In this Weekly Wrap, we’re looking at what consumers want from restaurants, a drop in U.S. tourism, the proposed ‘no taxes on tips’ legislation, and more.
Dine-In Perks in a Takeout World
The Headline: “In a takeout world, some dine-in benefits still matter”
The Source: Restaurant Business Online
What You Need to Know:
According to consumer data from Restaurant Business sister company Technomic, two notable items consumers say they want more of are music and free Wi-Fi. The percentage of consumers who say music selection is important increased from 43% in 2022 to 50% this year. Free WiFi increased to 45% from 41%.
“It’s all about takeout and off-premise these days, but those are on-premise elements,” Robert Byrne, director of consumer insights for Technomic, said at the National Restaurant Association Show on Monday. “Consumers still want on-premise elements that are enhanced when they go out to eat.”
The survey can help explain certain strategies at chains like Starbucks, which gets most of its visits now through drive-thru and mobile order but has focused as much on the in-store experience since the arrival of CEO Brian Niccol last year
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They also want their restaurants to be innovative. Sixty-eight percent of Americans told Technomic that it’s important for restaurants to introduce “new, exciting products,” up from 62% in 2022.
But consumers also want their restaurants to be a good value, and Byrne highlighted Chili’s, which has seen same-store sales rise more than 31% over each of the past two quarters—and over 15% over the past four—despite an environment otherwise brutal for casual-dining restaurants.
Our Take:
I wish this were common sense, but it’s not: people care about how a space makes them feel when they walk in. Be it a dive bar, fine-dining restaurant, or quick-service hot dog joint, atmosphere has an impact.
Music, however, is often the most overlooked element in setting the tone. So many operators neglect it. Music should always fit the space. I recently went to a well-known quick-service restaurant, and not only was the music blaring, but it was hard rock. And this place was not a hard rock kind of spot, it’s more of Katy Perry kind of place. If my wife hadn’t been so specific about her craving (and if I wasn’t worried about facing the wrath of a hungry partner), I would have gone somewhere else, even though I was just getting takeout. (I should add there was a line.) The lesson here: make sure the music level is just right and that it fits the vibe of your venue.
As for WiFi, why not offer it? At the very least, it’s a great way to collect email addresses for your mailing list. “Free WiFi — just enter your email.” Cheesy? Sure. Effective? It can be.
The rest of the article rehashes what we’ve been talking about for months now: people are looking for value and innovation. That’s not going away anytime soon.
Tourism Woes
The Headline: “US Border Woes Grow as Millions in Tourism Revenue Lost from Collapsing Canadian Flights, Road Trips, and Bookings Amid Tariff Fallout”
The Source: Travel and Tour World
What You Need to Know:
The US is experiencing a significant decline in Canadian tourism as geopolitical tensions, new tariffs, heightened border scrutiny, and growing fears about deportation and device inspections at ports of entry deter travelers. This growing rift between the U.S. and its northern neighbor is manifesting in severe economic repercussions, particularly in border states and tourism-dependent regions like California. With airlines slashing flights, bookings collapsing, and long-time visitors canceling travel, the impact on state and municipal economies is becoming increasingly dire.
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Despite the effort, the campaign failed to reassure Canadian audiences. Online reactions quickly reflected widespread concern over the current U.S. political climate, especially under the second administration of President Donald Trump. The sharp rise in visa denials, the detention of tourists, and even high-profile deportation cases have fed growing anxiety among international travelers. Canadians expressed particular fears about border agents searching personal devices or misinterpreting political views, sparking concerns about civil liberties and personal security while in the U.S.
This rising apprehension has translated into measurable consequences. Visit California, the state’s official tourism body, has projected a 9% drop in international arrivals in 2025, with the most significant losses expected from Canada and Mexico. Canadian travelers, in particular, have historically contributed significantly to California’s tourism economy due to their frequent visits and high spending levels.
