Comité Small Business Development de la Cámara de Representantes, 10 de marzo de 2026

Transcripción

197 turnos. Seleccione un tiempo para reproducir ese momento del video.

1. 0:10:38

   Small Business Development Committee meeting to order. And in our first order of business, uh, I've asked, uh, Chairman Noel Williams if he would lead us in a devotional.

2. 0:10:49

   Thank you, Mr. Chairman. May we pray. Dear Lord, we thank you for this day, and we thank you for all your many blessings of life. Father, we thank you for the, uh, opportunity of serving the, the great state of Georgia and, and serving the people. Father, we ask you to be with us, to lead us, to guide us, and direct us, and to forgive us where we fail you, for we pray in Jesus' name. Amen.

3. 0:11:09

   Amen. Thank you, Mr. Chairman. All right. We'll go ahead and go ahead and get started. Let's see. Right. Okay.

4. 0:11:20

   Is Adam Smith?

5. 0:11:23

   Good morning.

6. 0:11:24

   All right. And, um, you're with the Georgia Micro Enterprise Network. Is that correct?

7. 0:11:31

   That, that is correct. Yes, sir.

8. 0:11:32

   Okay. Well, the floor is yours.

9. 0:11:34

   Well, good morning, uh, everyone. I'm delighted to, to be here on behalf of the Georgia Micro Enterprise Network. Uh, and the, we're-- the presenter today will be our chief executive officer, uh, to my left, uh, Ms. Elizabeth Wilson. So I will turn everything over to Ms. Wilson.

10. 0:11:57

    Okay.

11. 0:11:57

    Good morning, Chairman Cheokas. Okay. And members of the committee and support. Um, my name's Elizabeth Wilson, and I serve as the chief executive officer of the Georgia Micro Enterprise Network. I would like to thank you for the opportunity to provide testimony this morning, uh, particularly, um, regarding legislation, House Bill H-63, the Georgia Small Business Set-Aside Act, and a broader policy framework affecting small and micro-enterprise development across our state, as well as Senate Bill 207, which concerns occupational licensing for returning citizens.

12. 0:12:46

    And just a little bit first about who is GMEN. Uh, the Georgia Micro Enterprise Network... We'll go to the next slide. Oh, thank you.

13. 0:13:21

    Adam will be Vanna today.

14. 0:13:27

    So a little bit about GMEN. Uh, Georgia Micro Enterprise Network was established almost 30 years ago, 1997, as a statewide network of micro-enterprise development organizations dedicated to expanding opportunity for Georgia citizens through entrepreneurship. And for nearly three decades, GMEN has served as the statewide intermediary supporting small business formation, technical assistance, and capital access for entrepreneurs who are often overlooked by traditional systems.

15. 0:14:04

    And as you can see, uh, from our slides, we're gonna go kind of down, uh, memory lane with a few of our, uh, highlights of our organization. And on that slide, you'll see GMEN staff receiving a c- a commendation from then Governor Deal. We go to the next slide. Who do we serve? We serve citizens across the state of Georgia. Our work particularly focuses on rural entrepreneurs, women-owned businesses, minority-owned businesses, first-generation entrepreneurs, new entrepreneurs, senior entrepreneurs, micro-enterprises with fewer than five employees.

16. 0:14:50

    That's kind of the definition of a micro-enterprise, those businesses that have fewer than five employees and need less than about $100,000 to s- to get started. Also, usually, um, micro-enterprises might have some issues with accessing capital. So that's the broad definition according to the Small Business Administration. And also, because we're in Georgia, we've also had a focus on supporting returning citizens who are seeking lawful employment and entrepreneurship, uh, pathways through our services.

17. 0:15:28

    We're currently providing training across the country to over 50,000 individuals who are incarcerated, who are interested in starting small businesses when they come out of, uh, come f- come back to their communities. And you can go to the next slide.

18. 0:15:49

    How does GMEN strengthen Georgia's economy? And again, going back down memory lane, as you can see on this picture, one of our, uh, opportunities that we had back, a few years back, uh, was having then Secretary of State, uh, Kemp as our keynote speaker for Business Sunday Georgia. This, again, was one of the statewide initiatives that we sponsored, and we are, uh, pleased to be able to bring the state together under umbrellas for, uh, organizations and entrepreneurs to really focus on what it takes to scale businesses.

19. 0:16:31

    So under this initiative, we were trying to bring the faith community in to support the entrepreneurs in their congregations as well as in their communities. GMEN operates through this type of network model, working alongside local nonprofit development organizations, lenders, CDFIs, workforce partners, and community institutions across Georgia. Through these partnerships, we provide business formation. We help businesses to form legally.

20. 0:17:02

    Uh, we provide procurement readiness training for organizations so they can provide that training to individuals, licensing and regulatory navigation, financial documentation, and revenue tracking support. We found that that was one of the main issues that small businesses face, uh, large businesses too, having their financial house in order. And as you all know, during COVID, so many business-- Everybody became a micro business during COVID, but many were not able to access the support services because they did not have their finances in place.

21. 0:17:41

    So that's one of our strong suits also, that we do help businesses to, uh, create the right type of financial documentation so that they can scale their businesses. You can go to the next slide. Our role, again, is to help businesses to be ready, and one of the, uh, reasons that we specifically were in support of HB 863 was because that would create opportunities for businesses, small business in particular and micro-enterprises, to have access to procurement opportunities.

22. 0:18:19

    Most of them are not ready, again, for those type of opportunities. So our hope was to, if this had passed over, which it did not, but we still hope to see this bill come back next year and that we're able to support it, because our goal is to really strengthen the whole ecosystem of small business so that they can create more jobs, be more stable, and to really continue to see Georgia as the number one city-- number one state, number one state in the country for small business development.

