The Union of Concerned Scientists released a report today (full disclosure- they pay my rent, which is why I got a jump on writing about this great report) outlining the impact of California’s groundbreaking global warming legislation on small businesses. The long and the short of it? No big changes! The impact to small businesses is expected to come primarily from changes in the cost of energy, because the cost of producing cleaner energy, as required under AB32, will potentially be passed on to consumers. At least that’s the worry.
The report finds that it’s not a big concern. The percentage of revenue spent on energy for a typical small business will change from minuscule- 1.4% to mildly less minuscule- 1.7%. Even better, this is a conservative estimate, assuming that businesses do not invest in any energy efficiency upgrades. Companies that choose to invest in upgrades to reduce their energy consumption might even see decreases in their costs, but UCS wanted to focus on the worst case scenario for companies that do not pursue energy efficiency.
In addition to examining the impact to small businesses by sector, UCS conducted a case study on the Border Grill, an upscale Mexican restaurant in Los Angeles owned by the Two Hot Tamales of Food Network fame. The Border Grill was chosen because restaurants and bars account for the largest share of employment in any small business category, and restaurants also have relatively high energy costs– think of the gas used for cooking and the energy used to refrigerate, light and cool a typical restaurant. Energy costs are a pretty big concern for many independent restaurateurs. Plus the Border Grill was willing to open its books and share detailed information on its physical premises, equipment, lighting, energy use, and financial performance with the analysts. All of this was necessary to conduct a rigorous analysis, but don’t worry, the hot tamales are getting some nice PR out of it. Anyway, the analysts did their analyzing and it turns out that if the Hot Tamales were to do *nothing* but carry on as usual, all they would have to do is raise their typical check from $20 to $20.03 and their increased energy costs would be totally taken care of. Yes, that 3 cents will be passed on to the customer, but he can probably swing it.