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The collapse is spreading beyond traditionally high-traffic states. Even small towns near border crossings — such as those in northern Minnesota, upstate New York, and Michigan’s Upper Peninsula — are feeling the pinch. Many of these towns are economically interdependent with Canadian visitors, who contribute to hotels, restaurants, retail, and even cultural institutions.
Tourism boards and hospitality associations warn that the effects could ripple through the broader U.S. economy. From airport concessions to rural service jobs, fewer travelers from Canada mean lower revenues and potential job losses in sectors that were just beginning to recover from the pandemic’s devastation.
Our Take:
This is something we’ve been hearing from operators for a few months now. Unfortunately, I don’t see the pendulum swinging back anytime soon, at least not when it comes to international travelers visiting parts of the U.S. that have long depended on these tourists. Those regions can expect to see a decline in those travelers this year, and possibly beyond — my guess is beyond.
It’s not like the U.S. has always been universally adored by the whole world — there are many places that have long had issues with this country’s politics, values, and systems. But the current administration’s policies have amplified this sentiment, putting us in the crosshairs of allies and neighbors who’ve traditionally supported our economy with their tourism dollars. Until the U.S. can rebuild its image globally, those dollars are going to stay on the sidelines. It’s a brutal reality.
Many of the current policies are causing damage to our industry on multiple fronts. One silver lining is that it forces us to look inward. If you’re in a tourism-dependent area, engage your community, your neighbors, and locals, and embrace the tourists who do show up. Innovate, elevate, and exceed expectations, you will not only weather the storm, but emerge stronger and more resilient.
No Tax on Tips
The Headline: “Congress Is Poised to Pass ‘No Taxes on Tips’ Legislation. But What Does That Actually Mean?”
The Source: Eater
What You Need to Know:
This is one of those policy proposals that truly is as simple as it sounds — workers who are paid the tipped minimum wage (also known as the “sub-minimum wage”) of $2.13 per hour would not be required to pay federal income taxes on the tips that they receive from customers. The vast majority of these workers are restaurant servers, bartenders, cocktail waitresses, and other service staff, though the Department of Labor’s definition of a “tipped employee” applies to anyone who receives over $30/month in tips, which extends to drivers and other workers who collect tips
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“No taxes on tips” sounds like a good thing! Why is it bad?
It does, in fact, sound like a good thing. And it’s not bad, necessarily, but it likely won’t have much of an impact on the majority of tipped workers. That has everything to do with how taxation in this country is structured. According to Vox.com, only about a third of tipped workers earn enough money to pay federal income taxes at all. If your income is less than the “standard deduction” — $27,700 for a married couple filing their taxes jointly — you don’t pay taxes on that income. The median restaurant server earns about $32,000 annually, per the Bureau of Labor Statistics, which means that they would only be required to pay federal income tax on about $4,300 of that income. (Notably, those workers would still have to pay other taxes, like Federal Insurance Contributions Act taxes and state income tax, if their income is high enough.) As such, it’s not likely to have a meaningful impact on the economic burdens of restaurant workers, especially those who earn the least.
When Cruz’s bill was introduced, the Center for American Progress said that “the tax cuts it would provide low- and moderate-wage tipped workers would be small or nonexistent,” and noted that the Act would allow for high earners, like hedge fund managers, to reclassify large portions of their income as nontaxable. Harris’s plan claimed to include “guardrails” that would limit the exemption to low-income workers, though it lacked clarity as to what the promised “strict requirements” might be.
Our Take:
In my opinion, the 'No Tax on Tips' act feels more like a vanity play designed to create the illusion that lawmakers are helping tipped workers. Yeah, the federal tax savings will provide some relief, but it doesn’t address the deeper issues plaguing the industry. In actuality, it might even disincentivize raising wages for tipped employees, as operators could view this new benefit as a kind of bonus or incentive for staying in the industry.
The bill reduces payroll tax liabilities for restaurants slightly, but it only applies to tips up to $25,000 per employee. For restaurants with a large staff, this could add up to some noticeable savings, but it’s hardly going to move the needle for most.