23. 0:18:53

    You can go to the next slide. With that as our, kind of our legislative focus, we've been able to identify ways to bring resources from the federal government to the state to support the whole ecosystem. Uh, GMEN was the, uh, organization that received a, a small business, a Navigator grant, and under that, we were able to bring in, uh, community development financial institutions from our rural community and tie them with our urban partners, such as Access to Capital for Entrepreneurs.

24. 0:19:32

    We were able to bring Invest Atlanta to the table, as well as the Hispanic Chamber of Commerce. This was kind of our, our unique skill is to break down silos amongst business development organizations, bring them together, provide training and technical assistance to those organizations so that they can then help the businesses that they serve to not only scale, but to begin to create jobs and be a part of the larger economic opportunities that have been made available across the state.

25. 0:20:07

    You can go to the next slide. One question that comes up a lot is, um, why do we need organizations like GMEN when we already have the SBDCs? And we know that the SBDCs are doing a wonderful job in making an impact for businesses all across the state. But one of the things that the SBDCs do is, is they kind of have a university focus, and to access many of their services, you need to kind of go onto the campuses, be familiar with campuses.

26. 0:20:39

    Well, the majority of individuals here in Georgia ha- do not have degrees. Uh, only 35%, and for businesses, that's e- an even higher number. A lot of people kind of bypass the traditional educational path and immediately go into business, which is great because that gives them a longer term to learn their industry, to really focus on, uh, growing that business, to be able to create a business that, uh, can then be passed on by generations.

27. 0:21:11

    So we don't want people to only have to have that one pathway to be able to access the supports that they need for, uh, capital or to be able to get that technical assistance one-on-one or the training that, that everyone needs, as I was mentioning before about the, um, financial services. Those things sometimes people want to have access in their community, and they really being kind of pushed to go onto university campuses to find those services is-- would kind of be another hurdle for some small businesses to have to, uh, jump over.

28. 0:21:52

    You can go to the next slide. GMEN works across Georgia. For our first 10 years, we were, we mainly worked in the rural communities, and be-because of that really good, strong foundation and because of the work we were doing across, uh, some of our, with our rural partners, we started doing work in the urban areas. Recently, this, uh, last year, we were invited by, uh, SBA Administrator Kelly Loffler to be a part of a manufacturing roundtable that she had in Suwanee.

29. 0:22:24

    We were pleased to be able to support her efforts there, and one of our coworkers was invited to speak at the, uh, to be a part of a hearing at the White House as a part of the Women's Business Centers. We know that a lot of things have changed, but one thing that has not changed is business. Business services and supporting small businesses is bipartisan. Uh, all businesses need to be strengthened. And if we here in Georgia wanna continue to lead that effort across the Southeast, we need to have the support of legislation like H- HB 863 and SB 207.

30. 0:23:04

    You can go to the next slide. Again, when we're talking about our rural connections, uh, we were-- we've been providing a lot of services here in the urban area. We do have-- We had two offices here in, uh, urban areas in Cobb County as well as here in Atlanta. But there's so much need in the rural communities that we are, uh, next week opening an office in Brunswick, Georgia. And in our minds, Brunswick, uh, Martha's Vineyard has nothing on Brunswick.

31. 0:23:37

    It is a fabulous community. People don't know enough about it. So our, our hope is to use our resources that we receive from USDA to build out the capacity, uh, for rural communities, particularly around tourism, that ability to create products that can then be brought to urban areas where there are more retail opportunities to really start to connect, uh, the rural portions of Georgia that are underserved.

32. 0:24:08

    There are not as many resources in rural areas. So we're taking our grits and greens to not only Brunswick, but we're also going to go to, uh, Barnesville, Regions 3 and 4, and also we're looking to North Georgia as well before the end of this year. We think it's very important that there's a connection and that all support services that are provided here in the urban areas are also available to our, uh, rural business counterparts.

33. 0:24:38

    You can go to the next slide. We're very ambitious. We also feel that Georgia should lead the region. So we have been asked to be the chair in-- with, uh, Access to Capital for Entrepreneurs, ACE, which is a CDFI, and with, uh, a organization in Tennessee to be the chairs for the Southeast region, so that what we do here in the Southeast continues to reverberate and bubbles up.

34. 0:25:10

    Uh, at one time, Georgia was leading in business innovation and business development. When I came into the field, the names that were creative and innovators were Ted Turner. He kind of started the whole field with CNN. He started as a, as a small business, as a micro-enterprise, and he built an entire field. And now everywhere you see digital channels, that actually was something that came here out of Georgia.

35. 0:25:41

    Also, my first job here was working for the Ritz-Carlton Hotel Company. But before it was the Ritz-Carlton, it was the Monarch Plaza. And Mr. William Johnson, who was a businessman here in Georgia, changed Monarch and turned it into Ritz-Carlton. He took those funds from the Waffle Houses and started building Ritz-Carltons. So that's the kind of innovation that came out of Georgia. And we think we should be leading in innovation. We should be continuing to create those types of businesses that not only can create jobs here in Georgia, but across the country.

36. 0:26:20

    Next slide. Why does micro-enterprise matter? Because that's where jobs are initially created. Uh, that first business that hires that first employee and then hires those first five employees, and then 10 employees and 100, that's how corporations are created, starting small but growing, uh, in a very deliberate manner. Uh, they generate revenue. They take-- Uh, micro-enterprises take people off of, uh, dependency, off of welfare rolls, and, uh, away from, uh, illicit activities.

