New Mexico restaurants: heat in the kitchen - Restaurant Industry

New Mexico Business Journal, Dec, 1993 by Sharon Frink

The state's restaurants are facing a quagmire of health care reform, minimum wage restructuring and changes in business meal deductibility.

John Garcia, the high profile executive director of the New Mexico Restaurant Association, contends that while changes on the surface may appear innocent enough, the end result could be disaster for a lot of restaurants.

"The big issue we're against is a proposed 7.9 percent tax or fee on all businesses if they don't provide health care," says Garcia.

"The problem is we're a labor-intensive industry," notes Garcia. "We do have a lot of low income and minimum wage type, entry-level jobs."

Imposing a mandatory 7.9 percent tax or fee, says Garcia, could snowball to force restaurant owners to operate with smaller staffs resulting in layoffs or in some cases, force a number of New Mexico's 4,800 restaurants to close their doors.

New Mexico restaurants employ 50,000, with the state's restaurant/hospitality industry accounting for about $1 billion a year.

"We support health care access for everybody, but we'd like to see control of the costs of health care. We really want to focus on cost containment," says Garcia.

"The association's other concern is managed competition where somehow we can create a model and still keep insurance companies going," he says. "Maybe working with shared risk pools would work."

Minimum wage increases in the past two years are also bringing heat on restaurant owners who find themselves having to continuously alter operating budgets.

"We're not opposed to minimum wage increases, but we are opposed to a proposal to index them to economic indicators," says Garcia.

"In the past two years, we've increased minimum wage about 25 percent, and now they're proposing to increase it that much more again," he says.

Sharon Frink is president of N.M. Factfinders of Peralta.