McCain vs. Obama: What's a restaurateur to do?

With the presidential election just a few days away, we at Nation's Restaurant News decided to present this story from the issue that publishes Monday. It covers a debate we coordinated at our MUFSO conference specifically to help restaurateurs decide who'd be better for their businesses, John McCain or Barack Obama. It's being posted here in hopes of providing the industry with fodder for thought for those members who are still conducting their own internal debate as to which contender should get their vote (and if you want to practice, take our poll to the right).

Washington – A MUFSO debate between stand-ins for the U.S. presidential candidates proved as contentious as the actual face-offs between Barack Obama and John McCain, with the participants disagreeing on everything from Sarah Palin’s competency to what makes a good Oval Office occupant.

The two-person teams squabbled over such issues as which candidate offered the best prospects for small businesses; how much the financial crisis should be weighed in picking the next president; which contender was more of a capitalist; which candidate would surround himself with better people; and, in a strange twist, which of the two had mentioned Warren Buffett first during a televised debate.

Both sides included a one-time restaurant company leader who had sold his charge in the last few years: former Cold Stone Creamery CEO and chairman Doug Ducey, representing McCain, and Phil Hickey, who held the same posts at former LongHorn Steakhouse parent Rare Hospitality, speaking on behalf of Obama. Each was teamed with someone with a legal background. Melissa Rothring, the former executive vice president of legal affairs for current Cold Stone owner Kahala Corp., rounded out Team McCain. Cathy Hampton, the former general counsel of Rare and now a full-time volunteer in Obama’s campaign, joined Hickey.

Both sides offered assertions as to how the winner might affect the restaurant industry. The only concurrence seemed to come on the overarching question of which side had the best candidate. Both teams readily insisted they did.

Team McCain portrayed their candidate as the better capitalist, leader, commander in chief, decision-maker and independent thinker. “This guy’s a survivor, he’s a leader, and he’s always been mission-driven,” said Ducey, a resident of Arizona, which McCain represents in the Senate.

Teammate Rothring acknowledged that she had been drawn to McCain “by gut instinct.” But, in preparation for the debate, “I went to a website and looked up the issues. The common thread I saw with McCain is that he is a capitalist.”
She lauded the Republican candidate as someone who was likely to slice corporate taxes, cut the estate tax and lower the exemption on that industry-hated measure, push for tort reform, and seek a permanent research and development credit. All of those measures are favored by the restaurant industry.

In contrast, she asserted, Obama would push for a $9.15 minimum wage, unionization, paid sick leave, a rise in corporate taxes and the real estate tax, and a health care proposal that would cost “10 percent of your payroll.”

Team Obama’s Hampton challenged those assertions. “Just this weekend Sens. Obama and [vice presidential candidate Joe] Biden revealed their plans for small businesses,” she calmly retorted. “What they’ve done in their plan is direct money to help small businesses. One thing is to take away — completely eliminate — capital gains taxes for investing in small businesses.” She also cited a $3,000 tax credit for each new full-time employee a small business hires during the next two years.
“We’re talking tax cuts for 95 percent of hardworking families in America, and tax cuts for 98 percent of small businesses,” Hampton said.

Hickey professed to “take it up to the taller trees,” where he could see a bigger picture. Explaining that he’s a registered Republican who has contributed more than $1 million to industry lobbying and campaign efforts, he recounted that he was a staunch McCain supporter in the 2000 campaign.

Yet, he continued, the country has had eight years under a Republican Administration, “which was voted for by most of us. Let me ask you, how are things today? How’s your business? How’s that working for you?” His rhetorical questions came as the industry was contending with a pronounced downturn in sales, profits and traffic.

“My sense is, an Obama presidency would deal with bigger issues that would ultimately help our businesses,” Hickey said.
He cited such pressing concerns as the energy situation and the high gasoline prices that have resulted. “The leadership on that has been lacking,” he said. “As a result, it’s come out of control.”

Overall, he said, “The underpinnings of the economy are very uncertain. Who do you trust to lead for the next four years in the U.S. economy? Who do you trust to fix this?”

One of the constant points of contention during the hour debate was how much the economic crises should factor into a voter’s choice of candidate. The session was conducted after one of the worst weeks Wall Street had ever seen, and a day after the Bush Administration disclosed plans to buy stakes in nine banks as a recovery measure.

“Two years ago, we were all pretty happy with the economy. The issue was Iraq,” Ducey said. The economy “is unraveling, but it’s really all about housing. Once we get through the housing part of it, what will we have?”

He suggested, “People may go back to, ‘What are these issues?’ rather than, ‘What are these crises of the moment?’”
Team Obama would have no part of that. “I really wish we could turn the page on the economy, but it’s very hard to do that,” Hampton said.

Hickey asserted that the economy was an attitude-changer, not a short-term distraction. “There’s a strange dynamic in this room, in that there are a number of Republicans,” he said. “My support for Obama started out in the minority. But other people have come up to me and said, ‘I just can’t go there. I just can’t vote for McCain.’”

The debate was moderated by Nation’s Restaurant News editor Ellen Koteff.