37. 0:26:59

    If we can help people, like through SB 207, to take that same energy and start to create businesses, then we have not only reduced, uh, recidivism, but we've also created enterprises that can hire, uh, hire people and train them, particularly in this workforce where we need, need more hands-on and more individuals who can learn skills and trades like we're teaching currently in, uh, facilities across-- over 3,000, um, facilities across the country.

38. 0:27:35

    They have access to our curriculum, and we're able to introduce people to, uh, HVAC and plumbing and just to get that first start so that when they do return, they have a very clear focus on the type of business that they want to continue. And then they can tie into the network of services that are con-- uh, that are available through, uh, business development organizations, SBDC, SCORE, SBA, and other programs.

39. 0:28:06

    Next slide. So it's time for us to build more opportunities across Georgia. And GMEN is committed to strengthening Georgia's micro-enterprise ecosystem by connecting entrepreneurs, both urban and rural, to the training, technical assistance, capital, capital, capital, and partnerships they need to succeed. Together, we can continue to let Georgia be known as the number one state for business, for all businesses, with a little bit more support Little bit more specific concentration on this type of business, we can do great things, not only for the last 30 years, but for the next 30 years to come.

40. 0:28:58

    Thank you.

41. 0:29:01

    Thank you. Thank you. That was a very interesting presentation. Thank you for doing that. Um, I'm gonna open the floor for questions if there are any. Well, I've got a couple. Um, the, the, the services that you provide, especially for inmates and, and is that online or?

42. 0:29:22

    Yes.

43. 0:29:22

    It's online. So in other words, they have to get access to the computer so that you don't have members of your organization actually in the-

44. 0:29:31

    Co-correct.

45. 0:29:33

    Okay.

46. 0:29:33

    With technology now, uh, there are tablets that, uh, individuals who are incarcerated can have access to, and our training is on that tablet. It's not connected to the internet. They can't-

47. 0:29:47

    Mm-hmm

48. 0:29:47

    ... uh, come, you know, re- uh, go out. But the tablet is loaded with our training on it. So what one, uh, individual who, uh, took these trainings while she was incarcerated, she told us it went from feeling like a prison cell to a dorm room because all of these trainings are available, and we get letters every week from individuals who are incarcerated asking us for more trainings.

49. 0:30:14

    Gotcha.

50. 0:30:15

    Uh, and we are currently in, uh, 20-- We've received letters from 27 states.

51. 0:30:22

    Gotcha. All right. The second thing is you, you're talking about capital, capital, capital. Um, are these loans? Are these grants? Wha-wha-

52. 0:30:34

    Yes, both.

53. 0:30:35

    Both?

54. 0:30:35

    And Adam, if you'd like to share a little bit about some of our lending, uh, products.

55. 0:30:41

    Sure. Um, the-- To answer your question, the, the, it's both, uh, loans and grants. Um, but we are very proud of a product that, that, that we, uh, have had in place for almost three years now, and it's our Flex Fund Loan Program, uh, where we provide, uh, micro loans to, uh, small businesses and entrepreneurs, um, up to $30,000. Um, the, the requirements for the, for the loan, we're, we're very proud of.

56. 0:31:12

    You know, it's no application fee, no credit, uh, check, um, and then a very comfortable repayment plan, 36-month, and no interest. Um, we are funded to do this program, uh, but we're very proud of the program where we're able to make loans, uh, to s- uh, our clients and those who participate in, in many of our programs.

57. 0:31:35

    Cool.

58. 0:31:35

    We've been doing this for three years now, and we're on-- we're going to start round three of the Flex Fund, um, Loan Fund Program.

59. 0:31:43

    And the Sapelo.

60. 0:31:45

    You got a question-

61. 0:31:46

    As, as well-- And that, that's one of our products. Thank you. Uh, the, the other product we have is through the Sapelo Foundation. Uh, and we're able to make, um, you know, loans through, through that foundation as, as well. If I, if I also may add, with our Flex Fund, the focus is on businesses within the Atlanta, uh, area. Uh, the Sapelo Fund is, is available to businesses throughout Georgia. Um, and we're hoping to expand, uh, our relationship with both of those funds, uh, to be able to make more loans.

62. 0:32:18

    Like I said, with the Flex Fund, we're on round three. Um, so we're really happy about that.

63. 0:32:23

    Cool. Um, 'cause we have a question, but what about the repayment? What's the repayment, uh, uh, percentage? I mean...

64. 0:32:33

    Um, actually pretty good. Uh, be-be-because the, the, the loans that we make, we, we try to be very conservative, uh, ab-about making the loans because for, for many of these businesses, they have never, um, um, had a relationship with a commercial lender, uh, and they've never had an opportunity to, to make any business loans, uh, or to, to receive a business loans. Uh, so it's not only making a loan to, to these businesses, but it's also giving them an opport-- We, we see it as a training opportunity, uh, for them as well on how to complete loan applications, uh, how to make payments on a monthly basis.

65. 0:33:11

    Uh, we also provide them with technical assistance throughout, um, the, um, the loan process, uh, where we meet with them on a regular basis to make sure that the business is doing well, uh, and more importantly, to make sure that they are able to make the monthly payments. Um, our, our monthly payment schedule is 36 months. Uh, so on a $10,000 loan, um, that's roughly about two hundred and seventeen, sixteen dollars a month, and most of our borrowers have done extremely well, uh, in, in meeting those monthly payments.

66. 0:33:43

    In fact, we have a few paid off early, uh, and so we're, you know, happy about that as well.

