The Negative Impact of Government Regulations on Restaurants - Literature review Example

The Negative Impact of Government Regulations on Restaurants Introduction The cost of doing business in the contemporary society has been hampered by numerous factors and chief among them is the negative impact of government regulations on businesses. Restaurants, just like other business entities, can be negatively impacted as a result of these regulations. The aim of this research paper is to discuss the negative impact that has been created as a result of the smoking ban regulations on restaurant businesses. This issue is vital for the management practitioners because it will help them to know how such government regulations could actually prove to be spinning on the restaurant industry which has already been at odds with an economy which is so sluggish. Before then, restaurants were faced with minimal governmental regulations which mostly dealt with complying with the requirements of local health departments. However, today’s restaurant operators are faced by a “barrage of oversight” since there are now numerous government regulations that affect the restaurants not only in their hiring, in order to infuse new blood into the ranks of the restaurant industry, but also in their daily operations. Indeed, the restaurant industry is now known to be exposed to many regulations which were initially not a great issue that had to be dealt with in the past (Smith, 2014:1). Various kinds of government regulations have had a negative impact on the operations of most restaurants in the U.S. For example, healthcare reforms are now known to be the “largest single set” of government regulations affecting the hotel industry. This is because according to the legislation in healthcare reforms, every employer having more than 50 full-time employees is supposed to offer them with minimum essential healthcare coverage and failure to do that attracts a fine or penalty. This legislation, passed without giving consideration to the consequences on the side of the employer and the growth of the restaurant, it is predicted, may force many of the restaurant owners out of business. Such legislation may also result in restaurateurs opting to shift to 100% part-time workforce in order to avoid the fines (Marlow, 2010:14). Another government regulation that restaurants are coupling with is the requirement by the FDA for retail food establishments or restaurants having 20 or more locations to actually not only disclose calories but also provide the “point of purchase” materials defining any other nutritional content. According to Dan Roehl, the NRA’s Public Affairs Specialist, this issue will have a great impact on a big segment of the restaurant industry. Some other regulatory issues that the restaurant industry and the operators face include swipe fees, immigration compliance and gainful employment (Marlow, 2010:15). According to Steven DiMillo, the Chairman of the “Maine Restaurant Association”, he says that he now spends double the amount today than he used to spend previously to tend to “regulatory work”. He further argues that restaurant owners need to dot numerous “i’s and t’s” in order to please the State and this makes them to be unable to achieve their mission of provision of quality food in enhanced and quality environment (Smith, 2014:2). The smoking ban regulation has had a tremendous effect on the profitability of restaurants especially in the United States where smoking bans in most of the public places has actually been promoted based on various reasons, for example, to discourage smoking and protect the health of the public. Smoking bans in public places, restaurants include have now become common in the United States. Because of an advocacy group in the US known as the “Americans for Non-Smokers’ Rights”, 29 States in the country have now prohibited smoking in not only 25 bars but also in restaurants as well. The group further asserts that approximately 17628 municipalities have now been covered either by State or local bans on smoking in bars, restaurants and working places (Marlow, 2010:14). Business owners in the United States, especially restaurant owners have raised concerns that smoking bans will economically harm their business operations and thus they are strongly opposed to them. The proponents have argued that the smoking bans have no specific and significant “negative economic impacts” on restaurants and even bars may even have positive effects on a country’s economy. These arguments are based on two reviews done by Frank Chaloupka and Marlow Eriksen in 2007 and another one carried out by M. Scollo and others in the year 2003 which confirm the fact that indeed, there are no negative effects that is associated with smoking in bars and restaurants (Weber, et al.2003: 60). According to research which was carried out in Ohio, it was revealed that previous studies actually underestimated and underrated the harm since they didn’t consider the impacts of such implications in not complying or following with the bans. In essence, it will be