Tag Archives: rent-seeking

Food truck regulations are a textbook example of rent-seeking

The Restaurant Association of Metropolitan Washington (RAMW) has been noticeably quiet on food truck issues, at least in public channels, since the DC Department of Consumer and Regulatory affairs released its latest round of proposed regulations in March, and for good reason [Note: I detailed my opposition here]. Regulation proponents have been on the defensive lately because their favored policies are extremely unpopular. Of the 223 comments submitted to DCRA regarding the latest proposed regulations, only six–less than 3%–were supportive. Even the Washington Post editorial board wrote that the regulations should be rejected by the City Council.

On Friday afternoon, RAMW decided to go on the offensive, and sent out an email blast. In it, a RAMW staffer wrote that the map released by the Food Truck Association of Metropolitan Washington (FTA), which details where food trucks would be allowed to vend under the proposed regulations, is a fraud. On a laughable note, they also wrote that the proposed regulations are definitely “not a ‘plot’ dreamed up by restaurant operators to stifle competition.” (Does this remind anyone else of a certain Twitter account?) It also stated that the FTA previously supported a lottery to assign food trucks to specific locations, which is demonstrably false.

This email puts lobbying group in the awkward position of pretending to be a disinterested public service organization while simultaneously begging the government to put its members’ competitors out of business.

The letter raises two important questions:

1) Why is RAMW involved in the food truck rulemaking process to begin with? 

RAMW is engaged in a textbook example of rent-seeking, the process of interest groups lobbying for favorable regulations that either take money from competitors/consumers or stop them from competing at all. Specifically, RAMW wants regulations that eliminate food trucks from most of the city, while allowing a small handful to operate where they are currently most popular. Under the new regulatory regime, at least some of the former food truck customers would instead spend money at RAMW member restaurants. It’s common to see RAMW use high-minded language about protecting public space when discussing food truck regulations, but it would be naïve to take them at their word.

Perhaps I’m being cynical, but RAMW President Lynne Breaux actually wrote that stopping competition is her goal. In a 2010 comment submitted to the DCRA, she wrote “the positives of [food trucks], however, must be balanced against the needs and interests of the District’s business locations,” demonstrating quite clearly that RAMW is looking out for their members’ profits rather than consumer well-being.

Does RAMW expect us to believe that the money it collects from members to lobby on their behalf has instead been diverted to unrelated work on public space preservation?

2) What regulations has RAMW actually lobbied for?

After DCRA proposes new regulations, it allows for public comments to be submitted, which it then displays on its website and sometimes uses when making later revisions. RAMW has participated in this process, and their comments give us a chance to see what their ideal regulatory framework would look like.

It’s not pretty.

In late 2012, RAMW asked DCRA to assign a small number of food trucks to a few specific locations in the Central Business District (i.e. nearly everywhere south of Massachusetts Avenue NW), and then ban all trucks who don’t win one of the few assigned parking spots. Lo and behold, that’s basically what DCRA included in their next revision of the proposed regulations.

One of the main benefits of food trucks is that they cluster and provide customers with several convenient options in one place. Previously proposed regulations set a minimum of three food trucks per location downtown, but RAMW instead would like to set a three-truck maximum.  RAMW also asked that any trucks outside of the Central Business District not be allowed to sell food if they are within 10 feet of a business, 20 feet of another food truck, or on a block with two other trucks.

If this is starting to sound familiar, take a second look at the FTA map that RAMW called a ‘fraud.’

RAMW also proposed a ban on food truck sales after midnight and a ban on music played by trucks. Trucks would also be banned from throwing away their own trash, and must contract with a third party to do so. Any food truck vendors caught in contravention of these regulations would owe $500 for the first offense, which would  then escalate with every  subsequent infraction. In sum, RAMW proposes a world in which your lunch choices are extremely limited for the benefit of downtown restaurants (you can read the rest of their many other recommendations here).

It’s DCRA’s job to protect consumers, not the restaurant industry. When it comes to food trucks, RAMW is in direct conflict with the interest of consumers. Not only are there other, serious problems with the proposed regulations, but it’s not even clear what problem regulators are trying to address.

Food trucks are extremely popular in the District because they meet the needs of hungry workers. Free entry into the market and free movement within the District means more choice, and more competition. That is good news for consumers, but bad news for RAMW.