. And we are hearing that customers are fatigued. And what we don't want is transactional tipping to impact experiential tipping because we have millions of employees in the U.S. that really benefit their livelihood on these tips from an experience they provide. And we want to protect that while we try to get some control over this transactional tipping that has taken off.

 

Gene Marks [00:18:21 - 00:18:28]

And the transactional tipping is tough because you, like you said, you pump for a cup of coffee, choose not to tip, and then your cup of coffee comes with a little bit of saliva in it.

 

Emily Williams Knight [00:18:31 - 00:18:54]

But there is that you're tipping on a service you actually haven't received. I do think a lot of the, a lot of restaurants are seeing that. And I think that tipping also goes with the service charges, right? So, we had some service charges in COVID to cover cost and I think when it comes to service charges, outside of tipping, it's really about having an open dialogue and a transparency with your consumer. Never at a service charge the consumer is unaware of.

 

Gene Marks [00:18:54 - 00:19:14]

So that. Okay, we're going to. I definitely want to ask you one final thought on the tipping thing, is that as a, as a small business advocate, I think it's good to tip when - you're right - when it's not transactional, I think it helps the business owner to tip. I mean, you know, because it's, it's. The consumers are contributing a little bit more to the compensation of the employees, and it takes a little bit of the pressure off the owner of the business. You know what I mean?

 

Emily Williams Knight [00:19:14 - 00:19:31]

So, there is a give and great customer service. I mean, I think it rewards great customer service. And you've got people making over $100,000 at work a couple days a week at a high-end restaurant, and we need to protect that because they've been in those jobs a long time and they're great at what they do, and they create an experience that is worth tipping on.

 

Gene Marks [00:19:31 - 00:20:41]

100% right. And what I've also found, very interestingly enough, is because I live in Philly, like right downtown, so my wife and I go to restaurants and bars and whatever. And, like, I met a few bartenders that were, it's their career, you know, being a bartender, young people, and they're like, and it is a honorable career as long as it's compensated well enough, you know, and to get to be a professional, you know, service provider, waiter, bartender in 2024, it takes experience and knowledge and energy and, you know, so it is good for them that they should be making now, okay?

 

You mentioned also about the service charge. I'm so glad you brought that up as well. So, service charges should be, like you said, explained in advance. And that's where a lot of restaurateurs make a mistake. Just recently, just this past week, as we're recording this, both Visa and Mastercard settled and agreed – this is like a national law – I'm sure you're familiar with this one saying that they were going to cap the service charges for a period of time. I'm sure that was taken as good news by the industry. Do you think that will have an impact on restaurant tours, not charging these additional service charges, or do you think it'll change much?

 

Emily Williams Knight [00:20:41 - 00:21:16]

Yes, so another really good question. So, I'll separate out. So, service charges. There's sort of two scopes, right? Service charges that restaurants charge to their consumer, and that can be for parties of eight or more. It can be, in some cases, there was a COVID surcharge. And when it comes to the bucket of surcharges that restaurants are charging to consumers or to their customers, it needs to be very clear. It needs to be known ahead of time. And you really have to understand what it's going for and understand if your customer base is going to support this. Putting an arbitrary $2 health and wellness fee on every check is not something we'd ever recommend.

 

Gene Marks [00:21:16 - 00:21:20]

Drives me nuts. And by the way, I was at a restaurant in Chicago, and that happened. This was like a couple of months ago.

 

Emily Williams Knight [00:21:20]

Poor, Chicago.

 

Gene Marks [00:21:21 - 00:21:30]

Yeah, I know. And the customers walk away with a bad taste in their mouth. You know what I mean? It was like, I can't believe it was a health and wellness charge. What the heck?

 

Emily Williams Knight [00:21:30 - 00:22:16]

Yeah. And especially if the consumer itself has been under inflationary pressure for years now. It's a really tough ask. And I think separate to that is something that we are working very hard on at the federal level, is that we believe that what you referenced is something called swipe fees. And what that is is it's that fee, as you know, as a small business owner that you're paying to run that credit card on Mastercard or Visa, and those are the only choices you have.

