Obama’s News Taxes Expected To Hurt The Restaurant Industry In A Major Way
Observers close to the food and restaurant industry are watching their bottom line shrink, with profits expected to be lost due to new taxes that went into effect on January 1st. With Obamacare putting a halt to hiring and forcing some managers to cut staff and hours, the industry was already forecasting a pale 2013. But now with the reversal of the payroll tax holiday that eats an additional 2% from employees take-home check, the companies and supervisors that manage the nations biggest restaurant chains are fearful for what that will mean for their bottom line. Rising gas prices don’t help, either.
Despite a New Year’s Day compromise that raised taxes on only the top 1% of Americans, or households making more than $450,000, Congress allowed the payroll tax cut to expire, effectively raising taxes on all U.S. workers.
The increase in the amount workers pay into the Social Security fund — to 6.2% from 4.2% — is expected to yank about $2,000 this year from a family with an income of $100,000. All told, analysts believe the payroll tax increase will cause $117 billion to $125 billion in U.S. disposable income to evaporate.
One of the first industries to feel the heat is expected to be the restaurant business.
Scott McCormac, 53, of Cranston, R.I., had lunch Wednesday in an Olive Garden in Times Square while visiting New York with his wife. He said he’s already factored the smaller paychecks into his and his wife’s date nights for the coming year.
“Instead of dinner and a movie it will be one or the other,” he said.
So what’s the plan?
Many national chains have started rolling out additional value menus to try to entice customers to keep spending their money at their establishments.