Aug. 21, 2014 SIGN IN | REGISTER
Roll Call

Hill Eateries Sweating Reforms

Last summer, Paul Zucconi, the co-owner of La Colline, initiated a $20, three-course lunch at his Capitol Hill restaurant, a popular haunt for GOP Senators. It was the dog days of August, and Zucconi was looking for a way to drum up business during the Congressional recess.

Now, as a scandal-plagued Congress rushes to limit the value of gifts Members and staff are allowed to accept from lobbyists and others, Zucconi’s price seems remarkably prescient. It would just meet the Republicans’ proposed limit of $20, though not the Democrats’ proposed outright ban. (Tax and tip are excluded from gift rules.)

“I was ahead of my time,” jokes Zucconi, who said he has no intention of doing away with the prix fixe menu, which includes main courses such as beef bourguignon and steamed mussels mariniere.

Elsewhere around Capitol Hill and downtown Washington, D.C., restaurant owners and managers are trying to gauge how much of an impact the flurry of proposed gift and entertainment limitations will have on their bottom line. Many restaurant officials interviewed this week said their calculations are hampered by too many unknowns to say for sure how big their hit will be.

Congress’ absence from Washington over most of the past month hasn’t helped this analysis. Many upper-scale Capitol Hill restaurants say that business has been slow — but they attribute that trend to the Congressional calendar, not skittishness about being seen going to lunch or dinner with a lobbyist.

“We are in a waiting period,” said Charlie Palmer Steak Executive Chef and General Manager Bryan Voltaggio. “We are waiting to see what legislation goes through.”

“All fine dining restaurants in town are well supported by this machine,” added Mark Walsh, general manager of the swanky Pennsylvania Avenue restaurant, 701. “I think it will have a negative impact.”

Still, Walsh, like others in the D.C. restaurant business, said that after an initial period of adjustment, the city’s upper-end dining establishments tend to bounce back.

After all, they’ve been in this situation before. And most have survived.

In 1996, Zucconi’s sales fell by $385,000, or about 18 percent. That year, the Senate implemented a $49.99 limit on individual gifts, with no more than $99.99 in gifts allowed from one source in a year. Meanwhile, the House implemented a zero gift rule that was later changed to the Senate level. (Both regulations had some exceptions.)

By the following year, however, Zucconi said business returned to normal. “They got accustomed to working with that,” he said.

Pressed about what he meant, Zucconi — who said he does not “finesse numbers” to meet gift limits for Members and staff — demurred.

“What they do is their business,” he said, though he did concede that the improvement may be attributed at least partly to the fact that “people stopped paying attention to” the rules.

Likewise, Walsh said the gift rules in the mid-to-late 1990s “knocked the bottom out of our very busy, busy lunch.”

The tougher restrictions of the 1990s likely contributed to lackluster midday sales of alcohol, which helped squeeze income from one of the restaurant industry’s profit centers.

“People basically stopped drinking at lunch,” said Jim McVeigh, the general manager of McCormick and Schmick’s near Farragut Square.

At least one prominent Hill establishment — Le Mistral on Pennsylvania Avenue Southeast — was forced to shutter its doors in the late 1990s.

“It’s going to have an initial impact. Maybe some people don’t want to be out and seen with lobbyists,” said Zucconi, adding that in the long run he didn’t expect any rule change to dramatically affect business. “They still have to eat,” he said of his lobbyist-heavy clientele.

Rather than further restrict the dollar amount of the gifts Members or staff could accept, Zucconi said a more sensible approach would be to enforce the rules already on the books.

That’s a sentiment shared by the National Restaurant Association, the industry’s lobbying group, which is adamantly opposed to overhauling current gift rules.

National Restaurant Association chief lobbyist John Gay said his group was “making our views known on the Hill” that the “focus should be on enforcing the rules and looking at disclosure regulations, not on throwing the baby out with the bathwater.”

“I think it could have a very serious impact on those whose clientele is a high percentage of lobbyists with these sorts of meals,” Gay added.

Lynne Breaux, president of the Restaurant Association Metropolitan Washington, a state affiliate of the National Restaurant Association, said her group was already in “preliminary discussions with the [D.C.] mayor’s office to see if “the mayor could make a statement” that would in turn pressure Congress to consider the impact of gift rule changes on the restaurant industry.

