Extending Your Brand Beyond Your Restaurant

In a great webinar on extending your brand beyond your restaurant, the teams at Results Thru Strategy and Merchant Centric highlighted the importance of monitoring your brand in the digital landscape.

Results Thru Strategy is a strategic advisory firm that helps hospitality companies optimize their people, performance, and profits. Merchant Centric helps increase revenues for businesses by using data analytics and intelligence to determine meaningful business actions.

The presenters included Fred LeFranc, Founder of Results Thru Strategy; Adam Leff, Co-Founder of Merchant Centric; Connie Shelton, SVP of National and Strategic Accounts for Merchant Centric; Katie Milligan, Manager of Guest Services for Firehouse Subs; and Chris Artinian, CEO of Toojay’s Deli.

The webinar’s agenda focused on 5 key elements:

  1. Understanding the restaurant technology space
  2. Online guest engagement management
  3. The value in what your guests are saying
  4. Actions restaurant brands are taking and results
  5. Online guest engagement management checklist

While there are a lot of buzz words in restaurant tech, many of them don’t identify what’s going on. As such, Adam suggested that this quadrant analysis is more fitting:

All of the online media, online engagement, and targeted advertising components help enhance the in-store experience

The influence of online engagement and media is more significant than ever before. People no longer look only to expert food critics; they look to their friends and social media connections (84% of people trust online reviews in addition to their friend’s content).

Similarly, a diner’s experience with your restaurant doesn’t end when they walk out the door. They go home and create posts and other forms of content, and have conversations surrounding their experience. And restaurants need to identify how to best monitor, sift through, and report on all that content.

There are four main online guest engagement management solutions:

  1. Reputation monitoring
  2. Reputation management
  3. Data analytics
  4. Reporting & Dashboards

There are services available that make reputation monitoring more manageable. You ave to at least listen to what’s going on. If not, you’re at risk for having unfavorable information out there that you may not know about.

The next step in reputation management is to make the investment to interact with guests. Data allows you to actually understand and analyze what guests are saying. You can then say, “If we take this action, we’ll be able to better address what guests are saying.”

You will also then be able to better report and explain everything to your share holders. When businesses actually engage in online guest management, there are often favorable results:

  • More new and repeat guests
  • More reviews
  • Higher ratings
  • Increased revenue

The best organic way to get more reviews is to engage with your guests. They recognize this is a way to communicate with you and so they’re more vocal. Typically, you’ll get more positive reviews, too.

This is beneficial because guests tell restaurants how to increase sales:

Guests’ sharing habits have evolved, too. Online reviews across top sites like Google, Yelp, Facebook, TripAdvisor, OpenTable, and Foursquare contribute drastically to peoples’ decisions.

Restaurants now receive a massive amount of feedback!

People may also share at either the corporate or location-level. Katie noted that, at Firehous Subs, they monitor and respond to both corporate and franchise reviews. Since most are at the location-level, they’ll address the customer from the corporate level then send it across to local management to address. They’ll personally take ownership over anything that’s a brand issue, and relay it to any relevant departments to act on those reviews.

It used to be the case that only 3% of restaurants would reply to reviews. Now, restaurants lead the industry in replying to customer feedback. Why are customers replying? There are many reasons:

  1. More new and repeat guests
  2. More reviews
  3. Higher ratings
  4. Increased revenue

A Harvard Business School Study found that a 1-Star increase in online reputation results in a 5-9% increase in sales.

In looking at Toojay’s as a case study, they discovered they needed to better incorporate technology as well as develop some best practices. Expanding the team and connecting management with guest feedback were also actions items.

They began taking and displaying ownership in what they do by flushing out these priorities and managing guest feedback. They respond to all complaints within 24 hours and want to ensure any issues are completely resolved within 48 hours.

This resulted in higher overall ratings; increased guest satisfaction (monthly ratings higher than past); connected management with guests (real-time email reporting); and being better equipped to guide the brand.

The matter of ratings vs revenue was also addressed:


You think you may be doing well from a money perspective but if your guests aren’t happy, things may be heading downward.

Firehouse Subs was another case study discussed. They have over 1,000 locations and maintain and build brand relationships beyond stores. They manage multiple constituencies (franchisee owners, franchisor management, field marketing managers).

They realized a year ago they were missing the mark in terms of reviews. Previously, many reviews were unanswered and could lead to crisis.