67. 0:33:50

    But the success rate and the failure rate, w- have you got any numbers on those?

68. 0:33:55

    Uh, we, we don't. We're still digging for our numbers on that, but we, um, I, I would say the success rate is, it certainly outnumbers the, uh, those who have not been successful. Um, and so a-again, what we try to do is work very hard with the borrowers, um, throughout, uh, the term, uh, you know, of the loan to make sure that they are able to, to make the monthly payments.

69. 0:34:21

    Um-

70. 0:34:21

    Unlike, unlike what commercial lenders, uh-

71. 0:34:25

    I still didn't get an answer

72. 0:34:27

    ... don't-

73. 0:34:27

    And I'm, I'll turn it over to number 26.

74. 0:34:31

    Uh, yes, Mr. Chairman. I was also thinking about the default rate and the Flex loan, given how easy it is to obtain. But Mr. Ta-- uh, Mr. Chairman, thanks for reading my mind. You asked the question.

75. 0:34:49

    The thing about lending, and I've been-- When I started the program, uh, back in those Ted Turner days, we provided small business loans to women for the first time. They were receiving-- They had access to capital up to $5,000. And most of these women, this was their first time in business. Uh, the thing that makes, uh, microenterprise loans, microloans different is that the-- there's a lot more hand-holding. Um, there's not a long period of time where the business can get into trouble.

76. 0:35:22

    Uh, we are immediately working with them to, uh, mitigate any problems. Uh, sometimes businesses might miss a payment, but then they can double up or add onto the back end. That's the whole flexible point of it. And then to be able to, uh, partner with financial institutions for that next loan, uh, and to be able to really create the opportunity for ongoing lending. Uh, for those who are in business, having access to capital for the length of that business is more important than paying off the loan because we want businesses to be able to scale, and in order to do that, they need to be able to access capital.

77. 0:36:11

    This is more of a suggestion than actually a question. Uh, the flex loan, uh, if it's that easy, it's always, it's always easy to overlook the payments. But what about checking the credits? Uh, great credit, forty-five thousand, uh, mid-range credit, thirty, and not so great credit, fifteen.

78. 0:36:40

    Ten.

79. 0:36:41

    Have you considered that?

80. 0:36:43

    We-- And that's a great question. We, we have considered, um, that as a requirement that we check, you know, the credit of all those who apply. Um, we are in partnership on this flex loan with, with two other partners. And so, uh, we've created this, uh, requirement plan to, uh, make sure that we make the loan as flexible as possible. And one of the things that we decided to do as a team, not individually as GMEN, but as a team, um, is that we decided that we would not require, uh, the credit check.

81. 0:37:19

    We went through round one of our funding, and we realized, hmm, maybe we should reconsider that, um, and, and look at checking credit just, uh, just to provide some technical assistance to those borrowers who may need assistance on improving their credit in, in some way. Uh, so we are considering that process now. Uh, we are still at the point where we don't want to check credit. Uh, and we work very hard with our funder who agrees with us, uh, that we don't, uh, check credit, again, sticking to the ideals of the program, making it a flex fund.

82. 0:37:58

    Um, but we're not all on the same page every time regarding the credit check. Um, but that's something that we are exploring as we move forward.

83. 0:38:07

    And share the capital readiness opportunity.

84. 0:38:09

    And as well as, uh, and one of the, uh, programs that we provide in connection with the flex fund, uh, and actually with all, all of our funding, um, our products, is we provide, uh, capital readiness programs where we-- those who are interested in applying for one of our flex funds or either the Sabala Fund. Uh, we hold sessions throughout the year where you can come, uh, to our sessions. We talk to-- talk about capital readiness. Basically, we-- it's really ca-- it's capital readiness, but we kind of look at it as loan application readiness, where we walk through a loan application, uh, where we talk about what's required, uh, for that application, the financial documents.

85. 0:38:49

    Uh, so it's also a technical assistance type program to tho-- again, to those who have never applied, uh, for a commercial loan.

86. 0:38:58

    Well, thank you. Thank you very much for your present-- Thanks. Thank you very much for your presentation. I appreciate it. Um, I wish you would get me some numbers on the success rate-

87. 0:39:08

    We-

88. 0:39:08

    -on the payback-

89. 0:39:09

    You will.

90. 0:39:10

    -uh, so that we can, uh, determine whether, you know, the, your customers are looking at it as a loan or a grant.

91. 0:39:19

    Definitely a loan.

92. 0:39:21

    But if they don't pay it back...

93. 0:39:23

    Yeah, we, we want to stick to it being a loan.

94. 0:39:26

    Well, that being said, but thank you very much for your presentation. Wish you much success.

95. 0:39:30

    Thank you.

96. 0:39:31

    Thank you.

97. 0:39:31

    Cool. All right. Next, uh, Scott Bierman. Did I pronounce it right?

98. 0:39:36

    You did, yeah.

99. 0:39:36

    All right, good. With the, uh, Georgia Restaurant Association. Super.

100. 0:39:47

     Do you want to reach out to Kasey? This is for you.

101. 0:39:51

     No.

102. 0:39:56

     Morning.

103. 0:39:59

     Morning, morning. Thanks, everybody, for, uh, having us here today. Uh, Scott Bierman with the Georgia Restaurant Association. With me is Alexis Kinsey of 4Q Concepts, operates a countless number of restaurants across the state. I feel like it's growing every day. Uh, we want to thank you for the opportunity to speak today to talk about, uh, the state of Georgia's restaurant industry and the small businesses that power it. Um, restaurants are the cornerstone of Georgia's small business economy. Uh, across the state, there are roughly twenty-four thousand restaurant locations generating forty-seven point two billion in annual restaurant and food service sales, supporting more than five hundred thousand jobs.

