Hampton meals tax revenue soars to record levels, but some restaurants say the news isn’t all good
Folks are hungry out there. And restaurants, despite industry challenges, are cranking out the meals.
Over the past three months, revenues from Hampton’s meals tax saw some of its highest levels in the past two years, said Ross Mugler, the city’s commissioner of revenue.
As of Wednesday, the last day of the fiscal year, Hampton reported $6.6 million in meals tax revenue for April, May and June, according to data compiled by the commissioner’s office. It’s higher than the $4.4 million the city took for the same three-month period last year and more than pre-pandemic levels at $5.9 million during 2019 for the same time frame. For the fiscal year 2021, Hampton’s total gross restaurant receipts exceeded $89 million, with the meals tax intake at $23.1 million.
Hampton’s charges consumers a 7.5% food and beverage tax on top of the state’s sales tax.
“The gross numbers and volume of restaurant sales, even with the constraints and picking days to close, even with the limited capacity back in March and April ... the volume has increase substantial for existing restaurants,” Mugler said. “It’s the fast food, it’s the big box restaurants, it’s not really due to new restaurants. We have continued to see restaurants thrive.”
Food and beverage tax in Hampton is among the highest in the region, with Newport News and Portsmouth each at 7.5%, Norfolk at 6.5%, Poquoson at 6% and Virginia Beach and Chesapeake at 5.5% each. Williamsburg and York County, while at lower rates with 5% and 4%, respectively, add a 7% state retail and use tax to bills. In Hampton, meals tax revenue is used to help offset property tax rates, to cover tourism and other debt for the Hampton Roads Convention Center, Mugler said.
Last year, the pandemic blindsided restaurants and hospitality businesses, forcing them to close or shift gears to offering take-out only and costing them untold millions in revenue. Some made it through; some didn’t.
“Hampton residents may have used takeout to get through social distancing, but it didn’t replace the atmosphere of dining out,” city spokeswoman Robin McCormick said in an email.
Phoebus saw openings, including The Baker’s Wife, Charlotte’s Cafeteria, Fox Tail Wine Bar and an expansion for Scratch Bakery. Also, fast casual dining has expanded in Coliseum Central, she added. With mask mandates lifted, more people vaccinated and capacity limits on indoor dinning relaxed, business is cooking now that summer is underway.
“We have a fairly steady crowd for dinner. Up to a couple months ago it was the same people, but now that mask mandate is lifted, you are seeing a lot more people,” said Randy Thomas, owner of Vanguard Brewpub & Distillery in Hampton’s downtown.
“It’s people coming and making it their business to support small businesses,” said Scratch Baker owner LaShonda Sanford, who just opened a bistro in Phoebus. “It’s on-purpose spending at this point, they tell me.”
Carlyle Bland, who owns three restaurants in Hampton — including Brown Chicken Brown Cow, Marker 20 and Venture on Queens Way — said it’s a mixed bag.
“There is a lot of pent-up demand. We are happy and sad at the same time,” Bland said. “I don’t have enough employees. It’s just getting bodies. I think during the pandemic the economy went on. The restaurants closed and people got other jobs.”
His restaurants are operating under constrained hours and sales are not back up to pre-COVID levels, Bland said.
Thomas said Vanguard also is down employees, nearly 50% compared with 2019 and there are other challenges.
“Pre-pandemic I had about 70 employees between full- and part-time. Even though we are back at full capacity, I cannot operate at full capacity because I’m down staff. I think that was not being taken into account,” Thomas said when asked about the city’s gush over record meal taxes. “We’ve seen a shortage of chicken and chicken wings. Restaurants are facing a ton of challenges, staff challenges, rising food costs and competition with fast food (places). That’s our biggest challenge, keeping a menu that we can afford.”
Sanford said small business are being hit hard in general, especial with the new minimum wage scales. In Virginia, minimum wage increased to $9.50 in May and expects to increase to $11 by January.
“We have to get more employees. We can hardly find them. When we do find them, we have to pay them much more,” Sanford said. “I support minimum wage going up. I do support it for big box chains, but it’s really hard for small business to maintain those numbers for kids that we are trying to employ for the summer. We can hardly compete with that.”
Mugler agrees restaurants are under a lot of pressure now, but things are improving.
“I talk to a lot of friends, and we are just tired of cooking (at home),” Mugler said. “It’s hard to find a parking space in Phoebus. That’s a great sign.”
Thomas said the pandemic gave his partners time to rethink what they were doing, so he’s mostly optimistic for the future.
“We are going to come out of it on the backside,” he said. “Once everything goes back to normal, we’ll be in good shape.”
Lisa Vernon Sparks, 757-247-4832, lvernonsparks@dailypress.com
