Does government involvement in business do more good or harm to the foodservice industry?
The U.S. Department of The Treasury spent trillions of dollars during COVID to help people and businesses in need. Without those emergency funds from the government, many hospitality businesses would not have survived the pandemic.
Now, our world is finally getting away from the pandemic. However, many crises facing the hospitality industry are not over yet. We still need help to address the supply chain issues, labor shortage, record-high inflation, and looming concerns of the economy. Should the government continue its support?
Natural gas may be one of the urgent issues needing the government’s help right now.
There is a spike in natural gas prices in Southern California. For example, a family-owned BBQ and seafood restaurant in L.A.’s Chinatown found its natural gas bill went from a typical $5,000 - $6,000 to nearly $14,000 in February 2023 (Quednow & Cheng, 2023).
The Governor of California, Gavin Newsom, has urged the Federal Regulatory Commission, which regulates wholesale natural gas, to investigate the incident. The California Public Utilities Commission also voted to accelerate the state’s climate credits for residential customers, who might see a credit of $90 to $120 in their February or March bill. The question is: Will restaurants and hotels that use natural gas too also get help?
More municipal governments impose restrictions on restaurant use of gas-powered appliances.
In 2019, Berkely became the first city in the nation to impose gas restrictions (Hamstra, 2022). Although the California Restaurant Association still holds a pending lawsuit against Berkely, L.A. has joined Berkely and other municipal governments in 2022 to ban the use of gas appliances in all newly constructed buildings, citing health and environmental concerns about using natural gas. In January 2023, the Governor of New York, Kathy Hochul, also made a proposal to end all sales of new fossil-powered heating equipment by 2030, including natural gas-powered sources (Gould et al., 2023).
While gas restrictions have gained momentum in more municipalities, each place adopted its own version of regulations. Sooner or later, restaurants in restricted areas must convert their operations and learn how to cook with electric equipment.
Besides gas restrictions, more regulations are coming.
Another example is that a handful of states now require cage-free housing for hens laying eggs. The State of New York is also in the process of imposing cage-free egg production. Like gas restrictions, cage-free egg legislation will for sure have significant impacts on restaurant operations.
In general, are you a supporter of a free-market or command economy? Do you favor government involvement in the business? If so, in what situation?
Linchi Kwok
Professor at The Collins College of Hospitality Management, Cal Poly Pomona
CAL Poly Pomona
