Dashboard: Could California’s Fast Food Regulations Actually Work?

[Music] welcome to another 21 hats dashboard I'm Lauren Feldman I'm here with Gene marks to talk about the stories and issues we think business owner should be following this week welcome Jean Hey Lawrence seems like it's been a while it has great to have you back yes uh Jean as usual you've been writing and talking about issues that matter to business owners I I want to start with um the new law in California that you've uh been writing or talking about actually on a podcast that uh subjects the fast food industry to an array of new regulations um before we get into the details and what you think of it let me just start by asking you this is there any reason that business owners who are not in California should care about this new law yeah um they they should because if the new law you turns into something good you know um it it could easily spread in fact there are other uh other states that are taking a very look at what this law is so let's just step back a little bit right so this was signed into law by Governor Nome on Labor Day and it targets just the fast food industry it creates a committee of people that are appointed I think mostly by the governor um and it's mostly you know it's a proportional committee that has representatives from Employers in the industry employees in the industry and some lawmakers as well some government officials and the committee itself is being given wide authority to make rules for the industry um what's you know safety rules Health rules and of course what's gotten the attention is wage rules the committee can actually increase the minimum wage in that industry if they vote to do that up to as much as $22 in change an hour so like a lot of people are up in arms about it you know like like the the the CEO McDon was on CNBC saying like oh this targets you know big big franchise you know big you know fast food companies and then you've got like small business owners who are independent franchisers they're complaining about it because they're saying it's going to you know increase our costs if this committee says we have to raise our minimum wage and then you've got consumer Advocates that are saying oh my God if they increase the minimum wage it's going to increase prices for everybody and then you've got labor people let's say that once once the fast the fast food industry increases their minimum wage to $22 an hour then then you know what are other Industries going to do right that hire the same pool of workers they're going to have to increase wages to be competitive so you know there's all that just on that one point it's it's there's no guarantee they're going to increase the minimum wage they just have the option to increase it if they find it necessary right yeah and most people I talk to feel that it's pretty likely that the minimum wage they're going to increase it you know um and and you know we don't know that still but what intrigues me about this is and I'm going to write about this too Lauren because and you know me like I'm like a you know I'm a republican like no no you keep the government as far away and you know blah blah blah um but I got to tell you you know I mean there is we have to always keep our minds open to new models of doing business okay and instead of you know most Industries in this country now pretty much self-regulate unless it's a real industry like healthcare or financial services that could harm you know so the government leads them up to self-regulating and is that the best model I mean it might be but this Governor Newsome is trying out for the fast food industry and and the the the position is hey you know what instead of just letting the industry self-regulated then they have to Lobby lawmakers and you know the big businesses always step on the small businesses when that happens why not have an independent committee um that's made up of the key players in the industry employers employees and and a few law makers and then that committee decides what's best for the industry and whatever the committee says that's what the law will be you know and um I don't know I mean I'm like you know this it might not be a bad idea if everybody has skin my mouth is hanging open well it's not it's not like the government is telling what they're it's not like they're like overregulation the industry and say oh you have to raise your wage to $22 an hour for example if this committee which is made up of both employers and employees and government officials decide to raise you know think that it's better for the industry to raise the wages then I think I would trust that more than just like lawmakers deciding who might not even have any clue what the industry is about and that goes for safety and Healthcare and health and wellness as well do you know what I mean so um safety is a big part of this right that's this was this comes out of the pandemic and concern that uh Employers in the fast food industry in California were not overly concerned with the health of their employees during the pandemic um and and this whole thing is like is like um people are saying oh you know this is you know again it's the you know the Democrats knew some Pro worker you know whatever and I don't know maybe there's some of that but I mean you know if if in the end it makes the industry better for all involved you know more attractive to workers um as well as you know more attractive for you know better for employers um there's that and you know and if they set a wage in the industry you know doesn't that kind of level the playing field for small businesses smaller franchisers because they're like hey we don't have to have a discussion about wages anymore this is what it is you know and the committee decided this not some lawmaker but a committee did this do you know what I mean well