Business

These are the top 7 issues facing the struggling restaurant industry in 2025

Published

3 weeks ago

January 1, 2025

These are the top 7 issues facing the struggling restaurant industry in 2025

Operating a restaurant in Southern California continues to be a difficult endeavor, with many establishments still struggling from pandemic losses.

Food and labor costs increased in 2024, remaining by far the largest expenses of running a restaurant, according to the Independent Restaurant Coalition. And the minimum wage is set to increase again in California starting in the new year — to $16.50 an hour.

Locally, several Los Angeles restaurateurs report that they have yet to recover from entertainment industry strikes last year, which severely affected the service industry. Paired with low patronage and pandemic-era loans and rent payments that came due, several acclaimed restaurants are struggling or have shuttered across the country, particularly in L.A.

Most recently, the well-regarded All Day Baby in Silver Lake closed on Dec. 15. Owner Lien Ta told The Times that the restaurant simply didn’t make enough money on a day-to-day basis to sustain operations.

All Day Baby in March 2020. The Silver Lake restaurant is now shuttered.

(Mariah Tauger / Los Angeles Times)

It’s unclear what 2025 has in store for restaurants, but the needs of restaurants and bars are complex and numerous. Here are the top seven challenges restaurants are likely to face in the coming year.

Labor costs

Labor has long been a top expense for restaurants. In California, a larger percentage of the bottom line is spent on labor compared to other states. This doesn’t just mean the dollars for paying staff but includes other costs, such as payroll tax and workers compensation insurance.

It used to be that a good goal for a restaurant was for labor costs to be about 30% of gross sales. But many restaurants are spending much more. At some establishments, labor can account for 50% to 60% of the bottom line.

Ross Pangilinan, chef-owner of Terrace by Mix Mix restaurant at South Coast Plaza in Costa Mesa, said he spends the most on staff, which can account for up to 34% of his bottom line. The higher the labor, the more payroll tax and workers comp, he noted.

“Labor is going to be the No. 1 challenge” for 2025, said Pangilinan, who operates small, independent restaurants, including Populaire, also in South Coast Plaza.

Larger restaurants regularly poach his staff, he said.

“The restaurants can pay higher wages. They are paying their cooks over $20 an hour and smaller restaurants are trying to compete with that,” Pangilinan said. “We’re a tiny restaurant at Terrace — 70 seats or so. We’re not backed by a big corporation or big investors.”

To stay competitive he’s raised wages for his back-of-house staff, who also benefit from tip sharing, he said. “They deserve as much as the servers do. They are working more hours and they are working as hard and, sometimes harder, than the front of house.”

Food prices

Food prices are up 28% since 2019, according to the Consumer Price Index.

Higher production costs, labor and fuel costs are a few reasons that food is so much more expensive now than before the pandemic. Severe weather and disease have affected several essential crops and livestock. Also, global events such as the war in Ukraine have led to supply chain disruptions.

While the rate of growth has slowed, food costs are expected to still increase in the coming year.

Egg prices already are going up due to the accelerating spread of H5N1, a highly transmissible and fatal strain of avian influenza. The virus is to blame for below-normal levels of egg production that can’t keep up with consumer demand, which leads to higher prices.

Luis Perez, executive chef at Chapter One in Santa Ana, said he’s already paying about $114 for a case of 180 organic eggs. A few months ago, he was paying less than $100.

He’s bracing himself for what the cost will be in the coming weeks. “On any given week, we go through four to five cases of eggs,” Perez said.

In response, he’s had to pivot more often than in the past. For instance, instead of serving airline chicken, he’s dishing up less expensive chicken leg meat since a few months ago. Instead of filet mignon, he’s serving hanger steaks.

He stopped buying mixed greens months ago from local farmers markets because it was just too costly. Perez said he currently charges about $15 for a salad but would need to charge upward of $23 to justify the cost of farmers market greens.

Health insurance

Federal law requires employers with 50 or more full-time or equivalent employees to provide health insurance benefits with minimum essential coverage.