Restaurateurs for Obama?

When Chris Matthews took the stage at MUFSO, he jokingly asked, “Any Republicans in the room?” Even outsiders know the industry of inclusion is a lot more single-minded when it comes to politics. But clearly a few Obamanacs have snuck under the tent, and the number will likely grow as the recovery plans issued this week by the presidential candidates are digested by the industry. At least on paper, Barack Obama seems to have the better prescription for a wheezing restaurant business.

For one thing, he’s proposing that employers be given a $3,000 tax credit for each full-time employee they hire over a two-year stretch. Repeatedly during MUFSO, executives cited a need for talent at all levels of their organizations as Priority No. 1. Couple that with all the people who are being displaced from their jobs by the economic meltdown, mix in the Democratic sweetener to hire, and you’ll likely have a lot of pleased restaurateurs.

What’s more, Obama’s plan would eliminate capital gains taxes on investments in small businesses. That provision could be a stout wrench in re-opening a rusted-shut capital pipeline.

That could get enough credit flowing for restaurants to makeover their current restaurants and even build some new ones. If they do, Obama’s plan would grant them a $250,000 write-off on the investments through 2009.

Ironically, John McCain’s plan is far more focused on consumers than Obama’s business-centric proposal. The Arizona senator wants to ease the plight of restaurants’ customer pool by allowing people to tap their retirement accounts now without paying an income tax rate that sounds as if it was a vig set by Louie the Horse. Up to $50,000 could be withdrawn during the first two years at a rate of just 10 percent.

The Republican also proposed that the capital gains taxes on stocks and other investments held for a long time be cut in half, to 7.5 percent. That, too, could help consumers enhance their liquidity, as the financial types say.

But other provisions of the plan are designed to encourage saving, not spending. This is just a guess, but restaurateurs probably don’t want at this point to see consumers socking away more dollars that might otherwise go into their tills.

Is it any wonder that some industry executives are openly voicing sympathy for the Democratic candidate—correction: for Barack Obama—as the election approaches?

“I’m a registered Republican,” said Phil Hickey, an unrepentant capitalist who, by the best of our recollection, made upwards of $30 million when he sold the company he led, Rare Hospitality, to Darden Restaurants in a multi-billion-dollar deal last year. “My family’s maxxed out on the Ed Tinsley campaign (a push to turn restaurateur and National Restaurant Association director Tinsley into a Republican Congressman from New Mexico). I’ve sent (industry lobbyist and leftists’ scourge) Rick Berman almost a million dollars in checks over the last 10 years.”

Yet, Hickey stressed from the stage at MUFSO, he’s pushing for Obama on Nov. 4. Indeed, Phil agreed to serve as the Democrat’s proxy in a debate NRN staged during MUFSO (Doug Ducey, the former CEO of Cold Stone Creamery and an Arizona resident, served as the main advocate for McCain.) In normal times, arguing for the policies of a Democrat is akin to wearing pork chop cufflinks during a visit to an attack dog school.

As Hickey noted, the country has had eight years under a Republican Administration, “which was voted for by most of us. Let me ask you, how are things today? How’s your business? How’s that working for you?”

It’s now a cliché to term the industry’s economic plight a perfect storm. Regardless of whether or not you agree with Hickey’s choice for president, you have to agree that his question merits asking. Voting for a Republican in knee-jerk fashion just doesn’t make any sense during times like these.

Watch what you insinuate, John

It’s bad enough the presidential candidates exploit their families, friends and supporters in the lunge for votes. Now they’re going after one of our own. On Tuesday, John McCain threw the venerable Sonic chain under a bus so he could sound wise and statesman-like.

“If we do nothing, many businesses will fail,” McCain said in a mass e-mail to supporters after the House of Representatives rejected the $700-billion bailout package. He then cited Sonic’s problem in securing capital from a usual source, GE Capital. His implication was clear: The corporation could become a casualty of the financial mess. That’s at best an overstatement, and at worst a calculated misrepresentation of the franchisor’s stability, made either way for political gain.

In covering companies with financial problems—something Nation’s Restaurant News is doing with increasing frequency these days—we’re painstakingly careful not to suggest that a concern could be going under, unless of course it’s actually filed for bankruptcy. At the hint of a business failing, suppliers might deny credit, loans could be called, prospective franchisees could pass on a contract, landlords could choose another tenant, and new hires might decide to work elsewhere. It’s the business equivalent of declaring someone a criminal because suspicions have been raised.

McCain apparently doesn’t share that compunction. He went ahead and affiliated Sonic with catastrophe, when the facts don’t warrant that assertion. Ironically, Sonic CEO Cliff Hudson spent part of the next day joining with other business leaders from the chain’s home state of Oklahoma to lobby for the bailout package, the very intention of McCain’s e-mail blast. There was no need for the senator to raise the possibility of failure to get his point across. He could have merely cited the importance of the package to Sonic, and left it at that.

Instead, he demonstrated the sort of self-serving, exploitative politicking you don’t want to see in a leader who needs to inspire.