we all have a deep seated fear of committees and for good reason but but I but I hear you you know I I wonder I'd love to know what one chain in in particular thinks about this are you familiar with the In-N-Out Burger yeah I am I don't get it though I don't get it I've had an In-N-Out Burg it's good you know everybody makes such a big deal you go to La I've never had one I'm I'm less interested in it as as food and more interested in it as a business model because they are famous for paying their people really well and running their restaurants very differently from most other ch and I would love to know what their reaction is to this new it's an interesting my suspicion is that it won't have much of an impact on them who knows who knows now you know will this increase prices for consumers if wages go up yeah I mean will it you know will it it motivate more these you know fast food chains to automate and get more technology to replace workers maybe I think they're already motivated they're already doing that yeah they're already doing that so I listen here's the thing I don't think anybody knows you know that's the one thing I've learned over you know living on this Earth for 57 years is that no one knows [ __ ] you know so they're going to try this is an interesting little model to try out in California in the fast food industry and I'm curious to see you know what happens over the next few years I realize I don't have any skin in the game because I don't I'm not a franchiser so I guess they're the guinea pigs um but I don't know it could be an interesting model for other Industries as well you know a joint type of Regulation between both you know lawmakers employers and employees it be interesting you just scared the hell out of own list to this pigs flying all right well this will be fun to watch um do you have any sense of when this is going to kick into gear and when we may begin to see some oh it's law now so I think we'll start seeing the effects of it in 20123 and I can guarantee you that there'll be a bunch of screaming and yelling when minimum ages go up because that's going to happen it's going to happen do you think is that the major issue is that the yeah yeah yeah that's the big issue I mean I don't think I think there's pretty much overall agreement between health and safety of workers and all that you know for goodness sake but you're going to see people scream and yell when they raise wages you know from $15 to $20 an hour wait oh my God so that'll be interesting to see interesting all right uh next topic also talking about the treatment of employees you recently wrote I don't know what's going on with you you're going soft in your uh in your middle age uh you recently wrote that it would be smart for business owners to offer paid parental leave um what's going on I what happened to you no listen parental leave uh continues to come very high among you know requested benefits for employees and um there's been this there's there's now a trend there was a study done by I think the Society of human Resource Management that some big employers are pulling back now on paid par rental leave they're not offering the benefit as much um or as high a benefit both for mothers and fathers you know for you know paternal that's surprising do you know what's driving that yeah uh costs just straight out straight out it was just becoming but at a time when there's a labor shortage and everybody's competing desperately it seems kind of counter counterintuitive yeah I agree but you know I guess they're you these big employers are trying to they're they're juggling what benefits to provide and what you know what just doesn't seem sustainable um but parental leave is a big it's a big issue and um you know I'm saying to my clients first of all there's a few ways you can go about this parental leave thing if you're a small business I mean for starters even just offering some some counseling like like having your your accountant be available for your employees to make sure that your employees are fully versed on how to take advantage of the uh you know the the Child Care Credit uh for if they're getting you know you know help look after children a lot of people I meet don't really know their way around that and they're not taking fully advantage of it so that's just that's a basic thing you can do I do have some small businesses I mean if you run a small business and you set up a flex flexible spending account you can contribute up to like 5,000 bucks uh you know pre-tax to the employee you get a deduction and the employee can take that money and use it uh for you know parental leave costs so there's that as well you don't have to do the whole 5,000 per employee maybe 500 or a th000 but any little bit would help um and then finally the Family and Medical Leave Act um yeah there's an expansion of that from the 2017 tax reform if you you know you got to give them 12 weeks off if you've got more than 50 employees but for any size business if you if you give them unpaid leave but you pay um 50% of their salary or more um you can get tax credits to help you offset some of that cost so the government is providing some assistance uh both to your employees and to employers to you know to help with parental leave and I'm just saying it's a big you know it could be a great benefit that could make the difference between losing that perspective employee um or current employee you know um or retaining them especially at a time when larger employers are cutting back yeah yeah and the other thing is about parentally if you're running a small business I mean you can be flexible about it because you're a small business you know and so um you know I I just think to leverage that I think as a potential asset for a small business and like I said it's a very popular benefit in the column you wrote about this