104. 0:40:37

     That makes restaurants the second largest private sector employer in Georgia, with jobs and entrepreneurial opportunities in every community, from, uh, the biggest cities here in Atlanta to the smallest towns across our state. Uh, most importantly, the restaurant industry is overwhelmingly made up of small businesses. Nine out of ten small, uh, restaurants are small businesses, often family-owned establishments, uh, that serve as economic anchors in their neighborhoods, and we've seen that through the revitalization of many of our downtown areas across the state.

105. 0:41:08

     Um, even many of the restaurants with recognizable lo-logos on their doors are small business operated, uh, by franchisees, usually have one or two, uh, locations. Um, these businesses not only employ Georgians, they contribute significantly to the state's economy. Uh, restaurants pay and collect, uh, over seven billion dollars in state taxes. Um, and for every one dollar spent in a Georgia restaurant, it generates a dollar and ninety-two cents in economic activity across the straight-- across the state. Uh, restaurants support our farmers, our distributors, our construction workers, our technology part- providers, and many other industries that depend on a strong hospitality sector, and that will be very key this summer as the, the state hosts, uh, seven, eight matches of the, the World Cup, when we have the world coming to our state.

106. 0:41:57

     Um, later this morning, here in about thirty minutes or so, um, that partnership with the ag industry will be on display as we recognize the twenty twenty-six class of the Georgia Grown Executive Che-Chefs, uh, on the north steps of the Capitol. Uh, these are chefs who show excellence and creativity with the ways they use Georgia Grown prod-products in their restaurants, and we'd love for you all to come by and, and see that, uh, here in a little while. On a national level, um, the restaurant industry is one of the largest economic sectors in the country. Um, this year alone, we're projected to reach one point five five trillion in total sales, employing fifteen point eight people nationwide.

107. 0:42:36

     Um, we also know that restaurants are deeply woven to every, uh, everyday life. We all have that restaurant we go to as a, uh, as a family tradition or to celebrate big events in our lives or, you know, as a kid, for us, it was going to the pizza place after Little League. I think we all have those stories. We have a restaurant that ties to, to us on a, on a personal level. Sixty-one percent of adults say restaurants are an essential part of their lifestyle, and more than seventy percent say they would dine out more often if their budgets allowed.

108. 0:43:08

     So in other words, demand, uh, for restaurants is strong. However, there's the flip side of that is, um, while their interest is high, operating environment for restaurants, uh, especially small businesses, is becoming increasingly challenging. Um, across the industry, um, since two thousand and nineteen, we've seen food costs increase roughly thirty-eight percent and labor cro- costs go up about thirty-five percent. Uh, that's a big number on both of those. As a result, uh, many restaurants are, are struggling to ma-maintain profitability.

109. 0:43:40

     Forty-two percent across the United States of operators reported their restaurants were not profitable last year, despite the strong demand. Again, that number of seventy percent-

110. 0:43:51

     Forty-two percent.

111. 0:43:51

     Forty-two percent were not profitable last year. Um,

112. 0:43:58

     that's one extremely thin profit margins. We're looking between three and five percent, um, for your average independent restaurant. Now, some of-- Some, some varying members of the sector, you know, have, uh, different margins based on buying power and things like that. But your average small business, that, that number's gonna be three to five. Uh, so for independent-- I mean, what does that mean for independent and small operators? Even a small increase in costs, whether it's food, insurance, utilities, credit card fees, which we've seen a lot of, can determine whether a business survives.

113. 0:44:30

     Every, every penny, every nickel counts, uh, for some of our operators. Um, and at the same time, we've seen consumer spending patterns shift. Um, higher income consumers continue to dine out frequently, but many middle and lower income households are cutting back either on their frequency of visits to restaurants or their average, uh, the average spend when they go to a restaurant. About six out of ten restaurants in last year reported declining, uh, customer traffic.

114. 0:45:01

     They're seeing fewer folks show up. But despite all these challenges, restaurants, I think, continue to adapt and innovate and find new ways to serve their consumer base, um, investing in new technology, digital ordering, use of AI when, when possible. Uh, off-premise and dining options have become very popular. Um, delivery, takeout. Um, here this session, the House, you voted to support, uh, to help the food delivery ecosystem with a, a law that makes it easier for food delivery robots to operate in the city of Atlanta, which helps get our food from restaurants to the consumer quicker, safer, um, and more efficiently, um, and also take drivers off the road, which we know here in Atlanta, fewer cars is always a good thing, um, for our folks.

115. 0:45:45

     Uh, our folks are also investing heavily in workforce and training. We, uh, as an association, are heavily invested in our high schools around the state through our ProStart program and through our Fulton County-- uh, partnership with Fulton County Education Foundation, where we go into schools and br- connect them with industry leaders to show them we're, uh-- the restaurant industry is not just cooking and serving. There's so much behind it. It's, it's an entrepreneurial spirit. There's how you can build your business, and if you wanna work for many of our fine brands here in the state, you can get involved in a lot of, a lot of support roles there.

116. 0:46:20

     Um, we know that two-thirds of Americans have worked in a restaurant at some point over their lives. It's a huge number. It's a big number. So that, that means, you know, millions of Americans and Georgians learn their first job skills, their first soft skills, how to interact with someone in a restaurant. So as you guys consider the needs of American-- of Georgia's small business community, it's important to remember that, uh, restaurants operate on extremely tight margins while supporting hundreds of thousands of jobs and billions of dollars in activity Supporting the restaurant industry means supporting small businesses.