At the same time, the average cost of health insurance has increased for nearly every American. It’s no different for restaurant operators offering plans to employees. The average cost of single coverage health insurance was $8,951 in 2024, up 6% from the previous year, according to the National Restaurant Assn. For smaller outfits, the price was an average of $9,131.

Kerstin Kansteiner, owner of Alder & Sage in Long Beach, has a small staff and isn’t obligated to offer health insurance. Still, she decided to offer coverage to her six full-time employees. Three of them took her up on it. She also provides free dental insurance and a 401(k) plan.

“I promised myself, I can’t have health insurance myself and not offer it to my team,” she said. “We felt like we wanted to do the right thing.”

But that commitment comes at a price. Not long ago, Kansteiner said she got word from her health insurance provider that rates were increasing 17% to 19% in the coming year. She could switch to a lower-tier health insurance plan, but she said she doesn’t think it’s right.

“I ask my team to do the impossible every day,” she said.

She said she doesn’t quite know where she’ll find the money to pay her portion of the increase but doesn’t think she can pass it on to diners. Some already complain about prices on the menu, she said.

“I think we have to have a conversation with the public about what food really costs,” Kansteiner said.

Maricela Moreno, manager at El Tarasco in Marina del Rey

Credit card fees

As use of cash in everyday transactions fades, credit cards have become the de facto way to pay for meals, and that means card transaction fees have become a growing monthly expense for restaurant operators.

The fees are particularly a burden on smaller independent restaurants, which already operate on the slimmest of profit margins.

Delilah Snell, who operates Alta Baja Market, a restaurant and market in Santa Ana, said card swipe fees take at least 3% of her bottom line.

“Three percent means everything over the course of a year,” said Snell, who sells an assortment of products and prepared foods sourced from Mexico, California and the U.S. Southwest. “If a business makes $500,000 a year and it’s a 3% fee just for credit cards? That’s a lot.”

Visa and MasterCard dominate the credit card market, controlling around 80% of transactions in the U.S.

“With little competition in the industry, these companies set the terms, leaving independent businesses with few options to reduce their processing costs,” according to a statement from the Independent Restaurant Coalition. “The lack of competition stifles innovation and prevents smaller restaurants from negotiating better rates or leveraging alternative payment systems.”

Child care

Affordable child care continues to be a major challenge for restaurant workers. Nearly 3.5 million parents work in the restaurant industry and more than 1 million of those are single mothers, 40% of whom live in poverty, according to a 2016 report by the National Women’s Law Center and the Restaurant Opportunities Center.

The rising cost of child care and the lack of flexible options put both parents and businesses under pressure, said the Independent Restaurant Coalition. Dan Jacobs, a “Top Chef” star and chef-owner of Dan Dan restaurant in Milwaukee, said that as his team expands, more of his staff are starting families.

“The rising cost of child care across the country presents a tough dilemma: Parents are forced to choose between remaining in the workforce or staying home with their children,” he said in a statement. “It’s disheartening that in a country as advanced as ours, basic parental leave and childcare support remain out of reach for so many. It’s time for a change.”

Delivery app fees

Meal delivery apps became ubiquitous during the pandemic, and the demand for food delivery continues to expand. The delivery app market — dominated by DoorDash, UberEats and Grubhub — seems to be a blessing and a curse for restaurant operators.

The apps helped restaurants survive during the COVID-19 pandemic, when everyone was hunkered down at home. But that convenience comes at a cost to restaurants.

The commission rates can be as high as 30% per order, according to the Independent Restaurant Coalition.

“For small and mid-sized restaurants, the costs and constraints imposed by third-party apps are unsustainable,” the IRC said. “High commission fees, coupled with marketing expenses, drastically reduce profitability.”

Caroline Styne smiles standing next to a display of canned beverages.

Caroline Styne, a restaurateur who is co-owner and wine director of the Lucques Group of restaurants, said her restaurant relies on third-party delivery apps because she’d rather get a sale than not get one.

“It’s a little like you’re damned if you do and damned if you don’t,” Styne said of delivery apps. “They have us in a stranglehold. And because of that they are able to continue and even increase their price as time goes on.”

