Site Visit: Alaska Restaurant Industry Had Regulatory Issues to Discuss with Advocacy Staff
By Prianka Sharma, Assistant Chief Counsel
In early July Advocacy staff visited Alaska. While there, they had the opportunity to visit three small businesses in the restaurant industry and learn about their regulatory concerns. They spoke with the owners of an ice cream store, a pizza shop, and a coffee shop.
Wild Scoops is an ice cream store in Anchorage. The company is four years old and works to create hundreds of unique flavors of ice cream using natural and locally sourced ingredients. In 2017, they opened a small shop in downtown Anchorage, followed by a test kitchen in a mall in early 2019. Despite the cold climate, Alaskans consume the most ice cream per capita of any U.S. state. However due to its remote location, finding quality natural products can be challenging. Therefore, owners Elissa Brown and Chris Pike decided to source items locally. Advocacy heard from many businesses about the high cost of finding quality products, as well as the high cost to ship items to the state due to its geography.
East Ramp Pizza is a small wood-fired pizza establishment located, literally, at the East Ramp of the Fairbanks airport. In addition to serving delicious pizza (with dough imported from Italy), customers can watch small planes that take off and land on the airport runway and admire novelty and historic aviation memorabilia. The pizza shop owner, Wendy Ehnert, is a retired schoolteacher with no previous business experience. She stated that she was unable to get a bank business loan because of her lack of experience, even though she had enough collateral to cover the amount. She also stated that one of her biggest concerns is staffing. She currently has 15 part-time employees but has employed more than 100 different people over the past 20 months. Alaska’s restaurant industry competes with the tourism industry for employees, and seasonal job turnover is very high. Many employees want higher paying jobs on cruises in the summer months and seek temporary work during the winter.
One issue that Ms. Ehnert faced in starting her business was compliance with Americans with Disabilities Act regulations. The restaurant is located on the second floor, and the only entrance is an outdoor staircase. Ms. Ehnert received an exemption from the requirement to have an elevator because it would create a significant hardship for her and was not feasible to add to the structure. To serve customers, she offers to-go orders that an employee brings to their car. She also faces challenges with air-quality regulations because she operates a wood-burning stove near an air traffic control tower. To deal with this issue for now, she cooks the pizza at a very high temperature to cause fewer emissions issues. Finally, she mentioned that the process for applying for SBA loans was long and arduous. After spending four months on her application, she never heard back from the agency and decided to seek other funding.
The third establishment that Advocacy visited was a coffee shop in Anchorage, Caffé D’Arte. The owners, Lori and Bob Brewer, have been in business for 25 years. They started by opening the first drive-thru espresso stand in the country. They now have six retail stores, over 200 wholesale accounts and a statewide espresso machine repair operation. Ms. Brewer stated that their biggest challenge is the Affordable Care Act. She stated that due to the cost increase for health insurance, she had to make the difficult decision not to open more stores because this would require hiring more full-time employees and raise her overhead costs to an unmanageable level. Another challenge is the proposed minimum wage increase on both the state and federal levels. She stated that since consumers are not willing to pay much more for coffee, she could not absorb an increase in wage costs. She stated these are two main obstacles that prohibit her from growing her business more.
Finally, Ms. Brewer stated that the U.S. Department of Agriculture needs to enforce the proper use of the term “organic” for products that are certified and thus rightfully labeled “organic.” Companies that are not certified still use the term “organic” on their products, creating an unfair advantage since they have not followed appropriate certification procedures and paid the costs for organic certification. This issue has come up several times at regulatory reform visits and roundtables.
Overall Advocacy was able to gain a good understanding of the regulatory climate for the food-service industry in Alaska, as well as the unique challenges facing restaurant owners in the area.
Advocacy was in Alaska for Regional Regulatory Reform Roundtables July 9-11.
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For more information on Advocacy’s mission, our regulatory reform efforts or to find out where the next Regional Regulatory Reform Roundtables will be held, please visit: https://advocacy.sba.gov/regulation/regulatory-reform/.
Prianka Sharma is an Assistant Chief Counsel for Advocacy whose portfolio includes agriculture, energy, and natural resources. Sharma can be reached at Prianka.sharma@sba.gov.