By making it a priority to use sophisticated platforms and best practices, they were able to back and clean up old reviews. Now, they pro-actively respond and monitor all locations’ reviews – on a daily basis – and respond to anything 3 stars or below.

They base everything they do around their mission statement which is their culture. Thus, their star review goes up and so does business. They address it at the corporate level then it trickles down to individual managers.

Interacting became a magnet to get customers to be more vocal online in general, and produce far more positive reviews and feedback, which in turn, drives greater sales volume.

Firehouse Subs also shares information daily among the executive team so everyone has eyes on what’s going on. They also send reviews to the franchisees’ area representatives who share with their teams.

Understanding themes that work with your brand is also a critical step. You have to figure out the number of complaints you get and make sure there’s a balance between high reviews in order to maintain ratings and sales.

Discern what’s meaningful and not necessarily what’s noisiest.

In general, increasing star-ratings increases sales growth. Higher ratings attract new customers and indicate existing customers are satisfied. This means more new and repeat customers and more referrals.

Through proper social media marketing, you can know when your guests are upset about and fix it.

Firehouse was able to narrow down which locations got the most complaints. Most of the time, the complaints were about speed of service, so they decided this was an issue they needed to address.

Many of their customers are in for lunch and want to roll in and out in 30 minutes, so they rolled out a new labor platform to make lunchtime more efficient.

Similarly, Toojay’s also used reputation monitoring to identify exactly where to focus. They were getting great ratings on food but one venue was struggling with slow service and surliness. They focused on how to manage guest feedback in the four walls and figured out a strategy/criteria to resolve in-house issues. They were able to see immediate improvement after putting training behind their team.

In closing, it was recommended to assess the following questions for your brand:

R365 Customer Freddy’s Gets Recognized for Kind Gesture

Kudos to customer Freddy’s Frozen Custard & Steakburgers for this great recognition.

When a young boy didn’t have enough money to order his dessert, cashier Travis Sattler paid for the custard himself.

Half an hour later, the boy returned with a note and $100 bill. Travis is putting the money toward his savings for nursing school.

Kind gestures go a long way!

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.

Restaurant365 and xtraCHEF Announce Strategic Partnership

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Restaurant365, a leading restaurant ERP platform, has partnered with xtraCHEF, an automation tool for restaurant purchases.

The partnership merges Restaurant365’s expertise in accounting, budgeting and financial reporting software with xtraCHEF’s leading restaurant invoice platform to deliver real-time inventory and cost of goods management data, analytics, and reporting to Chefs, Accountants, and Restaurant Owners.

“We’ve been working closely with the team at Restaurant365 for the past year, and this partnership only enhances the relationship between our two brands,” noted Dayna Barringer, Director of Business Development at xtraCHEF.

Restaurants can spend a lot of time entering physical invoices. Many receive anywhere from 10-15 invoices a day with 20-25 item per invoice. That’s 300 items a Chef has to manually enter.

To help chefs be more efficient, xtraCHEF developed an app that allows restaurants to simply take a photo of an invoice. It’s then translated and the data can be sent directly to Restaurant365.

“Our technologies seamlessly integrate together, enabling Restaurant365 customers to easily take a photo or scan in all invoices including food, alcohol and non-food such as linens, services etc. Our multivendor EDI platform eliminates the manual data entry, streamlines the invoices workflow, and saves time and money,” Dayna continued.

XtraCHEF packages superior technology in a unique architecture that provides a one‐step solution that is both innovative and economical.

Restaurant365’s accounting and operations modules are further enhanced with the xtraCHEF offering, enabling more detailed data to flow into the Restaurant365 platform.

“We strive to offer a very robust restaurant platform and look to strategic partners to provide complementary solutions. XtraCHEF’s ability to remove any manual effort for handling paper invoices provides valuable data that flows directly into Restaurant365’s real-time financial & budget reports, payables processing, and business analytics,” states John Moody, Co-founder and VP Strategic Initiatives.

Restaurant365 and xtraCHEF have a growing number of joint clients that truly look to use the best technology and services to streamline the business side of the restaurant business.

7 for ’17: Key Business Issues Impacting the Restaurant Industry this Year

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As we close out the first month of 2017 – a month where we ushered in a new president and administration – the restaurant industry continues to face a number of challenges driven by legislation as well as marketplace dynamics.