Styne said she encourages diners who want food delivery to do so directly on the restaurant’s website, instead of going through a third party; that makes the fees slightly lower for restaurant operators.

Service charges and tipping

Service charges and junk fees came to the forefront this year after California prohibited “junk fees,” hidden online ticket sale fees and fees tacked onto hotels, restaurants, bars and delivery apps.

At the last minute in June, the state Senate passed an emergency bill to exempt restaurants from the service-fee ban.

Regardless of the 11th-hour reversal, the practice of service fees has been called into question and sparked lawsuits against restaurant operators over its use.

At the same time, the practice of adding service charges to restaurant checks has grown in Southern California and across the nation in recent years, giving rise to a debate about how the fees should be treated by customers and workers.

Several restaurant operators and industry advocates favor a service-charge model. Advocates say such a model can provide more equitable compensation to all staff so that pay is not reliant on factors such as customer satisfaction or implicit biases that may affect tipping behavior.

Mary Sue Milliken, chef and co-founder of Mundo Hospitality Group, whose restaurants include Socalo, Border Grill and Alice B, said she hopes the entire restaurant industry will one day turn to a service-charge model and get away from tipping, which she said can lead to “bad behavior” and an inequitable system where front-of-house workers get paid exponentially better than back-of-house employees.

Two women in chef's clothing, in front of a large mural portrait of two people

But, she said, doing away with tipping would have to be done universally. Milliken compared it to how Beverly Hills in 1987 became the first city in California to ban smoking in restaurants — and most public places — while nearby cities continued to allow it.

“Beverly Hills had no smoking and all their restaurants were dead,” she said. “It has to be all in the state of California or the county of L.A. All have to do it to make it fair. There has to be some movement toward a better system.”

Business

Musk Is Likely to Get a West Wing Office for His Cost-Cutting Project

Published

6 hours ago

January 20, 2025

Press Room

Musk Is Likely to Get a West Wing Office for His Cost-Cutting Project

Elon Musk, the world’s richest man, is likely to be given office space in the West Wing, putting him close to President Trump as Mr. Musk steers a project that aims to cut as much as $2 trillion in government spending, two people with knowledge of the planning said on Monday.

Mr. Musk had been expected to be situated in the Eisenhower Executive Office Building, which is in the White House complex but not in the West Wing proper. But he has for many days been asking about his level of access, signaling a desire for proximity to Mr. Trump, according to the people.

Mr. Trump had wanted Mr. Musk to have the space, one of the people said. Mr. Musk has been given a badge for the White House complex and was said to be working there on Monday. He has filled out paperwork to be brought onboard for the role and already has a government email address.

Trump officials and an official with the so-called Department of Government Efficiency, the cost-cutting project that Mr. Musk leads, did not respond to requests for comment.

Mr. Musk spent time on Sunday at the Washington headquarters of his rocket company, SpaceX, before speaking at Mr. Trump’s inauguration on Monday. His government-cutting team has largely spent the past two months at the company’s downtown offices, joined by a number of engineers who hail from Silicon Valley and are planning to be dispersed across the federal government, with a goal of placing about two people at each major agency.

At least some of these employees carry navy blue mesh baseball caps in all-white capital letters reading “DOGE,” as Mr. Musk’s project is informally known.

Many aspects related to Mr. Musk’s efforts have been shrouded in secrecy. It remains unclear whether he is going to become a “special government employee” for his project to recommend dramatic cuts to federal programs. The Department of Government Efficiency is not an official department.

His allies have been considering his options over the last several weeks, with an eye on making sure that he is minimally restricted by ethics laws. The question of Mr. Musk’s formal status carries legal ramifications because different rules apply when government work is performed by private citizens or by officials.

The different legal categories include conflict-of-interest restrictions for government employees that could be significant since Mr. Musk’s companies have billions of dollars in government contracts, and requirements about when deliberations may be kept confidential or must be performed in public view that could affect the rollout and reaction to his proposed cuts.

Mr. Musk has already played a major role in placing personnel throughout the federal government, including in areas that overlap with his businesses. His allies have been interviewing candidates for senior jobs at agencies including the Pentagon and State Department. And Mr. Musk has weighed in personally on key roles. He successfully pushed for Troy Meink to be chosen as secretary of the Air Force, according to three people with direct knowledge of the situation.