 

We believe as an association that is a duopoly, that there is not fair competition. And we've been lobbying very hard to get a third option so we can start to bring down prices because with increased competition, we will reduce some of that swipe fee. Most independent restaurants, most restaurants generally cannot negotiate those fees, and in some cases ...

 

Gene Marks [00:22:16]

health insurance.

 

Emily Williams Knight [00:22:17 - 00:22:49]

Right. They're the third-largest line item on a P&L today. And you're talking about, I've had people testify here in Texas to seven and $800,000 in swipe fees. And so, what the settlement was this week is, yes, it's a win, and I'll celebrate that, but it doesn't go far enough, and it doesn't replace the need to pass comprehensive legislation in Washington that is going to insert competition into this space. It is a fight. It is a battle. But we know the importance to the industry, and we accomplish this on the debit card side. We have to accomplish it on the credit card side.

 

Gene Marks [00:22:50 - 00:22:59]

Right. So does that mean you're in favor of your members charging additional fees on a check for these types of transactions.

 

Emily Williams Knight [00:22:59 - 00:23:39]

So, they can charge right now anything on a check that is open, honest, transparent. If you've got X number of people in your party, the swipe fee, you are able to pass back that credit card fee to the consumer. There are very, and this is really important for listeners. There's really clear guidelines about how you post it, where you post it, how you do it. Yes, and so as long as that is something that you believe as a restaurant owner, because every restaurant's unique, that this is something that you want to pass back on. But we've also seen restaurants say instead I'm going to add $0.25 to my menu items and that's going to cover X dollars. Making a choice.

 

Gene Marks [00:23:39 - 00:24:25]

And again, I'm going to come in again as an accountant here. I mean, you want a good service to provide members, get a few accountants to work with your members, particularly your smaller members. Teach them how to figure out what those fees are across a year's period of time, a two-year period of time. And then you just, you allocate those fees among all of your menu items. Because if I'm going to get, you know, if I, because when you, when you shared among all the menu items, it spreads out the cost.

 

And if I'm going to charge you or pay $12 for a burger or $12.25 for a burger, it's not going to make a difference to me, you know, but if I'm going to pay $12 for the burger and then at the end of the day I'm getting like a, you know, a $6 service, you know, you know, swipe fee charge that has that impact. It's, it's easily addressed, while at the same time you're negotiating and going after these large credit card companies and saying we've got to put an end to this sort of cap.

 

Emily Williams Knight [00:24:25 - 00:25:19]

And I think that's the real math for the restaurant, right? Is to really think about. And also for, I think where we've come and we've been pinched is you have seen menu prices increase over the last three years and we really are just starting to see a reduction in cost of goods. And that cost of goods is still going to be offset by extraordinary cost inflation on beef and it's going to continue.

 

So, you really have a very large segment of protein that's off the charts again and it's going to head that direction, and then you think, okay, I can't charge more. I've pushed the price of what it would be to have a burrito bowl or a sandwich to the point where the consumer is going to start to make another choice. And that's where I think we are with restaurants today, is the levers they have to pull are getting more and more difficult and more challenging. That room is what's still forcing restaurants to close because even with the cost increases on their menu prices, they still are not covering their labor and cost of goods.

 

Gene Marks [00:25:19 - 00:25:50]

Okay, two more issues I just want to get your thoughts on. And then I want to move just to some of the advocacy stuff and the limited time we have. How about shrinkflation and the restaurant industry? I'll go to the Italian restaurant down the street and I'm getting two meatballs instead of three with my spaghetti for the same price. There was this move, there was a legislative move to go after, I think it was Elizabeth Warren or the FTC, somebody was going after saying that this is like illegal or whatever, which I don't think it's, there's a legal merit.

 

Emily Williams Knight [00:25:50 – 00:25:52]

Yeah, well, I mean, there's no legal merit.

 

Gene Marks [00:25:52 to 00:26:01]

No. That is, it's how you price your, your products and services. What are your thoughts on it as the, you know, you know, as the association? I mean, this must come up among your members.

 

Emily Williams Knight [00:26:02 - 00:26:22]

It does. And we get a lot of calls about that saying, hey, if I move from a ten ounce to a six ounce, will someone notice? Yes, they will. It's no different. And it happens in our industry. It happens in every industry. It happens in grocery, right? You open the potato chip bag and now it's half full, not three-quarters. And it's air. And so, it is something, as well.