Jean you raised some really fascinating questions um you didn't give the answers necessarily I'm curious if you have answers to them one is um you just raised the question is it biased for a business to offer paid leave to new parents um what you know people who don't or can have children feel about seeing that yeah I mean it's people that that don't or can't have children children now the these people are getting paid leave off just because they're able to have a kid I mean that that's a little tricky or how about people that are like if worked for you for 10 20 years maybe their kids are grown they didn't get any paid parental leave benefits and now suddenly you're giving the younger workers parental leave you know like is that fair um you know and even like paternal fathers and mothers you know is there is there a bias between offering it to them as well that's why it's it's it's a tricky issue it really is so I don't have answers to that those are those are tricky issues let me know if you get them here's another one you raised is it fair to tell a new mother or father that you need them to be responsible for at least some of their work duties from home now that we know remote working is a valid option that's a great question it really is and yeah again if you're a small business you know say you've got 10 employees or 20 employees and you one person goes out on Parental leave it's a big deal so I don't know you being a dick by saying to that employee listen you know can you put in a couple hours a day or something you I know you have a new newborn but you know can you know people don't think about it unless you own a business from that perspective very often if you know you're obligated to keep this job open you you don't always know for sure that the parent is going to come back um so you can go a long time waiting for someone and then find out well that's actually not going to happen and and that's not necessarily because you know the the employee is being is committing some kind of fraud or something you don't always know the way these things are going to go you don't and that's just the way it works but it can be very difficult for a business owner who you know doesn't have a a big staff yeah that's right and I guess just comes down to the relationship you have with your employees and it's a good measure to see how much how committed the employee is to you how much they care about you and your business as well as how much you care about them and um you know I mean there's a lot of people talk about being exploited as employees and I you know the the vast majority of small businesses that I talk to their employees are treated well by their employers and there's you know there's a good back and forth relationship you know so hopefully you know that's the case for you know that's the case for your business maybe you can work something out with that employee to you know keep that flexibility you mentioned I think that's a great Point next topic you recently wrote that Salesforce has come out with a less expensive uh customer relations management uh option uh aimed specifically at small businesses uh Sal for Salesforce of course is kind of the gold standard when it comes to most CRM but in a piece you wrote you kind of worn against it and you did it with a very good line that I'm going to quote you wrote that buying a CRM system that targets small businesses from Salesforce would be quote like buying a salad at McDonald's they offer it but you know it's not the restaurant Chain's main focus um that's well said and an interesting point tell tell us more about sales buying a salad at McDonald's for starters for God's sake I go to McDonald's like three times a year two times a year and it's all Big Mac with a chaser side order of of cheeseburgers um no no salads so you know I mean Salesforce okay for starters Salesforce fantastic application they're like the BMW of crms you know that's they're they're great I mean they're stock ticker says CRM you know I mean that's how right um but they they don't give a [ __ ] about small businesses I mean they don't they you know they offer the small business version because it's like a carrot to try and attract a small business that maybe can turn into a bigger business and really make them money but Salesforce you know their Core Business is selling to Enterprise siiz companies and as you know Lauren I mean we we Implement Salesforce I've got about 30 Salesforce clients they're all giant companies you know like J&J and Dupont for example so you know but smaller companies that Salesforce is not it's not position in the way they're not organized well enough to go after and support small businesses I mean small business owners I mean we are lunatics you know we're calling at all hours of the night we expect the same kind of service as if we're running a a billion dooll company you know what I mean we're impatient you know we're arrogant all okay it's all me that's I'm not right but it's so Salesforce doesn't have a support infrastructure you know to to handle that and when there's so many other better more affordable crms that are geared towards small and midsize businesses and one other thing I mean Jesus when you're running a small business I mean come on you don't need the space shuttle when it comes to a CRM system you know most of the mainstream crms out there are fine for you I just think it's a waste to go down the road of Salesforce you're going to be disappointed is it a bad product or is it just the service uh it's it's it's not a bad product it's just lacking in a lot of the features that you can get for the same price or less with some of the mid-market crms so that's the biggest difference and as far as the services concerned again you know if this is a company that you know they they sell their products and have companies like