prudent if it was ascertained in specific the kinds of business entities which were harmed as a result of the bans and those that were not. According to Marlow Marlow of “California Polytechnic of State University”, a full accounting needs to be done to ascertain who in particular bears the costs associated to such smoking bans based on both public health and economic impacts. This, he asserts, will resolve the debate regarding the desirability of the smoking bans (Marlow, 2010: 43). Previous studies concluded that the smoking bans did not exert any harm since the non-smokers actually outnumbered the smokers and therefore the smoking bans actually make more non-smokers to frequently visit the businesses and therefore outspend the smokers who may eventually lower not only their frequency but their spending as well. However, such other studies which have been carefully conducted and disaggregated the analysis to the individual business levels have indicated that indeed, the smoking bans actually exerted differential effects because some of the restaurant establishments lots, some of them gained while others were completely unaffected as a result of the smoking bans. According to a study conducted by William Boyes (Bar and Restaurant) in 1996, it was revealed that following the smoking ban in 1990 in San Luis Obispo, 17% of the business entities gained, 25% lost while 57% of the business entities were totally unaffected by the smoking ban. On the other hand, a nationwide study that was carried out in the year 2000 by John Dunham regarding the anticipated effects associated with the smoking ban depicted that bar owners really predicted losses arising from the smoking bans twice as often as it was felt by the restaurant owners. As for the bars, 2 % reported gains, 82% predicted harm while 14% were totally unaffected as a result of the smoking ban. On the side of the restaurants, 10% predicted gains, 39 % predicted losses while 51 % were completely unaffected as a result of the smoking ban. It was also revealed that bar and restaurant owners who catered towards many smokers indeed predicted higher losses than those one who did not (Moore, et al, 2009:60-70). Based on a 203 study by John Dunham (Wisconsin Bar and Restaurant Owners), it was concluded that bar owners actually lost business 50% more as opposed to the restaurant owners after the implementation of the smoking ban. Studies conducted on the effects of the smoking ban on the business operations in India, Scotland and the United Kingdom have also yielded evidence about the differential impacts or effects of such bans. In fact, common sense suggestion is that business owners who had not initially found it a lot more profitable to forbid smoking voluntarily before the smoking ban will ultimately not only become more harmed by such a ban but will also stand higher chances of being cited for “non-compliance”. Based on the claims that the value of restaurants and bars were highly boosted as a result of the smoking ban, a study conducted by Andrew Hansen and Robert Fleck suggested that such claims were incorrect since most of the smoking bans were easily adopted in places that were already incurring above average increases and as result, business values rose based on the gains in general real estate in such communities (Eadie, et al, 2008: 45). Accordingly, it is a fact that bars are probably prone to incur more losses and experience more harm since they (bars) provide patrons with more social atmosphere in which clients enjoy mingling with others. As a result, bar owners have now found it too expensive and difficult since many clients will find it bad to segregate non-smokers from smokers as it may happen in restaurants where such interactions are less vital. In addition, most of the bars are normally too small to offer choices of smoking and non-smoking for darts, dancing or billiards and research depicting that owners of restaurants offer more non-smoking seating as opposed to the bar owners is genuine. Continued non-compliance of the smoking ban will therefore seem to be a vital indicator of harm and will therefore not force the stakeholders in the selection of one particular attribute, for example, tax receipts or revenues. References Eadie, D. et al. (2008). ‘A Qualitative Analysis of Compliance with Smoke-Free Legislation in Community Barsin Scotland: Implications for Public Health’ Addiction, vol. 103, pp. 45-100. Marlow, M. (2010). ‘Do Smoking Bans Reduce Heart Attacks?’ Journal of American Physicians and Surgeons, vol. 15, pp. 23-69. Marlow, M. (2010). ‘The Economic Losers from Smoking Bans ‘Regulation Summer, vol. 2, pp. 14-18. Moore, R. et al. (2009). ‘Correlates of Persistent Smoking in Bars Subject to Smokefree Workplace Policy’ International Journal of Environmental Research and Public Health, vol. 6, pp. 45-90. Smith, D. (2014). ‘The More you Know’, viewed November 2, 2014 from . Weber,D. et al. (2003). ‘Long Term Compliance with California’s Smoke-Free Workplace Law among Bars and Restaurants in Los Angeles County’ Tobacco Control, vol. 12, pp. 41-78. Read More