 

Gene Marks [00:26:22 - 00:26:26]

And you know, service, hospitality, everybody is practicing shrinkflation. It's not.

 

Emily Williams Knight [00:26:26 - 00:27:56]

Yes, yes. So, I think one, we've got to get some relief from inflation, right? And that's what really the business retail restaurant community is screaming about, right? We've got to get some relief.

 

But second, I think that is something that we wouldn't advise. We know it's happening. We know. But I'll give you an example. We have a barbecue restaurant that wrote a letter to their customers, sent it out to everyone in their database, posted across their walls of their different restaurants, and it just said like, "Dear customers, you are so valuable. Here's some math on what it's like. I promise we'll get through this and when we do, I will go back to having X portion. In the meantime, this is what the portion is.” And it was so well-received because it was a cry for “I promise it will get better, but help me right now."

 

I also would say what we would recommend is if you're at a point where something that was your very most popular item and you're making a substantial change to what that is, take it off the menu. Just take it off the menu. If you have something now that you cannot afford to make, or it is such a difference from what the customer is used to, just simply say for a short period of time due to the supply chain challenges, this is coming off the menu. So again, it always comes back to being honest, transparent. But if you buy something and are used to having a sandwich that's this big, you've had it for 10 years and without knowing it, you ordered it, it's 25% more and it's half the size. That is a brand broken promise, and it's hard to recover from that.

 

Gene Marks [00:27:56 - 00:28:14]

All right, next issue, before I move on to some of the advocacy things. Advocacy things. You're working on minimum wage. I mean, you must see what's going on in the fast-food workers in California and be like, oh, my God, I don't think that's ever going to happen in Texas. But then again, who knows? I never thought the Phillies would make it to the postseason, so …

 

Emily Williams Knight [00:28:14]

Me either.

 

Gene Marks [00:28:15 to 00:28:31]

Yeah, so they're, you know, I mean, things happen. So, give me your thoughts on minimum wage, national issue, local issue, you know, industry issue, fast food issue. Tell me what your thoughts are when you hear what was going on in California, for example, right now.

 

Emily Williams Knight [00:28:31 - 00:30:22]

Yeah, you know, it's really a really complex issue, right? I think, first and foremost, ever having the federal government set wages or a state government set wages for a single industry and a segment of an industry is scary to me, brutal. I think that's incredible overreach. And I think when you get to that level; A, you never go back. B, it's not just fast food that's going to have to deal with this. It's every segment. It's every industry. So, we always want to stand behind making sure that our employees are well-compensated. What I would argue is the market has determined that in the last couple of years, our wages are up 28%. And so, you're seeing people now at that $15 to $18 to $19 entry level. My daughters were offered $18 to make sandwiches. They're in high school, right? Wow, that's amazing.

 

I think we just have to be very careful when we start to have commissions that have been appointed by a governor that has one particular party behind him. I think we get into a dangerous area. So, yes, we look at California a lot in Texas when we had the Berkeley gas issue. We preempted natural gas. When we had scheduling issues, we preempted that to the state level. So, we really want to make sure that we don't end up in a situation like California, where a single segment of an industry, or you're playing whack-a-mole because every single county and city has a different set of regulations, and you cannot run a business that way.

 

And so we watch everything in California, and we're proud of where wages are going, and we're probably more proud of the fact that they're starting to introduce things like TeleDoc and resources and benefits that we didn't have prior to the pandemic, that we were able to bring these operators at scale, but really need to be very careful about how we begin to set wages as an industry specific item. I think that's a dangerous lane to go down.

 

Gene Marks [00:30:22 - 00:30:44]

Yeah, I agree. Yeah, you make me laugh because there's a couple of people in my life that whenever, whenever they say something or give advice, I'm always like, okay, whatever this person says, I'm going to do the exact opposite, you know, and I'm sure you know, a few people like that, as well. What you're saying about California, like, whatever California does, and you're in Texas, you're like, okay, whatever they're doing, we're not going to do that. We want to make sure that we.