All told, Breaux said that “Congressionally related” dining accounted for roughly 30 percent of the D.C. restaurant patronage.

At McCormick and Schmick’s, McVeigh said that stricter gift rules could have a significant repercussions for the restaurant, where the average lunch bill per head checks in around $26. These could include lower turnover and longer waits, due to the increased time required to run separate credit cards and the potential implementation of cheaper, “dummied down” menu items like grilled cheese and french fries.

Even some more casual hangouts — such as Bullfeathers, located just blocks from the House office buildings — could take a hit.

“Yeah, they are going to hurt us,” said Bullfeathers owner Stratton Liapis, estimating that 80 percent to 90 percent of his clientele visited his restaurant on “Hill-related” business. “But it will hurt Morton’s a lot more.”

When asked about the impact of any potential reforms, Liapis, like other Hill restaurateurs, launched into a defense of the lobbying profession.

“They taught us in civics class that it’s important to have lobbyists because that’s how Congress gets a lot of their information. I still think that’s the case. I think that 98 percent of lobbyists are honorable, hardworking people that do a good job for the country,” he said.

“Why shouldn’t [lobbyists] pick up lunch for a staffer or Members?” Liapis added. “You mean people are selling their souls for $25 or $50? It’s so silly. It’s the big things they need to be concerned about.”

Not everybody is worried about the potential changes. Some D.C. restaurateurs pooh-poohed the idea that business could be affected in a major way.

Sam and Harry’s General Manager Lesley Gallagher said that her upscale steakhouse, located near Dupont Circle, was not concerned about a drop in sales.

An investor in the Penn Quarter’s Caucus Room, who requested anonymity due to the sensitivity of the subject for lobbyists, agreed.

“With the exception of Capital Grille and maybe one or two other places,” he said, “I think the reality is ... most [restaurants] are not packed table to table with lobbyists and Members huddling over the latest legislation. A good snowstorm will do a lot more [to cripple business] than a meal ban will.”

For the record, Capital Grille, located just blocks from the Hill on Pennsylvania Avenue Northwest, wasn’t talking. An official with Fleishman-Hillard, the restaurant’s public relations firm, said the restaurant had no comment.

Meanwhile, Voltaggio of Charlie Palmer Steak said his restaurant’s biggest concern was the possibility that Members could be banned from fundraising in D.C. With PAC events accounting for 25 percent of Charlie Palmer’s business, “that would hurt us a lot,” Voltaggio said.

Neither party is proposing that at the moment, though ex-Speaker Newt Gingrich (R-Ga.) suggested such a move.

Some reforms, if they pass, could even give restaurants a boost to certain portions of their bottom lines.

So far, none of the new proposed gift limits applies to campaign contributions — so meals purchased at restaurants as fundraisers would still be exempt from any of the proposed gift rule changes. Rather, such events would be subject to the same limitations as contributions from PACs — up to $5,000 per year to a leadership PAC and up to $10,000 per election cycle to a campaign committee.

With its five private rooms, a rooftop terrace with views of the Capitol and access to other spaces in its prime 101 Constitution Ave. NW location, Charlie Palmer Steak could stand to benefit in a big way if lobbyists began hosting more fundraising events at area restaurants.

Others, however, suggested the market for such events was nearly maxed out.

At The Monocle, located less than a block from the Hart Senate Office Building, owner John Valanos said his restaurant typically hosted about six fundraisers a day when Congress was in session. “I wouldn’t think it’s going to increase,” he said.

As for the potential $20 gift limit, some D.C. restaurateurs said that lobbyists would still have options if they insisted on picking up the tab for a lawmaker or aide.

The Monocle currently offers an extensive selection of small plates ranging from $6 to $12, which include everything from sliced tenderloin to grilled shrimp, that can be ordered both at the bar and in the dining room, Valanos said.

Charlie Palmer Steak, like La Colline, has long had a prix fixe menu in place. Priced at $20.06, it would slightly exceed the proposed $20 limit.

But Voltaggio isn’t worried.

“I’m sure they can splurge six cents out of their own pocket,” he laughed.

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