Restaurant Owners Maintain a Positive Outlook in 2017

Coming into this year, many restaurants were struggling to grow their sales following a rough time for the industry.

Now, however, it appears restauratuers’ outlook on the industry is unphased by past sales slumps. A new report from Toast POS found that 92% of restaurant owners are optimistic for their sales and success in 2017.

The report delves into which actions restaurant owners are taking to achieve that success, specifically in the realms of marketing, social media, and technology. Of the hundreds of restaurants surveyed, the majority intend to:

  • Increase or maintain their spend on restaurant advertising.
  • Increase usage of social media and search engine ads.
  • Adopt more innovative technology for their business.

Here are some of the most noteworthy takeaways from the Toast Restaurant Success in 2017 Industry Report.

Perceived Optimism and Control

58% of restaurants report feeling optimistic for their sales in 2017, while an additional 34% are very optimistic, meaning more than 9 in 10 restaurateurs maintain a positive outlook for their sales this year. Only 6% are pessimistic, and just 2% are very pessimistic.

Part of this could be due to the level of control restaurateurs’ feel over their success. The same report found that 87% of restaurateurs say they have direct control over the success or failure of their restaurant business.

Loyalty and Online Ordering Set to Rise in Usage

24% of restaurants will start utilizing a loyalty program in 2017, and another 24% will offer online ordering this year.

Loyalty has been proven to boost customer retention and spending amounts, while customized online ordering can lead to higher check sizes compared to in-store purchases.

Perhaps the usage of these profit-generating tools are why restaurant owners feel so positive and in control this year!

Diners Lack in Innovative Tech

Compared to other restaurant concepts, diners seem to be reluctant to introduce technology into their business. Diners are the least likely restaurant concept to:

  • Operate a website
  • Leverage an email database
  • Offer a loyalty program
  • Accept mobile payment

However, some plan to turn this behavior around. Diners are the most likely concept to introduce a website and an online ordering program in 2017.

Not All Social Media is Created Equal

Restaurants love their social media. Only 4% don’t use it in any capacity. However, restaurants definitely play favorites with their social media sites.

Far and away – Facebook is the most popular social media site for restaurants. 92% of restaurants use Facebook, with 73% naming it their social media channel of choice.

The less-loved social media channels include Snapchat and YouTube. While YouTube is slated to grow the most is usage by restaurants in 2017, less than half of restaurants will be using the video-sharing site by the end of the year.

Even less adopted is Snapchat, which was not selected by any surveyed restaurant as their preferred social media channel for their restaurant business.

Goodbye to Direct Mail Ads

While direct mail ads aren’t gone for good, they’re becoming less and less popular. Less than one-third of restaurants plan in engaging in direct mail ad campaigns in 2017, representing a 6% drop compared to historical numbers.

Newspaper/Magazine advertisement is seeing a similar drop in popularity and will decrease 31% in usage this year.

Taking its place are search engine ads and social media ads, which will see 36% and 20% increase in restaurants using these methods, respectively.

Takeaways for Restaurants

As technology gains more importance in the restaurant industry – both inside of the location and online – restaurants should evaluate their current technology systems, advertisement methods, and social media strategy.

In ever-changing times, mastering all three of these systems is imperative for restaurant success.

For more details on what restaurants are doing in 2017 to achieve success, read the full Restaurant Success in 2017 Industry Report.

AJ Beltis is a Content Marketer and Blogger for Toast POS in Boston. AJ and the content team at Toast spend their time compiling resources for those in the restaurant industry dedicated to improving their business and increasing their sales.

The Domestic Production Activities Deduction: An Untapped Savings Opportunity for Restaurants?

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Many taxpayers in the restaurant industry may not be aware that they may qualify for a significant tax deduction available under section 199.

Fully phased in for tax years beginning in 2010 and thereafter, section 199 provides a permanent tax deduction (the “domestic production activities deduction” or “DPAD”) to taxpayers deriving income from qualified production activities occurring in the United States.

The DPAD is computed as the lesser of the following three amounts:

  1. Nine percent of the taxpayer’s qualified production activities income (“QPAI”)
  2. Nine percent of taxable income for the year
  3. 50 percent of the taxpayer’s W-2 wages related to the qualifying production activities

QPAI is principally net taxable income derived from qualifying activities, equal to the excess of the taxpayer’s domestic production gross receipts (“DPGR”) over the sum of the cost of goods sold (“CGS”) and other expenses, losses or deductions that are properly allocable to such receipts.

While many taxpayers tend to think the DPAD only applies to traditional manufacturers, the benefit may be available to a number of other industries as well.

Section 199 broadly defines manufacturing to include activities such as making tangible personal property from new or raw material: processing, manipulating, refining or changing the form of an article; or combining or assembling two or more articles.

This definition can include the preparation of food and beverages, as such activities typically involve combining various articles to make a distinct finished product.

However, section 199 specifically excludes gross receipts of the taxpayer that are derived from the sale of food or beverages prepared by the taxpayer at a retail establishment from DPGR.

A retail establishment is defined as tangible property at which retail sales are made that the taxpayer owns, leases, occupies or otherwise uses to sell food or beverages to the public.