Mr. Meink ran the Pentagon’s National Reconnaissance Office, which helped Mr. Musk secure a multibillion-dollar contract for SpaceX to help build and deploy a spy satellite network for the federal government.

A priority for Mr. Musk has been avoiding triggering a law that requires advisory committees that include private citizens to conduct their work in public view. Becoming a special government employee could be a step toward doing that.

While special government employees must fill out financial disclosure forms, that status comes with more flexible rules than what is required of regular officials. In particular, Mr. Musk, one of Mr. Trump’s top financial supporters, could avoid any public release of such information if he took no salary.

A federal ethics law aimed at preventing conflicts of interest generally makes it a crime for any government employees, including special temporary ones, to participate in official matters in which they, their families or their organizations have a financial interest.

SpaceX has contracts with the government to send astronauts and satellites into space. Mr. Musk’s Tesla electric car company is affected by government policies like subsidies to encourage more production of batteries and chargers inside the United States and to make it easier for consumers to buy such vehicles.

Under the ethics law’s terms, however, Mr. Trump could exempt Mr. Musk from that limit by granting him a written waiver.

Despite the restrictions that come with official status, if not only Mr. Musk but all of his staff members on the project become regular or special government employees, the effort could avoid triggering other legal issues. Many recruits for the cost-cutting project are expected to be formal members of existing departments, not special government employees.

In particular, the project might be able to avoid the Federal Advisory Committee Act, which regulates boards, panels, councils and other types of committees that work with people from outside the government to provide advice to the executive branch.

That law says that all meetings of such committees are to be conducted in public, and all the documents submitted to such a panel or produced by it are also supposed to be available to the public.

Business

State Farm expands renewal offers to all L.A. County policyholders slated to have been dropped

Published

7 hours ago

January 20, 2025

Press Room

State Farm expands renewal offers to all L.A. County policyholders slated to have been dropped

State Farm said Thursday it was expanding an offer to renew residential policies it had intended to drop last year to all Los Angeles County customers.

The decision applies to policies held by homeowners, owners of small rental properties and residential community associations facing non-renewal notices that had not gone into effect as of Jan. 7, when the Los Angeles fires began.

On Wednesday, the insurer told the Times it would offer renewals on those terms to any policyholder affected by the Palisades, Eaton and other fires that broke out in the county. The insurer estimated that it would apply to roughly 70%, or 1,100, of the 1,626 residential policies it had in Pacific Palisades’ primary 90272 ZIP Code when last year it announced a slate of non-renewals.

The offer does not apply to policies that had already lapsed when the fire started on Jan. 7. State Farm is the largest home insurer in the state and has 250,000 residential policyholders in Los Angeles County.

The Department of Insurance said that among the thousands of policies State Farm had targeted for nonrenewal, more than 7,600 were in the Palisades fire zone. There were also 525 more in San Gabriel Valley’s Eaton fire and additional policyholders elsewhere but an exact number was not available.

It’s unclear how many of those policies, or others outside the fire zones, had already lapsed prior to Jan. 7. However, State Farm said about two thirds of the policies it had targeted for non-renewal are still in force.

“This decision reflects our commitment to supporting our customers and goes beyond the Department of Insurance’s request. This is an evolving situation, and our focus remains on our customers,” State Farm spokesperson Bob Devereux said Thursday.

State Farm said in March that it would not renew roughly 30,000 homeowners, rental dwelling owners and residential community associations, as well as business properties. It also said it would stop offering commercial polices to apartment owners and not renew roughly 42,000 of those policies in place. Renter’s policies that insure a tenant’s belongings were not affected.

Rental dwellings are defined as having one or two rental units, while commercial apartment policies cover three or more, State Farm said. Residential community associations include homeowner and condominium associations.

That decision by the Bloomington, Ill., insurer has drawn outrage given the enormous scale of the Palisades and other fires in Los Angles County, which have damaged or destroyed more 12,000 structures and killed more than two dozen people.

