Gratuity grief: Tips versus service charges
Wage challenges in recent months have spurred restaurant operators to take a range of actions, from adding service charges to guest bills, to eliminating gratuities. The changes have affected how restaurants report income, and according to Modern Restaurant Management, making mistakes in characterizing these payments can lead to penalties under the Fair Labor Standards Act (FLSA) and the Internal Revenue Code (IRC). As you wrap up the fiscal year, note the differences between the two forms of payment, according to the IRS: For a gratuity to be a tip, the payment must be given at the discretion of the customer, who has the right to determine its amount and who receives it. Tips can be given as cash or as goods like tickets or passes, all of which must be reported to the IRS for tax purposes. Employees need to report only cash tips to their employer, who must use that information to populate tip reports needed to withhold income taxes, Social Security and Medicare taxes on reported tips. The FLSA lets operators take a tip credit of up to $5.12 toward their minimum wage obligation (or the difference between the federal minimum wage, $7.25, and the required cash wage, $2.13). The IRS says automatic gratuities, such as any gratuity added to a customer’s bill, is not a tip. Employers may keep these charges or distribute them to employees, but in the latter case, the charges should be treated like regular wages for tax purposes. For further information, check out IRS Fact Sheet FS-2017-08 and FLSA Fact Sheet 15.
Deconstruct your data
Restaurant industry experts are predicting that 2018 will be the year of data. But with so much potential data and so many methods to collect it, restaurant data has become a vague term. So how should you focus? FSR suggests you zero in on five main categories: individual customer data, kitchen data, guest management, financial and inventory data and social media data. Individual data can include a name with contact information, food allergies and preferences, and birth date – and offering an incentive usually helps you collect it. In the kitchen, collect data specific to inventory and food preparation, focusing on different food stations and using an automated display system that can track how long every process takes. When it comes to guests, your data should tell you average wait times, turnaround times, party size, guest numbers and how efficiently you’re seating guests at any time. Automated systems can help here, too. Your financial data will help you understand how much revenue you’re generating, how much you’re spending and how effectively you’re using your inventory so you can identify and eliminate areas of waste. Focus on your expenses for utilities and payroll, items that have sold, how much you’re spending on the items you buy, sales of each menu item, total food cost, total menu sales and total profit. Finally, collect social media data – Facebook is a good place to start because it is so widespread and encompasses diverse demographics. Facebook, as well as Twitter and Instagram, will provide you with a weekly count of the followers you’ve gained or lost, as well as how engaged they are with the content you’ve been sharing.
Accommodating allergies – to the extreme
As restaurants go to greater lengths to cater to guests with food allergies – from using technology in the kitchen that monitors for allergens, to creating systems and procedures for sequestering the food of allergic guests from other food served at the table – many have begun designing full menus and restaurant concepts specifically for these guests. As an article in the Washington Post stated recently, “The afflictions of the minority are starting to determine the options for the majority.” The report says a number of college campuses have established dining halls that are allergy-free or limit allergens to specific serving areas. Restaurants are joining the effort – at Chipotle, for one, five of the top eight food allergens are not offered on the menu. While some wonder if limiting allergens will generate more allergy-sensitive people in the future, or will make it harder for those without allergies to find their favorite dishes, the prevailing belief is that this emerging model will spark more innovation on the menu – and across the industry.
Cleaning and disinfecting for an airtight sanitation plan
Does your team recognize the difference between cleaning and disinfecting – and why both are critical to ensuring the health and safety of employees and guests? Food Quality & Safety recommends you first work with a cleaning supplier to conduct a sanitation audit, identify contamination risks within your facility, and create a master cleaning plan that spells out what must be cleaned and how, as well as who should do the cleaning and when. Train employees to understand that sanitation involves both removing the residue from a surface and killing any microorganisms that can cause disease, odor and spoilage. Look for multipurpose products that can both clean and disinfect (many will do just one or the other) so you can reduce your inventory investment, minimize work and simplify training.
Why have reservations?
If you’re not yet accepting reservations via a guest management system, doing so could help you harness valuable data in several ways. Offering online reservations lets you track the origins of your bookings. Are people finding you through a Google search? Facebook? TripAdvisor ratings? Word of mouth? Knowing your best sources of new guests will help you know where to focus your marketing efforts and dollars.