117. 0:46:54

     It means we're supporting workforce development, local economic growth, and vibrant communities across our state. So at this point, I will turn it over to Alexis Kinsey, like I said, with Four Q Concepts. She has some restaurant brands I think you would all recognize, and she can give you a boots-on-the-ground look at what's going on in our industry.

118. 0:47:12

     I feel like everyone should open a restaurant right now after that. It's a, it's a very challenging industry to get into. Uh, so like Scott said, my name's Alexis Kinsey. My husband and I opened our first restaurant in 2011 called Taqueria Tsunami in Marietta Square. Um, and in-- actually next month, we're opening our seventeenth location, not a taqueria. It's a new brand for us called West Park Sports Bar in Marietta. Um, so since 2011, we have grown from one location to seventeen with six different concepts that span from Marietta to Atlanta on the BeltLine to Athens, UGA Market, Watkinsville.

119. 0:47:54

     Uh, we have two locations up north in Hall County and Gainesville. So we've had a good experience in a lot of different areas in Georgia opening up restaurants. Um, prior to having our own, uh, locations and concepts, I worked for a large international corporate, uh, restaurant concept, so I experienced that side of the business as well. Um, and I think that that experience of owning and operating independent restaurants in tan- in tandem with having that corporate experience definitely helps me see things a little differently from an operator and an owner's perspective.

120. 0:48:29

     Um, and like Scott said, right now, the climate's challenging for restaurants. It is, um-- Last year was pretty-- It was pretty tough. So our, our profit margins have shrunk dramatically over the last few years, and a lot of that, the majority of that, has to do with just cost of goods, um, labor, credit cards, which he mentioned, and I'll get into that a little bit more specifically. Um, and like he said, a lot of restaurants operate on a three to five percent margin, which is very, very tight.

121. 0:49:02

     So every penny counts. Every decision that is made that impacts the restaurant, every menu we have to reprint, um, there are-- It, it matters. Every-- I mean, we're looking at everything right now just trying to get to a cost-cutting perspective. Um, the cost of goods, I'll just get into that pretty quickly. I know everybody's very familiar with beef prices. Um, obviously, we had, uh, a herd, a level of the herd which is lowest, I don't-- I've forgotten how many years, but it's definitely impacted the prices of beef. Just to give you an example of how that directly impacts our taqueria brand with seven restaurants, um, it's gonna cost us nearly, with this increase that we took on just skirt steak, it would be an increase of two hundred thousand dollars for a year, um, of what we would have to make up in basically taco sales.

122. 0:49:52

     So just to give you a little perspective on one menu item price increase that went up that much percent, that's how much it would impact us, us negatively in just a year. So, you know, it-- everything, everything matters. Um, eggs were up and down, dairy's up and down. Um, just trying to bring-- We have a lot of concepts that we can only purchase internationally. So our Italian concept, we have to get stuff from DOP from Italy. Um, we have a Spanish tapas and wine bar called Sia Del Toro that obviously we, we import a lot of Spanish wines.

123. 0:50:27

     So those things have definitely been impacted as well on top of just what's going on domestically here.

124. 0:50:39

     Um, I'd like to talk to you just about technology and credit card processing fees. This is something that I have been actively looking in recently, and it's, it's very alarming how much we're spending in credit card fees. As a company, I could build and open a restaurant in the amount of credit card processing fees that I pay as a company in one year. I can open a building and build out a restaurant in this, and it's, it's something that we've been fighting from the National Restaurant Association as well, just trying to go through and explain that, um, the cost of our percentage of what we pay is higher in the United States than it is in most other parts of the world.

125. 0:51:19

     And, um, the-- what I'm dealing with personally now is the point-of-sale company. So the, you know, the computers that we use in the, in the restaurants, they currently have figured this out, and now they are making you process with their credit card processor because that's where the money is. So essentially, where-- whoever we go with, we have to process with them. There are some that still allow you to select your processor, but the majority of these larger groups are making you process with them directly. And if you've ever had to deal with a technology change in your life, it's terrible, especially when you're changing a point-of-sale company and you have to retrain all your staff.

126. 0:51:58

     So you're pretty much married to that credit, credit card processor in addition to that POS unless you want to disrupt your entire organization for, you know, six months. So, um, that's something that we're dealing with right now. But again, it's just all these, all these fees that keep hitting the bottom line, um, from food costs and then labor costs have obviously gone up too since COVID. And that's a direct impact of just competition in general. When, um, you know, 2020 hit and there was high demand, not a lot of people working, we were paying more.

127. 0:52:31

     And that hasn't changed because it's just a shift in the market now. So while I think it's great, um, that people are, are making more money, that still impacts the bottom line of restaurants. And I think a lot of restaurants have pivoted, you know, with the use of AI. There's a lot of new AI coming out too that will help take place of some of the needs of reservations or, you know, kiosks you're seeing more and more of. Um, and I, I worked in restaurants my whole life. My first job, I was 14 years old, worked at Blimpie's, you know?

128. 0:53:04

     And I'm like... So I appreciate that aspect of teaching these younger kids of, um, communication skills and prioritizing, and I think restaurants are so important to have that first job in that industry and make you uncomfortable 'cause everything's behind a screen right now. And you don't wanna lose that part of our labor force because of high cost of labor. Um, again, that's just another thing that continues to build. The other piece is insurance costs, which I know was a huge topic of conversation last year, and I do want to, um, have the opportunity to thank everybody in the room for tort reform passing or it, it, it's so frustrating to me to see after 11 years or after 15 years of being in this as an owner-operator, I think that's probably one of the scariest things that I deal with on a daily basis is the unknown and what could potentially happen that is no fault of my own.