State Insurance Commissioner Ricardo Lara had urged insurers last week to suspend pending nonrenewals in the Palisades and Eaton fire zones.

“State Farm is setting the tone for other insurance companies to follow and we are going to push for this for other companies as well,” Lara spokesman Michael Soller said Thursday in response to State Farm’s latest announcement.

Lara announced this week he had expanded the boundaries of a moratorium he issued last week that bars insurers from issuing new cancellation or nonrenewal notices for one year. It applies whether or not homeowners have suffered a loss.

The expansion adds 22 ZIP Codes to Pacific Palisades and Eaton fire zones, and for the first time protects homeowners living in the Hurst, Lidia, Sunset and Woodley fire zones.

The insurance commissioner does not have authority to suspend nonrenewals previously sent to policyholders.

Soller said that under existing law if policyholders were notified about a nonrenewal but the policy was still in effect and they experienced a “total loss,” State Farm is required to offer them two policy renewals anyway. However, that law does not apply to damages that are less than a total loss.

Devereux said that the policyholders with total losses would get two renewals, as required by law.

State Farm said Thursday it has received more than 7,850 home and auto claims and has already disbursed more than $50 million to fire victims — numbers it expects to rise.

Jon Farney, chief executive of State Farm Mutual Automobile Insurance Co., parent of California subsidiary State Farm General, told the Times in an interview Tuesday that the fires already are the largest wildfire disaster the insurer has ever experienced. State Farm is the largest property and casualty insurer in the country.

“We are in the business of helping people recover, and that’s exactly what we’re doing right now to those impacted by the fires. It’s just such a horrible tragedy,” he said, before State Farm suspended its pending non-renewals in the L.A. County fire zones.

However, he said it was too early to determine the damages, though at least one estimate has put them over $200 billion, which could exceed Hurricane Katrina and make it the most expensive disaster in the nation’s history.

“This early in this kind of event, especially as it’s still ongoing, we don’t have information of how big the event is going to be for us, let alone for the industry,” he said.

He called the company’s decision in March to not renew 72,000 policies very difficult, but said it was driven by calculations that State Farm could not afford to take on more risk due to the possibility of being overwhelmed by claims in a catastrophe.

“You have to manage the amount of concentration that you have and the financial risk that you have, so we are positioned to ensure that we can keep our promises,” he said.

Business

Trump, the Deal Maker in Chief, Is Back

Published

14 hours ago

January 20, 2025

Press Room

The questions facing a new Trump era

Good morning on this Inauguration Day. Welcome to Round 2 of President Donald Trump. No matter your politics, it is likely to be a historic ride.

For business and policy leaders, the next administration is expected to be filled with deals of all sorts — from White House agreements brokered over secure phone lines with foreign powers to congressional backroom pacts to headline-making deals negotiated by Wall Street.

This is a transactional president, perhaps the most transactional ever. He wants to engage with the business community, which is a big distinction from the Biden administration. He takes great pride in publicly name-dropping the C.E.O.s he’s talking with. “Today, I spoke with Tim Cook of Apple,” he told supporters last night. “He said they’re going to make a massive investment in the United States because of our big election win.”

Trump is rooting for big business, until he isn’t. He’s fickle. And uncertain.

That poses a big challenge for business leaders: How and when might Trump’s unpredictability emerge? Is there a red line? C.E.O. calculations have been that a second term means that uncertainty — something many dislike — is a certainty. But many think that they can manage it, or at least they tell themselves they can.

After Trump’s 2016 win, he invited tech C.E.O.s to meet with him (that was, of course, a photo op). They showed up, though many came reluctantly. Others joined his administration’s various councils only to depart when he said things that appeared to cross a line.

This time, many are all-in — at least for now. Some genuinely support him, or at least think he was better than the alternative. Others have taken an “if you can’t beat ’em, join ’em” attitude. Or it may be that his threats, real and imagined, are working. He said as much in a candid moment about his threats to arrest Mark Zuckerberg, Meta’s C.E.O., and the company’s decision to abandon fact-checking on the platform, saying Zuckerberg’s decision was “probably” the result of those threats. (Many of these same people rebuked him after the Jan. 6 attack on the Capitol in 2021).

