Regulation to Go

The Sunday edition of the Post-Dispatch ran an interesting story about the proliferation of food trucks in Saint Louis and other cities across the country. Not surprisingly, the mobile restaurants have come into conflict with their more traditional competitors:

For restaurateurs or aspiring chefs, the food truck can pave an easy route into the business. The capital and overhead costs are lower, and the mobility is an advantage: They can meet their customer base where they live and work.

But many “fixed” restaurants say this gives food trucks an unfair edge, siphons away business and can ultimately depress rents and erode tax bases. Some see food trucks as vultures, swooping in and stealing customers.

In New York City, a merchants association complained to a city official, who earlier this year introduced a bill that would revoke a food truck’s license if it gets three parking tickets within a year. In Los Angeles, officials are looking at limiting food trucks to certain prescribed zones or charging a kind of rental fee, in addition to vending permit fees. In Washington, lawmakers are considering a proposal that would prohibit food trucks from parking within 60 feet of a competitor.
[…] Food truck vendors, meanwhile, say these measures would unfairly limit business.

“The issue is: Are we a capitalist society and do we believe in competition?” said Kristi Cunningham, who sells more than 1,000 cupcakes a day from her van in Washington. “… We pay sales tax, we pay a fee to be a street vendor and we pay all the other fees associated with running a business.”

Earlier in the article, Todd Waelterman, director of Saint Louis’ street department, claims that “[t]he vendors make the neighborhoods come alive. We want that kind of activity,” but “[w]e don’t want an ice cream truck in front of a Baskin-Robbins. Those bricks-and-mortar people pay taxes.” This is the wrong attitude to have about new forms of economic activity. Although brick-and-mortar restaurants pay more in property taxes than the food trucks, they both pay sales tax. Regardless, the government’s mission should not be to simply maximize its own revenues. Furthermore, there’s no reason why an ice cream truck shouldn’t be competing against Baskin-Robbins. If the truck is able to offer consumers lower prices, higher-quality ice cream, better service, or some combination of the three, it’s better for people to have the option of buying from them. Even if the ice cream truck ultimately puts Baskin-Robbins out of business, that just means that consumers no longer value Baskin-Robbins highly enough to justify its existence, and the building, capital, and labor it used should be redirected to making goods and services consumers want more.

Unfortunately, it appears that the city will attempt to “balance” the interests of the food trucks and restaurants with some new regulations on vendors:

The city of St. Louis, for years, has issued 10 vendor permits, most of them to food carts of the kind seen around Busch Stadium. Most of the permits were $25 and allowed vendors to roam in any of the city’s seven vending zones.

But earlier this year, the city instituted a new policy that will require vendors to bid on particular spots. The change caused an uproar among city vendors who had long assumed they were grandfathered in and could wander around as they wanted, Waelterman said.

On Oct. 15, the bidding will begin. Waelterman explained that his department would take bids on as many as 12 locations. But for mobile vendors, the city isn’t putting a limit yet and will assess each bid on a case-by-case basis.

“It’s not a pure high-bid deal,” he said. “It’s what you can do for the city. It’s what we’re lacking. What your truck looks like.”

In other words, politicians and bureaucrats will be directing business activity, not entrepreneurs and consumers.