129. 0:54:03

     And just going through the legal process and the expense of the legal process. The first time we had a claim, I was talking to our insurance company and I, I said, um, "Well, I have proof that this wasn't the case of what happened. Let's fight it." And they said, "We're not gonna fight it." And I said, "Well, why not?" And he said, "'Cause it costs more to fight it than to pay it out." And, and, you know, fast-forward 14 years after that, I have, I kind of agree with the insurance company now.

130. 0:54:34

     It kills me because it's, you know, that's not ethical. That's not what should happen. But as a result of these frivolous claims, what we're seeing is a super high increase in our insurance costs. Um, our costs went up 38% one year, 38% in liability class in one year. Um, last year, just the liability cost for our company went up 21% and we had no claims. That was just liability. Um, then I asked why, and they said, "Well, it's 'cause you're in Georgia," was the answer that I got from my insurance broker.

131. 0:55:06

     And second to that, uh, the, the major piece of the increase was liquor liability. So what's happening is because of these catastrophic claims, you know, from, from li- results of, you know, people going out and fa- I don't know, there's a lot of ones, you know, falling or accidents, they're putting all the liability back on the restaurant versus the individual, and these claims are very expensive to pay out. So insurance companies are pulling out and no longer covering liquor, um, liquor liability.

132. 0:55:38

     So there's a small... Sure.

133. 0:55:41

     Chairman Williams has got a question.

134. 0:55:44

     Sure.

135. 0:55:45

     Thank, thank you. Um, you were talking about, uh, Taqueria Day. We eat the one in Athens all the time-

136. 0:55:51

     Thank you

137. 0:55:51

     ... on Prince. Is that y'all's?

138. 0:55:53

     Taquerias En Armia.

139. 0:55:54

     Well, I promise you, you're not losing money 'cause every time I go there- ... they're like a, they're like 100 kids in front of us and, and I don't know what I buy, but God knows it's delicious. But-

140. 0:56:04

     Well, thank you

141. 0:56:05

     ... thank you for, thank you for that. Um, my daughter's a senior, but we still go to Athens all the time. But question for you, I remember being, um, at Grind, um, Grindhouse, I believe, a hamburger joint there in town, and they said, "No cash."

142. 0:56:18

     Yeah.

143. 0:56:18

     Would that help y'all if you went to cash because or would you tell me that people would be stealing from you?

144. 0:56:24

     So it's very-

145. 0:56:24

     You know, talking about the credit card fees.

146. 0:56:26

     Sure. Uh, yeah, it's been a topic in my household with my husband and I for two years now. And so cash is definitely a liability, right? When you have cash in your restaurant, it will walk away. Somehow there will be theft. It just is what it is. Um, we were in a position to use less cash, cash in the restaurant, and in doing so, we went to a pay card for our employees. Um, so instead of the server getting paid out in cash, we would put it on a debit card, and that way we can control more of it.

147. 0:56:57

     We don't have to have as much cash in-house, and it's just less liability. However, with these credit card fees, um, you're looking more, more at the amount of money you would save to have more cash. Um, so, you know, it's a double-edged sword 'cause the other, the other opportunity, I guess, that a lot of restaurants are going towards is they're offsetting your credit card fee to the guest now, which is not unheard of. It's just kind of new for our industry. Like, when you go buy something online, typically you're charged with that credit card processing fee, but it's a different, it's a cultural thing, I believe, in the restaurants where when you go and sit down and get your ticket and there's a 3.5% or-

148. 0:57:38

     Right

149. 0:57:38

     ... it's whatever it is, fee, people are a little taken aback by it. So, um, I think that's probably where the industry is going to go because these credit card processing fees are so high that you'll start to see them offset it from, to the customer.

150. 0:57:52

     We just... An- another question, if I may. We discussed interchange fees and banks and banking-

151. 0:57:57

     Right

152. 0:57:57

     ... and of course, the banks were fighting it, and the credit cards were pointing their finger at the banks-

153. 0:58:02

     Right

154. 0:58:02

     ... the banks were pointing their finger, and then us as a consumer-

155. 0:58:05

     Mm-hmm

156. 0:58:05

     ... and we never could get a straight answer. Um, so you know, that's, that's been something we've been trying to deal with-

157. 0:58:12

     Yeah

158. 0:58:12

     ... and it's, it's not an easy answer. Um, but I was just, I remember working at Guthrie's back in the '90s in Athens, and that's all we dealt with was cash, and that's how they paid us was in cash.

159. 0:58:22

     Yeah.

160. 0:58:23

     Um, so.

161. 0:58:24

     Yeah, no, it's definitely a thought, but you know, you do open yourself up for a little more. There's a lot more reconciliation that has to happen, a little more m- meaning, and for a company that's a little larger, it definitely adds some steps. Uh, to your point with interchange fees, yeah, that's a great question. We've been trying to figure that out -

162. 0:58:41

     Yeah

163. 0:58:41

     ... since we had our-- We get credit card statements that are 17 pages long.

164. 0:58:45

     Right.

165. 0:58:45

     And have you ever tried to decipher one of those? I mean, I, I, I'd go to school for a year.

166. 0:58:49

     I've got a, I've got a daughter I'm trying to decipher her credit card all the time, so. But thank you, thank you.

167. 0:58:55

     Yeah, a- absolutely. But it's definitely something that I hope that we continue to, to pressure 'cause they make a lot more-- Their profit margins are a lot higher than ours

168. 0:59:06

     So moving on, I think cost to build and expand, you know, has also gone up dramatically, just the cost to build out, um, labor, materials, everything else. It costs us twice as much to open a restaurant today as it did five years ago.