We will see how long the love affair with business lasts. It may be longer than some skeptics suggest. Now that he’s in power, the business community needs Trump to like them: It’ll need his support if deals and investments are to flourish; it needs him to push the corporate tax rate lower; and the crypto world needs him. (He also needs it given his and his family’s forays into the sector). All of this raises all sorts of questions, as we get into below.

We’ll be here, every morning, reporting on all of it, as well as raising and asking tough questions. I imagine there will be a lot of them. — Andrew Ross Sorkin

TikTok’s fuzzy future

TikTok users in the United States breathed sighs of relief on Sunday after the video platform began to resume service, thanks to Donald Trump’s pledge to suspend a ban of the app.

But while the president-elect took credit for saving the hugely popular app — “So I like TikTok! I had a slightly good experience, wouldn’t you say?” he said at a rally on Sunday — his thinly sketched proposal leaves some big questions unanswered.

What Trump said: His “initial thought,” he wrote on Truth Social, was a 50-50 joint venture between ByteDance, TikTok’s Chinese owner, and an unspecified American entity. It represented Trump’s favorite thing — a deal — and on the surface had some appeal.

Trump added that he envisioned ByteDance handing over half of the company to the U.S. and that the U.S. wouldn’t pay a dime. “Whether you like TikTok or not, we’re going to make a lot of money,” he said.

But hold on a second. Trump hasn’t addressed the thorny national security concerns that persuaded a bipartisan group of lawmakers and President Biden to back the TikTok ban, not to mention who controls the ByteDance algorithm that is the key to the app’s success.

Moreover, it’s not clear how Trump can legally get around the ban. While he has promised to issue an executive order saving the app, the law is still on the books — though Trump can choose how aggressively to enforce parts of it, legal experts say.

Republicans and their allies criticized Trump’s efforts to circumvent the law:

Senator Tom Cotton, the Arkansas senator who chairs the Senate Intelligence Committee, warned on X that any company that aids “communist-controlled TikTok could face hundreds of billions of dollars of ruinous liability under the law.”
Speaker Mike Johnson added that he expected the law to be enforced: “The law is very precise, and the only way to extend that is if there is an actual deal in the works,” he said on “Meet the Press” on Sunday.
Joe Lonsdale, the venture capitalist who’s close to Trump allies like Peter Thiel, wrote on X, “Tomorrow he becomes POTUS, NOT King. Congress and SCOTUS were clear. He can give TikTok 90 days, then if it’s not sold, any company facilitating it is breaking the law.”
And Elon Musk reiterated that while he didn’t believe in banning TikTok, he found it “unbalanced” that TikTok be allowed to operate in the U.S. but X remains blocked in China. (That said, China’s vice president, Han Zheng, met with Musk and other business leaders to say his country was open to American business.)

What next? Trump will need to flesh out his proposal in the coming days to persuade lawmakers and others that it’s legally sound. Meanwhile, other bidders for TikTok are circling, including the billionaire Frank McCourt, who has assembled a group that wants to buy the app without its key algorithm, and reportedly Perplexity, an artificial intelligence start-up.

For ByteDance’s U.S. investors, which include General Atlantic, Susquehanna and Sequoia, a preferred course — second only to keeping the whole thing intact — may well be to spin the company to themselves. But if China won’t let them keep the algorithm, what would they be left with?

Executive orders galore

In between the dining, dancing and speechifying, President-elect Donald Trump is expected to unveil a flurry of executive orders on Monday.

First up, according to Stephen Miller, Trump’s deputy chief of staff, are major policy shake-ups for energy, immigration and border security, work protections for federal employees, as well as halting or scaling back key planks of the Biden administration’s climate agenda.

D.E.I. is also in the cross hairs. President Biden’s diversity, equity and inclusion measures for federal agencies are expected to be rolled back, just as big companies, such as Meta and Amazon, plan to eliminate or revamp some of these policies.

Electric vehicle credits are on the chopping block. Trump has long promised to undo the Inflation Reduction Act, a law that has supporters among some oil executives. It also extends credits to electric vehicle customers. Withdrawing those could dent sales of E.V.s.