That said, while the savings might be modest, they’re something. Will they drastically change the industry? Nope. Will it convince more people to become servers, bartenders, or bussers? Probably not. Will it persuade the significant number of service workers who don’t report cash tips to report those tips? Definitely not. We’ll likely need at least a year to evaluate any real impact. My initial reaction when I heard this news was more indifferent than anything. And I think that’s the prevailing sentiment many service workers will feel a year from now.
Los Angeles $30 Min Wage for Tourism Businesses
The Headline: “L.A. Votes For $30 Wages At Hotels And LAX—$17 Next Door. The Fallout Has Already Started”
The Source: View From The Wing
What You Need to Know:
The Los Angeles City Council passed legislation 12-3 requiring “hotels with more than 60 rooms, as well as companies doing business at Los Angeles International Airport, to pay their workers $30 per hour by 2028” plus “hotels and airport businesses would be required to provide $8.35 per hour for their workers’ healthcare by July 2026. The rest of Los Angeles will have a $17.28 minimum wage. (HT: @crucker)
To become law, the City Council needs to pass this again in a second vote on May 23.
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This policy carves the city’s economy into favored and disfavored sectors. By 2028, a maid cleaning rooms at a large L.A. hotel must be paid $30, but a maid cleaning an office building or a small 50-room motel across town will still earn around $17–$18 (the broader minimum in place at that time). A cook flipping omelets at a hotel’s restaurant will cost double the labor expense of a cook flipping identical omelets at the diner down the block.
Businesses and workers will respond to the pay gap. If you’re a restaurant server or line cook, you’d obviously rather land a job at the hotel where pay is twice as high. That means the big hotels will have a flood of applicants, poaching some of the better workers from other restaurants and cafes. Those other establishments could then face staffing shortages and declining quality, as well as wage pressure not provided for in the law. The city is picking winners and losers: large hotels and LAX contractors are told to bear a hugely increased labor cost, while their competitors in other parts of L.A. get to follow the much lower citywide minimum.
Our Take:
We’ll be following this one closely, as Los Angeles County has a history of leading labor policy in California, and what starts there often spreads to other municipalities across the state.
This proposal is a head-scratcher. It doesn’t make a ton of sense for the employer, and not even for most employees, unless you're one of the lucky hourly workers at these establishments. I understand what they’re trying to do but the details are just not well thought out.
From the employer's side, this is a drastic increase in costs. Let’s take a 60-key full-service hotel with 20 employees. If the average hourly wage is $25 (which is generous), that’s a $5 increase per hour under the new rule. If the average employee works 35 hours a week (not everyone is full time), that’s an extra $3,500 per week — about $182,000 per year in additional wages. Including payroll taxes, the total increase could approach $200,000 per year. Now, imagine you’re a larger hotel. It gets ugly.
I’ve spoken to hoteliers who say they’ll avoid L.A. like the plague if this passes. One even said he’d offload his small L.A. portfolio. Others have suggested they’ll run leaner, cutting back on new hires and strictly controlling hours. And overtime? Forget about it. For restaurants, this could make many hotel restaurants untenable to operate — many already lose money. Expect understaffed bars and restaurants with skyrocketing prices. And at the airport? If you think airport food is expensive now, just wait.
For employees, if you get in, it’s great. For tipped workers, even better. California has no tip credit, so in addition to the $30 an hour, you’re also pocketing tips, which can be significant depending on the type of hotel. But with staff cuts inevitable, it’s likely you'll find well-paid but undersupported staff, equalling service that’s probably not worth the price you’re paying.
Now for the kicker: the disparity. Setting aside the financial implications on the individual businesses, the city is basically saying you’re a more valuable employee if you work at a larger hotel. And if you work in a small hotel or a restaurant near the airport, you’re less valuable and deserve less money. Why should someone working in a restaurant near the airport’s minimum wage be almost $13 less an hour than someone at a larger hotel across the street? There isn’t an ounce of sense in it.