169. 0:59:23

     Um, another point, so I'm on-- obviously, I'm the past chair for the Georgia Restaurant Association, um, but I was on a call yesterday and I said, "Please send me any information that you would like me to present today." And, um, one of the concerns is the, just the clarity of the health departments and regulations when they come into the buildings, because it can destroy a restaurant and its reputation pretty quickly. Um, and a lot of those things might be very minor, you know, versus something that obviously critical things should make a difference. But, um, she just wanted me to throw that out there that maybe with, um, we could do some pre-planning with the states or something to help with more education for independent restaurants.

170. 1:00:03

     'Cause when you're an independent restaurant, you are HR, PR, marketing, training, everything, operations. You're supposed to know accounting, you know, and you wear 17,000 hats, and then all these changes that take place, you can't keep track of it. So, um, I think, think, think the Georgia Restaurant Association for being that tool for us that really educates us on, on, um, new things coming down the pipeline. But, um, I guess my point today of where we stand, so sales climate has been down.

171. 1:00:34

     You know, cost of goods are up, profitability is down. I agree with the stats of 42% probably lost money or broke even last year. It was, it was tough. Um, and I think that it's an unknown market right now. I'm optimistic. January was particularly hard for most restaurants in Georgia, and it's slower anyway just in general 'cause, uh, people aren't spending as much after the holidays. But with the weather and closing down for those two weekends in a row, like losing a Friday, Saturday, Sunday twice in January was very difficult to come back from for most restaurants.

172. 1:01:12

     So, I, I mean, just the, the general impact of those things and the unpredictable things that you can't control definitely add on to what's already just, you know, a hard business. So, um, I appreciate you all being here, and thank you for your time and listening to us. And, and I guess my only ask is that you continue, as these policies are being pushed, you continue to have an open conversation and dialect with the Georgia Restaurant Association, or go to your restaurant and ask them. That's it.

173. 1:01:43

     No, no, thank you. Thank you very much for your presentation. That's exactly what we want to hear. We want to hear how we can help. Uh, and you've got, um, a very powerful story and a very powerful message, I, I will say that, and I appreciate you coming and sharing that with... Um, and you were talking about the number of people that have worked in restaurants. Uh, both my daughters worked in restaurants, so, uh, I'm very familiar with that. Even, even President Trump worked in a restaurant.

174. 1:02:15

     We thought that was funny. Um, but, um, did the no tax on tips help you in the labor market trying to get mo- more servers involved and people in your business?

175. 1:02:27

     Um, I think it's-- I think any benefit to our industry is positive. Um, you know, as far as like, um-

176. 1:02:34

     Thank y'all.

177. 1:02:35

     You're welcome. You're welcome.

178. 1:02:35

     Have another week.

179. 1:02:36

     Okay. Um, I think anything that could benefit our industry is a positive, and no tax on tip is definitely a positive, too. Um, and I think it's gonna help maintain servers working in that environment.

180. 1:02:50

     It was interesting. Um, I, I'll share some comments with you. Um, you know, um, during the campaign saying, "Well, no tax on tips. Surely they don't report the cash tips." And I said, "No, it's on credit cards now, and they get a 1099-

181. 1:03:05

     Mm-hmm

182. 1:03:05

     ... at the end of the year." And then all of a sudden, "Whoa, okay. Then it makes sense." But, um, uh, and then the second thing that I wanted to mention is, um, credit card fees, cash, you know, you, you're weighing those choices and, and trying to determine which is the best thing, and you go through your association for the... A-and th-that would be where I would look at the association is maybe y'all can offer, uh, uh, through scale, a better rate by, by using your own processing rather than going through, um, uh, uh, you know, go-- rather than going through your software people, 'cause they're taking a p-percentage of that.

183. 1:03:49

     Oh, for sure. But that, yeah. I mean, it's, it sounds, it sounds great. But the, like I said, the POS is forcing you to use their processor or you can't work with them, right? So I don't know. It's a very interesting market. It's technology. You know, and they just, they flip.

184. 1:04:07

     Well, that may be, um, that may be the creation of a small business-

185. 1:04:11

     Yeah

186. 1:04:11

     ... create a POS that's independent of the credit card. So that's good. And then the, the last thing, um, you know, I think that what we've learned from COVID is that a lot of people's habits have changed.

187. 1:04:25

     Mm-hmm.

188. 1:04:26

     And, and, and y'all, of all the industries, y'all suffered, in my opinion, the most during COVID, and y'all had to, to, to adapt and, and bend and change and so forth. And, uh, I personally don't think that the restaurant industry has recovered from that. And it, it-- I mean, I'm reading all the time of large numbers of franchises closing, and these have been successful, very successful organizations.

189. 1:04:58

     So but, uh, we greatly appreciate y'all coming. Thank you so very much.

190. 1:05:04

     Thanks.

191. 1:05:04

     And we've had y'all here every year and always enjoy it. We always like to talk to the entrepreneur themselves. You know, we hear the big picture, but we'd rather hear what you have to say.

192. 1:05:14

     Sure.

193. 1:05:14

     And, and Noel and I both agree in, in the importance of small business, and our door is always open if there's anything we can do.

194. 1:05:23

     Thank you so much. It means a lot.

195. 1:05:25

     Thank you. Thank you very much.

196. 1:05:25

     Thank you so much.

197. 1:05:26

     Appreciate y'all being here. Uh, meeting adjourned. Cool.