That said, Elon Musk, Tesla’s C.E.O. and a key Trump ally, has suggested his company could weather a pullback.

Crypto bulls rejoice

Stock and bond markets are closed in the United States for Martin Luther King’s Birthday. But crypto trading is available — and it has helped mint Donald Trump as the latest crypto billionaire.

This weekend saw a frenzied rally for Donald Trump and Melania Trump meme coins, prompted by Trump himself. “GET YOUR $TRUMP NOW,” the president-elect told his followers on Truth Social this weekend.

It rallied further when Robinhood, the trading platform that made a big donation to Trump’s inauguration fund, began letting its customers trade the $TRUMP coin.

Bitcoin, which hit a record on Monday, and other digital tokens have soared since Election Day on the hope that the incoming administration will loosen regulation around the sector. That said, the rally in $Trump and $Melania tokens has astounded longtime market watchers.

Ethics watchdogs see the coin as a “profound conflict of interest” for Trump. Though organizers of the Trump coin say that buying it is neither a political donation nor an investment contract, skeptics say it raises questions about the president-elect benefiting from an industry he is supposed to be regulating.

There’s also the question of whether foreign governments could buy into the coin, potentially violating the foreign emoluments clause of the Constitution.

“This may represent the single worst conflict of interest in the modern history of the presidency,” Norm Eisen, a White House ethics adviser during the Obama administration, told The Washington Post.

The big money behind the inauguration

As Donald Trump prepares to take office, one thing is becoming especially clear: Washington is increasingly becoming a city where it pays to pay up.

The inaugural committee has already raised more than $170 million, shattering a record set by the first Trump committee.

Corporations as well as donors have opened their wallets. Apple, Google, Meta and Microsoft all gave millions to Trump this time, taking advantage of the more-permissive rules around donations for post-election activities such as the inauguration.

“Corporate America has embraced President Trump,” Brian Ballard, a powerful lobbyist and Trump fund-raiser, told The Washington Post. “Every corporate client I have wants to be a part of it.”

Critics of such donations point to a pay-to-play culture. An analysis by OpenSecrets of giving to the first Trump inauguration found that more than half of the 63 federal contractors who gave won multimillion-dollar bids in 2017.

Among them:

For-profit prison operators, including CoreCivic and Geo Group, saw huge increases in contract awards.

David Rubenstein, the billionaire co-founder of the Carlyle Group, put it bluntly to The Times:

Big donors, he said, “would like to get the policies they believe in from the federal government — more oil drilling, easier antitrust policy, more favorable crypto policy, less bank oversight. They also want more support for helping American companies invest overseas, and have ready access to government officials.”

How Trump’s inauguration stacks up

The inauguration of Donald Trump as president will be a pricey and star-studded affair.

Carrie Underwood, Rascal Flatts and the Village People are set to perform. And Snoop Dogg headlined Friday’s black-tie “Crypto Ball,” a $2,500-a-ticket gala that hailed Trump as “the first crypto president.”

Inauguration celebrations have changed significantly over the course of American history: The more lavish the festivities, the greater the statement. On the unpretentious side were those for Thomas Jefferson and Jimmy Carter. The co-chairman of Carter’s inaugural committee told The Times that the goal was “an inauguration which is traditional but modest in one, not extravagant.”

Barack Obama declined corporate donations for his first inauguration (though he still managed 10 official balls and a performance by Jay-Z) before accepting them for his second inauguration. President Biden’s pandemic-marred inauguration ended with fireworks, but there were no galas.

Trump’s festivities may draw comparisons to those of Ronald Reagan, whose 1981 inauguration fund set a record by raising $8 million (about $29 million in today’s money). As The Times described the day:

In white and black tie, in sequins and sables and clouds of perfume, Republican revelers stepped out tonight to the most lavish series of inaugural balls ever held in the nation’s capital.
It was an evening of shiny black limousines and nostalgic swing bands, of glittery Hollywood celebrities and wealthy Western oil men. The aura of big money was everywhere.

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