For two and a half years, the restaurant industry has taken blow after blow, knocking it down, but not out. Every month, increasingly powerful blows in the form of higher costs push more and more owners to consider closing their doors.
For this reason, the National Restaurant Association cannot support the Inflation Reduction Act of 2022 in its current form. This bill provides no relief for restaurants. Instead, it will likely raise prices for our supply chain partners, costs that will eventually pass down to local restaurants.
“The Inflation Reduction Act has laudable goals, but the current version is a net negative for local restaurants,” said Sean Kennedy, executive vice president for Public Affairs at the National Restaurant Association. “Passage of this bill will likely lead to higher supply costs for restaurants already struggling to weather the economic storms. For restaurants hoping for a pandemic lifeline from Washington, this bill falls very short.”
Amid the current economic environment, the Inflation Reduction Act of 2022 creates a new $313 billion Corporate Alternative Minimum Tax (CAMT). According to the Joint Committee on Taxation, manufacturers and wholesalers will be responsible for paying 59% of the $313 billion. This will likely impact manufacturers and producers of poultry, meat, frozen food, soft drinks, and alcohol, as well as their distribution partners, all of whom directly or indirectly provide products to the nation’s restaurants. These partners will likely have to pass on many of these costs to restaurant owners.
The National Restaurant Association believes lawmakers can still make changes that will directly ease inflationary pressures:
“We overcame the legislative odds to get RRF passed into law, so it’s very disappointing to hear that some of that money is sitting in SBA’s accounts. The Association supports SBA’s efforts to be good stewards of taxpayer dollars, but Congress set aside $28.6 billion to support the industry and restaurants should receive that full amount,” said Kennedy.
The restaurant industry is still struggling to rebuild from the impacts of the pandemic. It has still not recovered 728,000 jobs lost in the initial government shutdowns. Added to the stress of wholesale food costs and falling consumer economic confidence, operators are growing more pessimistic about the economic outlook. Learn more about the state of the restaurant industry in the Economist’s Notebook.