Furthermore, a facility that prepares food and beverages for take-out service or delivery is considered a retail establishment for purposes of section 199.

Accordingly, a restaurant that prepares food onsite from start to finish or a caterer may not qualify for the benefit.

Restaurants may still benefit from the section 199 deduction to the extent any portion of the food preparation occurs at an off-site facility. For example, many chain restaurants use a central kitchen to prepare food products and ship them to its various locations for final preparation and sale to the customer.

For these restaurants, the gross receipts attributable to the food preparation occurring off-site can be treated as DPGR, with the remaining gross receipts attributable to the on-site preparation of the meal treated as non-DPGR.

Off-site preparation of beverages also benefits under the same principle.

In a 2004 conference report discussing the various applications of section 199, Congress noted that although a beverage prepared at a retail establishment, such as a cup of coffee, would not qualify under section 199 in its entirety, a component of the beverage may be treated as qualifying property.

For instance, if a portion of the coffee was prepared off-site, such as roasting the coffee beans, then that specific portion could qualify for the deduction.

A taxpayer’s off-site facility is not a retail establishment if the taxpayer only uses it to prepare food or beverages for wholesale.

Additionally, a retail establishment does not include the bonded premises of a distilled spirits plant or wine cellar or the premises of a brewery (other than a tavern on the brewery premises).

Thus, any gross receipts derived from products produced at such locations and sold to customers (whether the sales occur on-site or off-site) can qualify as DPGR.

Qualifying activities for purposes of the DPAD are wide-ranging and applicable to taxpayers in numerous industries, including the restaurant and beverage sector.

As the rules under section 199 can be quite complex, it is prudent for taxpayers to work with their tax advisers to obtain a thorough understanding of the facts at hand in order to determine whether they may qualify for the incentive.

Note also that taxpayers may amend prior year returns (to the extent such years remain open under the statute of limitations) for any unclaimed section 199 deductions, further increasing their cash tax savings and reducing their effective tax rates.

This post was contributed by Dana Zukofsky and Travis Butler of Restaurant365 partner, BDO.

MOD Pizza Celebrating 200-Store Milestone

Restuarant365 client MOD Pizza announced it will open its 200th store this month, reflecting a doubling of the company’s footprint in just under a year.

In 2016, MOD added 100 stores and over 1,900 jobs system-wide, while expanding into six new US markets—Kansas, Kentucky, Missouri, Ohio, South Carolina and Wisconsin—and making its international debut in the U.K.

The company’s milestone location, MOD Westview Promenade, in Frederick, Maryland, is slated to open on January 31.

Scott Svenson, co-founder and CEO of MOD, says:

“At MOD our mission is simple: we make pizza so we can serve people.

We celebrate our growth, and the opening of our 200th store, because it highlights how many Squad members have joined the MOD family.

We now have over 4,000 passionate MOD Squad members who are energized by the belief that a company can succeed when putting its people first.

Thanks to the support of our loyal customers, we’re able to continue our growth, bringing new jobs into more communities and allowing us to support important grassroots causes across the US.

Last year alone, we partnered with more than 185 local charities in communities we serve, donating over $650,000 to organizations supporting at-risk youth and families.”

To mark its 200-store milestone, MOD will be celebrating with a special event on January 24.

For the entire day, at all locations, MOD will be thanking customers by offering $2 off of all MOD-size pizzas and salads.

MOD currently has locations in 20 states, including Arizona, California, Colorado, Idaho, Illinois, Kansas, Kentucky, Maryland, Michigan, Missouri, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington and Wisconsin, as well as five locations in the U.K.

Restaurant365 Expands to Austin Texas

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We are excited to announce the opening of a new support and sales center in Austin, Texas.

Restaurant365 is committed to offering the best software and support in the restaurant business and expanding to Austin helps us insure we can continue to deliver on that commitment.

We decided to partner with Link Coworking in Austin for our Texas operations. Link was a perfect fit for our team as they were able to offer a scalable work environment as well as the ability to surround our team with a great community of other tech professionals.

Austin was a natural fit for our company as it offered a great work force and restaurant scene. The talent in the Austin area will help us continue to offer the best restaurant management software on the market.

Restaurant365 is continuing to add new team members in our home base in Irvine California and our office in Austin Texas so you will likely be getting a chance to speak with members of both teams.

Now that we are a California and Texas team, we just want to say that we are super stoked for this expansion and we hope ya’ll are too!

Why take the time to create a budget for my restaurant?

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These are the Big 3 Benchmarks of Performance in the Restaurant Industry:

  1. Same-Store Prior Year
  2. Location Side-by-Side
  3. Budget

 What are the merits of each and is doing a budget even worth it?

The most common financial and operational benchmark for a restaurant is comparing performance of the same store to the same time period of the previous year.

This is known as ‘Same-Store _______________” (you insert the metric you want – i.e. Sales, Guest Count, SPLH, Prime Profit, etc.)

Same-Store Prior Year is an important metric to be sure as it can alert an operator of things that have fallen out of the normal ratio for that same-store and thus where immediate action should/can be taken to rectify it.