 

Emily Williams Knight [00:30:44 - 00:30:59]

Right. They kind of single, you know, single. And there's a lot. And I'm not, I mean, I was just in Laguna beach. It is beautiful. I love California, of course, but when it comes to sort of supporting our businesses, I think we just like to do things slightly differently in Texas.

 

Gene Marks [00:30:59 - 00:31:15]

Fair enough. Fair enough. All right. In the few minutes that we have, you know, Emily, give me, give me something that the, the association is working on this year. Something from an advocacy standpoint or, you know, that you're like, I am very passionate about. This is something that our members, you know, or prospective members are very interested in.

 

Emily Williams Knight [00:31:15 - 00:32:47]

Yeah, I would say two things. One, and this is, I think, going to be what I hope is a movement in our state. I'm going to call it a movement, but it's going to catch on across the U.S. is our ability as the business community to come up with solutions to solve for the child-care crisis. So, we have an early learning crisis in our state. It not only impacts the long-term longevity of these young people in our state, but it's keeping families from working, and that in our industry is significant and so the numbers and the demographic poses for us to have one of the greatest challenges. And we can't do our jobs at home.

 

So, we have decided that in particular in Texas, that we need to unite the legislators, the business community, and the advocates and come up with really sensible, entrepreneurial driven solutions to start to get more seats available for children and to get more people back to work. I have been very pleasantly surprised by the momentum. We began an employers for child care task force, and I want 1,000 member companies before we even hit the summer months. And really, it's about saying that it is everyone's problem in the state of Texas to solve for this.

 

And it is an economic imperative. We're losing about $9 billion a year because we do not have enough childcare and early learning for the citizens and the young people in Texas. And so that is work that became a, it started as a very clear business mission, and I would say it has now become a mission for business and those we serve. But it's also a personal passion because we have to do better as a state if we're going to sustain our growth.

 

Gene Marks [00:32:48 - 00:32:49]

Wow!

 

Emily Williams Knight [00:32:49 - 00:33:35]

Yeah. I think the second one is around our second-chance hiring initiative. So, we are working right now. Absolutely. And they're currently incarcerated, and they're learning how to work in a restaurant. Knife skills, janitorial work, chopping and cutting, basic food management, and before they get out, they are matched through a database with one of our member companies, a third-party community partner, and they are off to work.

 

And we are starting to see some incredible success stories, and I think that's one way to help solve for the labor challenge. It's a way to reward someone who's certainly paid their time. They're coming out, they want to work, they want to be part of a community. And I'm super proud of our restaurants for leaning into this population and seeing the value these individuals have and what a difference it can make in their restaurants and the communities they serve.

 

Gene Marks [00:33:35 - 00:34:09]

I just wrote a big piece on this for the Philly Inquirer, this exact topic about getting the formerly incarcerated back into the workforce. Work Opportunity Tax Credit that the federal government does. State of Texas offers workforce development grants as well. State of Texas has many nonprofits that they work for to transition people back to the workforce. And then it's really funny as the final word, like the, I probably interviewed about ten business owners in the Philly area who hired the formerly incarcerated across the board. They were like, these people are like, they were more loyal than some of my other employees. They're so grateful to be given the chance to get back to work.

 

Emily Williams Knight [00:34:09 - 00:34:35]

If we can show them that meaningful path as they begin to exit. I was down in San Antonio at the food bank and 30 of them get brought every day. They make all the lunches for folks that are coming across the border who don't have food. All the young kids in San Antonio. You can't believe the pride that these individuals have knowing they're making a difference. I love it. And I think this we want thousands and thousands of folks to come out of this program over the next five years.

 

Gene Marks [00:34:35 - 00:34:54]

Emily Williams Knight is doing great things as the president and CEO of the Texas Restaurant Association and the Texas Restaurant Foundation, which really didn't talk that much about the foundation itself, which is another topic for another time, okay, which I promise we will get to in another time that you and I meet. Emily, thank you so much for joining me. It was a great conversation.

 

Emily Williams Knight [00:34:55 - 00:34:56]

It was great. Thank you so much.

 

Gene Marks [00:34:57 - 00:35:37]

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or mail matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits or insurance services, see how Paychecks can help. Visit the resource hub at paychex.com/worx. That's W-O-R-X.

 

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Announcer [00:35:37 - 00:35:39]

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