The One Big Beautiful Bill Act, an omnibus piece of U.S. legislation that President Donald Trump signed into law on 4 July, includes tax policies that will strengthen the U.S. foodservice industry, according to the National Restaurant Association (NRA).
“The pro-growth tax policy in this bill will make it easier to start a restaurant and to continue to improve and modernize as the business grows. It lays the groundwork for long-term innovation, job creation, and economic growth, ensuring restaurants can continue to meet evolving consumer needs and power the U.S. economy,” NRA President and CEO Michelle Korsmo said.
According to the NRA, among the benefits of the One Big Beautiful Bill for restaurant operators is the ability to fully expense capital equipment purchases.
“Operators will be able to meet payroll and other expenses while investing in capital equipment or refurbishing their dining rooms,” the organization said.
Additionally, the 20 percent qualified business income (QBI) deduction outlined in the legislative framework will further support investments in restaurant operations and bring down the effective tax rate from 37 percent to 29.6 percent, creating greater parity with larger businesses, according to the NRA.
Tax relief could help lead to construction of new restaurants, too, John Gordon, the president of San Diego, California, U.S.A.-based Pacific Management Consulting Group, told SeafoodSource.
The legislation also includes no taxes on tips and overtime hours for tipped servers and bartenders, as well as hourly employees who earn overtime premium pay, which Trump promised during his campaign for the presidency last year, the NRA said.
“Tax policy plays a major role in the vitality of the restaurant industry. With these changes, restaurant operators can confidently make investments and manage capital expenditures that are essential for a dynamic industry,” Korsmo said.
While he believes most of the provisions are good for the restaurant industry, Chef Andrew Gruel, the co-owner of Calico Fish House in Huntington Beach, California, U.S.A., said he wishes that payroll taxes still applying to tips would have been removed from the bill.
“That would have been huge and was an issue both parties refused to address during the campaign,” Gruel said. "My other concern would fall outside the framework of this bill, which is access to capital. Small Business Administration loans are virtually impossible to get for small restaurateurs.”
Overall, the law will help restaurants, “as long as people understand what is there,” Gordon said.
“There is still a lot of confusion about the One Big Beautiful Bill,” he said.
Nevertheless, the potential shot in the arm to the restaurant industry the law may bring comes after a difficult year in 2024 that featured higher prices, fewer guests, bankruptcies, and more across the sector.
"The restaurant industry faced significant headwinds in 2024, including higher prices, shifting consumer spending patterns, and increased competition," Technomic Senior Director of Industry Research Kevin Schimpf said earlier this year. "Despite a challenging environment, top 500 chain sales stayed positive, climbing for the fourth consecutive year.”
Though restaurants may benefit from the law, Gordon expressed concern about the law’s impact on the general U.S. economy.
Cuts to Medicaid, for example, “are going to cause a cold shiver throughout the population who is [using it] now,” Gordon said, adding that it could have negative ripple effects for spending at certain restaurants as people balance budgets more carefully.