UberEats delivery gets personal
UberEats is taking a comfortable lead in the restaurant delivery market – and its personalization strategy is a big part of it. SkiftTable reports that UberEats recently launched three customer-facing features to help it stand out: in-app ratings, favorites and personalized menu options. Customers using the app get lists, collections of restaurants and search elements – all personalized according to their preferences. Once a customer selects a restaurant, for example, UberEats can now recommend dishes that the customer is likely to enjoy based on his or her taste profile. It can winnow an overwhelming menu of 100 items down to a desirable list of five, streamlining the ordering process while providing data that are helpful to restaurants. These changes will likely spur competitors to enhance their features as UberEats rapidly expands its market share: Since April, the company’s reach has nearly doubled, with 80,000 restaurant partners in 200 cities.
The POS: Your tableside marketing consultant
A tableside POS can help your servers make best use of their time and help you turn tables more quickly. But there are more benefits: QSR recommends you harness your POS to strengthen your marketing, so you can build a strong mailing list of guests who enjoy your restaurant and collect their feedback immediately after a meal, when it’s fresh in their minds. When the guest pays the bill, the tablet payment screen can ask for their email address and offer the option to receive coupons good for a future visit. Once a month, you can send a promotion or other incentive for them to return – it could tip the balance when they are deciding which restaurant to choose among a list of possibilities. When your guest taps the screen to make payment, you have a captive audience – and a chance to collect insights about the menu, specials, service, décor or any other part of your restaurant you want to analyze. Ask a few multiple-choice survey questions (and provide a place for sharing open-ended feedback if desired) that will help you determine what needs tweaking.
Ready yourself for review time
How do you evaluate your employees? Having a set process can help you keep communication lines open, show you’re interested in developing your team and make your operation run more efficiently. Upserve suggests you conduct your reviews on a set schedule – perhaps on the one-year anniversary of each person’s hire – and focus the conversation on performance. (Save all discussions about compensation for one time during the year in accordance with your fiscal year so you can budget accordingly.) To structure your reviews, work from a template to keep the conversations on track. Upserve recommends you create three categories for feedback: qualities, goals and comments. Your discussion of qualities should focus on the nuts and bolts of the person’s day-to-day performance, e.g. punctuality, attendance, communication skills, honesty, customer service and attention to detail. As for goals, discuss whether the person achieved set goals during the year, and, if not, what resources or training could help change that. If the person achieved set goals, ask for input about how he or she might like to develop, e.g. learning a new skill or technique, or taking on additional responsibility. Finally, turn the tables and ask for feedback about your performance as well. It will help your employees feel heard and their feedback could help you understand whether your restaurant is a good place to work. If it’s not, you can engage your team’s help in making it better.
When to lease your POS
Your POS system can help you make the most of profit points within your restaurant, cut back on waste, and provide you with information that can help you turn occasional customers into your most loyal ones. But the costs of systems may hold some operators back – POS hardware can cost between $500 and $3000 per pay station, according to data from Capterra, and lower-priced options don’t necessarily offer a better value. Web-based solutions promise a high return on investment – but what if you have shaky connectivity, want customized options or need access to specialized support not often included with web-based POS services? If you’re among the one-third of restaurant businesses who are planning to upgrade POS technology in the next year, according to Toast, you may have a case for leasing your equipment. Business.com suggests that leasing could be for you if you are new to the business, want to avoid the up-front payments required for POS hardware, like having the option to upgrade regularly to a system with more bells and whistles or simply need some time to figure out your restaurant’s longer-term technology strategy. Look for complete packages that include all equipment, service and repairs for the lease term. The business technology firm Lightspeed also suggests you study the interest rates from the leasing companies you’re considering, since they can vary widely, as well as what happens if you need to change your contract terms early.