Politics as unusual

The public’s interest in politics has been honed to a keen edge by the uncertainty over who’ll be sitting in the Oval Office next February. But the restaurant industry has been doing less handicapping than hedging. Indeed, the trade’s main lobbying forces have been quietly seeking insurance of sorts to protect the trade’s political interests regardless of who prevails in the November election.

That was evident during last month’s board meeting of the National Restaurant Association. As we reported at the time, the group voted to pursue an initiative whereby restaurateurs would be solicited to work in the campaigns of whichever candidate drew their support. The objective was to have a member of the business inside the tents of what were then the three main candidates. “When they win, we want friends who were friends [to them] before they won,” explained Bob Leonard, the IHOP franchisee who heads the NRA’s Political Action Committee.

That effort to curry favor with Democrats as well as Republicans has been seen in other actions by the group, large and small. For instance, as was noted earlier in this space, the association lined up John McCain to deliver a keynote address at its annual mega-convention in Chicago. I and apparently others chided the NRA for always selecting a speaker from the more sympathetic side of the aisle instead of taking a nonpartisan approach to booking presenters. In press releases issued after McCain appeared, the association noted that Sens. Hillary Clinton and Barack Obama had been invited to appear as well but had declined. It didn’t sound like the same NRA that had once boasted about its insider status with the Republican White House. It was as if it quietly removed that elephant pin from its lapel.

Fast forward to earlier this week, when the association and its longtime ally, the National Council of Chain Restaurants, formally praised a new law that aims to protect restaurants from being sued for printing credit card expiration dates on charge receipts. Obviously the two groups had pushed for the measure. They succeeded in part by working with Rep. Barney Frank, the liberal Democrat from Massachusetts, and Sen. Chuck Schumer, a party standard-bearer from New York. These are not the industry’s usual allies.

The NRA and its usual cohorts haven’t switched allegiances, to be sure. The group reportedly spent $200,000 last week alone to help one of its own, former chairman Ed Tinsley, win the Republican nomination for a U.S. House of Representatives seat from New Mexico. The association has very expressly indicated that it wants a member of the industry inside the Capitol, watching out for the business and presumably working closely with it to promote favorable measures. It’s hardly standing on the sidelines in that contest, and the party it favors is no secret, at least in that Congressional race.

But clearly its striving to work with the party that’s quite possibly going to control both the White House and the Capitol next year.

Every time restaurateurs are surveyed about what they regard as their biggest concerns, burdensome politics and regulation rank high on the list. If the industry slipped into a partisan mode in the current environment, that concern may move even higher.

Instead the NRA and the NCCR are taking a more pragmatic course. And it could prove a smart one indeed.

The house party

A heads-up to National Restaurant Association show coordinators: There is a second political party out there, you know. The association served up a pleasant surprise Monday by announcing that John McCain is going to drop by the industry’s mega-get-together next week in Chicago, first to speak to attendees, then to powwow with industry leaders about travel and tourism. His participation will follow by two years the unscheduled appearance of President George W. Bush, one of a long line of political speakers that also includes his mother, Barbara (accompanied by her dog, Millie), Ronald Reagan (in his second post-White House public appearance), Gerald Ford and Herman Cain. In one of those uncanny coincidences that no bookmaker in Vegas could anticipate, all were Republican (though I can’t absolutely swear to Millie’s political persuasion).

It’s easy to see why. As James Carville quipped at his recent appearance at an industry event, “I’d like to say hello to all of my fellow Democrats. All eight of you.” This is a obviously a Republican industry. And the whole point of a convention is being with persons of your own calling.

It’s great that McCain will be addressing the NRA’s convention. Indeed, it’s a tribute to the association that it can land figures of that stature, and the timing couldn’t be more perfect. This election is truly a race, with the outcome as uncertain as any I’ve witnessed. And you’re talking about someone who can recall listening to John F. Kennedy’s warning about some missiles in the place where Ricky Riccardo came from. A presentation by McCain could stimulating experience indeed.

But even rabid GOPers would have to acknowledge that their flag-bearer may not be the one voted into office six months from now. Nor is there any speculation about the Arizona senator’s claim to represent the team. His appearance may be more of a rah-rah event than a sobering moment of thought.

Face time with Obama or Clinton, in contrast, might have been far headier. If they’ll truly be enemies of the industry, isn’t it better to have a sit-down now, figuratively speaking? Where do they stand on industry issues like menu labeling, no-match letters or foreign tourism promotion? Inviting the trade’s adversaries might have been far more educational than a pep rally. And if the choice of the Democratic candidate has still yet to be decided, wouldn’t it be interesting to determine which one the industry would prefer to see in the race?

For all I know, the NRA did invite one or both of the Democratic contenders, and was turned down by each. Or that there might be a surprise last minute stop-by by one or both, akin to George W. Bush’s unexpected presentation in 2006.

That would be a pleasant surprise indeed, and I don’t say that because of my own political leanings. During times of political uncertainty like these, it’s better to learn what your adversaries are thinking than it is to review the points of agreement with the entrant you prefer.