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.
What’s your challenge? Whether you need help developing recipes and concepts, analyzing food costs, fine-tuning purchasing, planning a marketing campaign or managing another aspect of your business, we can provide guidance tailored to your needs. Contact Team Four at email@example.com or 888-891-3103 for more information.
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