Fast facts about handwashing
Boosting your operation’s cleanliness can be as simple as promoting better hand washing. David Walpuck, a food trainer from The National Environmental Health Association, shared these facts with Food Safety Magazine: 80 percent of communicable diseases are transferred by touch. Just 20 percent of people wash their hands before preparing food. Fewer than 75 percent of women and 50 percent of men wash their hands after using the bathroom. Every time a toilet is flushed with the lid up, a fine mist containing bacteria such as E.coli and Staphylococcus is spread over an area of six square meters. In public restrooms, the area around sinks is 90 percent covered in these bacteria. For every 15 seconds spent washing hands, 10 times more bacteria is removed. Most bacteria on hands are on the fingertips and under the nails, although most people wash the palms of their hands and nothing else. The bacteria count is highest on the dominant hand, but right-handed people wash their left hand more thoroughly than their right hand, and vice versa. Only 20 percent of people dry their hands after washing. Disposable paper towels are the most sanitary means of drying hands (reusable cloth towels harbor millions of bacteria).
Boost your restaurant’s social responsibility
Improving your restaurant’s social responsibility program isn’t just good for your community; it can help you generate buzz in traditional and online media outlets, gain new business and build a positive perception of your brand. In fact, Nielsen’s Global Corporate Sustainability Report found that 66 percent of consumers are willing to spend more money on a product from a sustainable brand. To increase your social impact, Foodable suggests you make it your mission to improve your community, then support that mission with goals, set aside time and resources to accomplish them, and hold people accountable. Your plan could include donating a percentage of revenues to a local cause, looking internally to decrease your restaurant’s energy use and identify products you can purchase from sustainable sources, or donating food or organizing food drives to benefit people living in poverty or recovering from a natural disaster. Make sure your social responsibility program is visible within your establishment, as well as on your website and social media networks.
How tech gives restaurants an edge over grocerants
Grocery stores have become go-to businesses for the convenience minded, offering a growing assortment of prepared foods (and becoming restaurant hybrids in the process). But technology can help restaurants reclaim lost ground. Modern Restaurant Management suggests that tech can deliver convenience, personalization and engagement more effectively than grocery stores. Why try to find an appealing meal at the grocery store on the way home from work if you can use mobile order to have your favorite pizza ready for pick up – or have it delivered to your home just as you arrive? What if you want extra pepperoni on that pizza – or on just half of it? Again, tech provides the customization and personalization that grocery stores don’t – and it lets a customer recall their preferences in a couple of clicks. Grocery stores have long used data to send customized promotions, but again here, restaurants can do this with greater precision. If you mine your technology, you can recall that a customer often orders take-out on Thursday evenings at 6pm and sometimes gets dessert. Armed with that information, you can entice that customer more effectively than any grocery store.
Tech to try next?
How will you improve your restaurant’s technology in the coming year? From providing online reservations to mobile ordering to tableside payment, there are any number of directions you could take. Toast’s recent technology survey of more than 900 restaurateurs and 1,200 restaurant guests may help you decide where to focus. While operators and guests agreed on many benefits of tech, they differed in these three areas: Among restaurant guests, 58 percent will use a restaurant’s app or mobile pay when available (far fewer operators offer these options), 49 percent of guests think kiosk ordering improves their experience (only 39 percent of operators think kiosks help efficiency), and when guests ranked their top tech preferences in restaurants, they listed online reservations, guest wifi and online ordering (loyalty programs didn’t make the cut). If you’re still struggling to decide where to offer tech, take heart: Software that accomplishes multiple objectives simultaneously is within reach. As David Scott Peters, founded of the TheRestaurantExpert.com, said recently, “As technology gets less expensive and more systems talk with each other, software will get smarter and not only provide analytics, it will automatically tell the restaurant owner where the problems are and what they need to fix.”
2018 predicted to be the year of data
Technomic and Restaurant Business have just released the Winsight 2018 Restaurant Trends Forecast and one message comes through clearly: Data is expected to have ever-increasing power at restaurants in both public-facing and business-facing ways in 2018. Kelly Killian, director of the foodservice content group for Winsight, predicts that data will impact every area of operations, from marketing messages personalized based on behavioral analytics, to highly customized menu suggestions based on past purchases, to sensors that track staff productivity. Data’s impact will also extend to the kitchen, where smarter equipment will gather data to make for more efficient purchasing and production, among other processes.
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