Each location is unique to some degree and when all else is equal, the same-store performance the previous year is a great way to measure current year performance. However, it does have its limitations.

For example, one industry veteran told me his staff would commonly joke that if you wanted to make any poor performing period look good, just make the previous year look the same and no one would bat an eyelash. There is a need to look at your business through multiple lenses.

The second most common analysis in the restaurant world is comparing store performance to other restaurant locations within the same company for the same time period. This is referred to a Location Side-by-Side analysis.

This form of performance comparison is also helpful in identifying warning signs and opportunities across your multi-unit brand but the greatest benefit is an intangible one: it can drive manager motivation. People love to compete. They like seeing their store at the top.

Restaurant365 is one application that has taken this to the next level. They have an exciting feature that allows managers to see the P/L’s of other locations within the company without revealing which location they are looking at except their own. The manager can see where they ‘rank.’ This gamification of the data is helping promote excellence within the manager ranks and changing the tone of weekly manager meetings for the better.

The third benchmark restaurants use to measure performance is against a budget. There are many reasons people take the time to prepare a restaurant budget each year – and there are many people who purposefully don’t take the time. For those that do, it is often done out of compliance for an outside investor and completed by the CFO or accounting department. For those that don’t, a common excuse we hear is, “I don’t have the time to analyze any variances.

Besides, the minute I complete my budget it is obsolete and irrelevant because of the ever changing nature of my business.”  There is some truth in these comments and realities we cannot deny.

Why then, go to the trouble of preparing a restaurant budget and who should do it? The best answer is because of what it teaches the person who does it and secondly, everyone from the restaurant manager on up.

The exercise of preparing a budget teaches you the business. In other words, it reveals how the business makes money or loses it. There are ‘levers’ in the business that when pulled, drive profits or losses. Restaurant managers who understand these ‘levers’ are in the best position to make recommendations to the company on how to control them.

Managers who help create the company plan as to how to use the ‘levers’ have more buy-in and ownership to the results. Luck will always be on your side when managers are fully bought-in.

In the end, is budgeting worth it? It is not only worth it, but when combined with same-store prior year and location side-by-side analysis, it is critical for all restaurant business hoping to maximize their return on capital.

Morgan D. Harris CPA, Co-founder, Restaurant365

 

Over 30 POS Integrations

We recently completed our 31st POS integration, which is specifically tailored to the restaurant industry.  Detailed (not summary) data from your restaurant point-of-sale is directly pulled into Restaurant365 including Sales Tickets, Tenders, Payment Types, Clock-in/Clock-out by Job and Employee for the automatic creation of:

  • Daily Sales Journal Entries in the Accounting Module
  • Daily Labor Accrual Journal Entries in the Accounting Module
  • Menu Item Sales for Business Analytics and Reporting
  • Labor Details for Business Analytics and Reporting

Visit here to learn more about our POS Integrations.

 

Online & Mobile Restaurant Scheduling

Online & Mobile Restaurant Scheduling 

Why would you use a spreadsheet or a generic online scheduling tool that didn’t automatically drive off your sales forecasts and labor budgets?  You really shouldn’t.

  • See projected labor profitability for the schedule while creating schedules
  • See weather, sales forecast while scheduling each day
  • Compare your schedule to actual hours worked at the end of the week and throughout the week
  • See a quick view  of who should be working right now
  • Copy schedules from prior weeks
  • Alert employees of schedule and announcements via text/email

For more information visit here.

Mobile App for iOS and Android Update

Mobile App for iOS and Android Update

  • Additional Enhancements to Stock Counts
  • Improved Usability on different device sizes
  • Mobile Reports – Daily Sales Report
    • ​Sales by Store
    • Sales by Day Part
    • Check Count
    • Avg Check
    • Labor Percent
    • Cash Deposit
    • Totals by Day, Prior 7 Days, Week to Date, & Period to Date

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LeBron James Becomes Spokesperson for Blaze Pizza

Restaurant365 is pleased to hear that Blaze Pizza, who utilizes our award winning software as their management platform, announced LeBron James as their official spokesperson. Blaze Pizza is a growing pizza franchise that mirrors a Chipotle style concept. Their build your own idea is changing the casual dining industry. Consumers can choose from the simplest of ingredients or a complex pairing of a variety of toppings.

LeBron James has been one of the original investors in Blaze Pizza since 2012. LeBron will be an ambassador for the brand with a significant marketing push on social media. With over 24 million followers on Twitter James will have a huge affect on the company.

We are excited for this partnership and know this is a slam-dunk!

For official announcement please visit here.

Enhanced Business Analytics

In addition to our restaurant-specific financial and operational reports, we have released a new enhanced business analytics module for Restaurant365. Along with the upgraded standard dashboards, Restaurant365 Business Analytics enables you to build your own custom charts, create your own ad-hoc queries, and customize your own dashboards. Put the metrics that matter the most to you in front of your managers.

Restaurant365 brings your restaurant locations’ accounting, inventory, banking, daily sales, labor analytics, food costs, recipes, above store reporting, and more into one unified platform.