Restaurant and hotel workers deserve to be paid more, and I think there are ways to achieve this. But this isn't the answer.
Meaningful Experiences in a Digital World
The Headline: “How to create meaningful restaurant experiences in a digital world”
The Source: Nation’s Restaurant News
What You Need to Know:
“For the past 10 years, we’ve tried hard to marry art and tech to create beautiful magic for our guests and our teams,” Feeney said. “Over the years, there have been cloud-based POS systems, reservations and floor management systems — all layered on top of each other. Looking forward, with AI, it’s going to enhance and empower teams, operations, make healthier businesses and happier guests. We’ll be able to know people whether it’s their first time coming in or their 500th.”
AI, he added, is creating a “new frontier” for hospitality in which conversations with guests start as soon as they make their reservation and continue until they leave the restaurant. Macpherson noted, for instance, that USHG has been piloting checkless payments to remove some of customers’ friction.
“We’re bringing an Uber-like experience into restaurants. When giving the diners the power to get up and go when they’re done dining … solves a couple of problems. We’ve all been in check jail, waiting and trying to get our checks. And for the staff, it’s stressful because they see people waving them down and they’re trying to do a million different things,” she said. “From a restaurant side, waiting for your check can take up to 20 minutes, so if we can shave off some time, it can add to the topline without adding capacity in the restaurants.”
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Feeney added that restaurants have long had access to a lot of data, but in the next five years, that data will become more empowering — meaning we’ll move from a dashboard system to “something bigger.”
Our Take:
The past 25 years have been a boon for restaurant technology. Kevin Garry, owner of L’Artusi in Manhattan, often talks about how Resy revolutionized the reservation process. Before Resy, his team confirmed every reservation by phone. Waitlists were also manually managed by one of their reservation staff members, and when someone needed to cancel, they had to call. That’s the key word here: team. Then came Resy with its “Notify List” and text confirmations, and reservation teams were suddenly streamlined. Restaurants saved on labor costs, which smart operators reinvested into their businesses and staff.
That’s just one example. Many tech advancements of the past 20 some odd years have come in the form of POS systems, Kitchen Display Systems (KDS), and other day-to-day operations tech. While these innovations have saved time and boosted efficiency, they still rely heavily on human input. But what’s being developed now is a whole new ballgame.
The most impactful — but also the most perilous — advancement is AI. The article touches on this, but it only scratches the surface of what AI is capable of and where it might go. From tracking kitchen efficiency to dictating training manuals and managing bookkeeping, the possibilities are vast — and a little scary. As these capabilities expand, I can see some operators becoming over-reliant on AI, losing the human touch that makes restaurants so special.
One particular development in the article piqued my interest: the “get up and go” payment system. It’s simple: when customers are ready to leave, they just get up and walk out, no asking for check, no flagging the server then waiting for them to come back to run their credit card. It’s great, especially if you’re trying to turn tables quickly. But sometimes guests need a check to know when it’s time to leave. Any restaurant owner knows the "campers" — those guests who finish their meal and their drinks and just hang out for seemingly ever. They’re the ones who often need the check to understand the table is expected to turn. I’m curious how this will affect those guests and their turn times. On a separate note, while I’m sure there will likely be safeguards in place, I’m also interested to see how it impacts credit card chargebacks. Will this system reduce them? Or increase them? We won’t know until it’s beta-tested.
The other major shift will be in how data and knowledge are integrated across restaurant tech systems. This is about collecting information on guests, then integrating it into reservation systems and POS systems to upgrade the guest experience.
This article discusses something we’ve been preaching for a while: tech is fantastic, but it’s also a slippery slope. Human engagement and empathy for our guests is still paramount, without it we’re just selling a product. But this industry isn’t just about selling products — it’s about creating experiences. Even a trip to Jersey Mike’s or McDonald’s is an experience in its own right. The key is to use tech to improve efficiency and, ultimately, to better the human experience.