biny and erston young and PWC Implement them so they're not interested in small but they're not going to their sh meetings and talking about their their that they just sold their you know CRM to the marks group they could care less you know what I mean so it's just you want to go with companies that focus on your on on the type business that you have the size of the business you want that Big Mac yeah you want that Big Mac not the salad goodness sake all right last topic for today the Wall Street Journal recently ran a piece about manufacturers who uh have made the dramatic shift from being uh short of inventory to having a glut of inventory we've been hearing a good bit about this for a while but they singled out uh Scott's Miracle Grow in particular and they quoted the company's CEO uh who told the journal I love working but this isn't exactly the [ __ ] hole I was planning to live in toward the end of my career working my way out of a goddamn latrine uh but that's what it is and that's where I am um pretty pretty Stark terms I I'm Cur obviously big company um we know about the um the problems with inventory and how it happened but are are you hearing this from your clients you you have a pretty good feel of what what's out there what are smaller business I'm hearing that and I'm hearing the opposite and then I'm hearing that and I'm hearing the opposite in other words I had like I was with a client today and they're trying to get supply from some of their key suppliers the key suppliers don't have any inventory and then I was speaking to another client earlier this week who had the exact opposite problem was sitting on too much inventory because Co [ __ ] everything up you know so whatever systems you put into place and whatever you know ordering you were doing to meet demand you know you had some bit of consistency some bit of regularity um all of that got turned on its head because of covid so it's just all over the place and it is amazing Lauren how um I mean we knew it but I don't think even any of us really appreciated I mean just the extent of the pandemic and the disruption you know I mean we shut down the world's largest economies and when you do that the supply chain the inflation uh you know the inventory issues it's it's been I mean it's just rocked the world and it's all these inventory issues that that this guy at Miracle Grow uh is having right now they're not going to go away anytime soon he's going to have this headache for the next year or two all because of the pandemic which is amazing and what does it say to you about the outlook for the kinds of businesses that you work with in the next you know 3 months or more I'm going to write a piece very soon either for the Washington Times of the hill and um it's it's it's a negative piece on I think 2023 is going to be a rough year for a lot of businesses you know particularly small and midsize businesses um I think that you know uh right now there's some reports about confidence being okay but still low from the nfib I think that's going to go down um that came out before the latest inflation report and before mortgage rates tops 6% we're going to have high Interest next year we're going to continue to have stubborn inflation next year we're going to I don't care what people are predicting about these elections it's going to be another stalemate in Washington uh there's going to continue to be labor shortages because I don't care how many people Governor to santis flies to Martha's Vineyard we're still going to have issues with immigration and labor shortages some businesses are going to face there's more labor regulations coming on the horizon overtime rules and independent contractor rules you know Energy prices are going to be super volatile I mean God knows what's going to happen this winter in Europe and you know with Ukraine if you know Putin continues to have setbacks it's just it's going to be a tough year next year for a lot of businesses having said that not catastrophic not like a bubbles that cause you know you know again you know violent swings like we saw in 2009 but next year's going to be a rough year there's no doubt about it you said you see the labor shortage continuing I mean could that continue through a recession I that seems yeah I think you're right I think the the recession itself is going to help um but that's the other thing that I like I said because it's not catastrophic I was at the the client I was at today we had like a two-hour meeting about people that they want to hire like they're looking for a director of manufacturing and a director of HR I'm seeing you know a lot of my clients still looking for people um I I no matter how slow things might get year are challenging um companies that have been around for a bit you know the the companies I serve at least the B2B companies family-owned companies my smartest clients are like looking ahead they know that 2023 is going to be rough but they also know things are cyclical no matter who sits in the white house so they are looking ahead at 2024 2025 and I think they're they're still going to be looking around you know for for for good skilled employees there's always going to be demand for that there's never going to be enough Supply um so I think that's going to continue into next year and everybody's fought so hard to get the staff they have at this point Y that's right Gene marks is a CPA who writes weekly on small business for the guardian the hill the Philadelphia inquire the Washington Times Forbes and entrepreneur you can also hear I'm on ABC radio's eye on the world with John Bachelor Jean hosts two small business podcasts with paychecks Corporation and the Hartford thank you Jean Lauren thank you we'll see you next week always a pleasure have a great week everyone we will follow up on these stories uh as they progress thanks [Music]