Here are seven issues that we believe rise to the top in their potential impact on the industry

1. Wages and Benefits

A rise in the minimum wage affects many businesses, including restaurants. In addition, the new administration in Washington has also vowed to significantly change – or eliminate – the Affordable Care Act.

The changes to the minimum wage are clear. Not so for the Affordable Care Act.

Changes to the minimum wage are being implemented at state level including changes to the tip credit. Currently, 33 states have adopted minimum wages for tipped employees that compensate employees at a rate other than required under the federal Fair Labor Standards Act.

Restaurant owners are likely to respond to increasing labor costs by implementing cost reduction measures designed to maintain margin with little or no impact on the guest experience.

Quick Service and Fast Casual concepts may expand their dependence on automation while other segments of the industry explore a no tipping/surcharge model.

Those restaurants with an intimate knowledge of their financial metrics will be in a better position to adjust to increasing labor costs.

For details on minimum wages for tipped employees in every state, visit the United States Department of Labor’s website.

2. Competitive Differentiation

Amid increased competition and decreased traffic, restaurateurs will be pressed to differentiate or fade away.

Restaurant industry analysts aren’t enthusiastic about same store sales yet the restaurant industry has become increasing popular with the investment community.

As a result of an increased number of investor-owned restaurant companies and their emphasis on driving growth, the restaurant community has expanded beyond what the market can support.

Due to decreasing commodity costs, the gap between eating at home and eating at a restaurant has widened and some consumers have just decided to reduce their visits to their favorite restaurants.

Strong brands and differentiated concepts will carry the day. Today’s restaurant landscape is littered with broken brands who are struggling to attract and retain guests.

Management’s ability to infuse a culture of innovation throughout the entire organization will create differentiation and drive positive outcomes.

3. Geography

New restaurants will migrate to states that are less litigious and have fewer regulatory obstacles associated with opening and operating.

States with increasing wrongful termination and workman’s compensation suits may also drive restaurants to new territories.

Because of these and other factors, the West Coast and Northeast regions of the United States may lose restaurant population. The South and Midwest regions may benefit.

4. Demographics

Strategies to engage with baby boomers and millennials will serve to increase revenue. This marks the first year that baby boomers will begin withdrawing money from their retirement accounts resulting in increased levels of disposable income for many.

And even though the software applications may change, millennials will continue to explore and share restaurant experiences through social media.

Locally sourced and sustainable concepts that creatively utilize healthy food products and cooking techniques will maintain their popularity.

But millennials aren’t the only group that researches restaurants before making a dining decision. They are teaching their baby boomer parents how to employ digital tools and social media, and those baby boomer parents are catching on.

Your social presence has never been more directly connected to your bottom line. Millennials and boomers like to photograph and post beautiful, delicious food while sharing and recommending interesting places.

5. Online Ordering

With more Americans opting to eat at home, and as third-party delivery services expand and improve, restaurants may expand their online presence while dialing back their brick and mortar locations.

Most of the larger chains have already ramped-up their online capabilities and the independents may not be far behind.

Whether large or small, once a restaurant builds a strong relationship with a critical mass of guests, they increase the likelihood of success online.

Guests who enjoy their dining-in experience are most likely to augment that experience by ordering on-line and having their order home-delivered.

Restaurants that use technology to help guests order, pay, and deliver with the click of one button will gain popularity.

6. Leasing and Location

Restaurants that choose to maintain or expand their brick and mortar footprint will need to become better negotiators, or be prepared to walk away from their current locations.

The terms and conditions of leases that were signed 8 to 10 years ago, when the real estate market was struggling, were far more generous than they are today.

With so many other costs chewing away at margins, the increased occupancy costs of renewing a lease may put some restaurants in the red.

Location is a critical component of any restaurant concept. But so is financial viability.

Restaurants are well-advised to give themselves plenty of time (18 to 24 months before the end of their lease) to start discussions with their management team and their landlord.

7. Attracting and Keeping Quality Employees

Restaurants have long struggled with attracting and retaining quality employees.

Beyond compensation, creating an environment where employees feel important, supported, cared for and part of the team will help to keep the right people in place.

Investing resources into proper hiring, training, and evaluation will go a long way in building a great team.

You entrust your employees with your most valuable asset—your guests. Building creative compensation packages that motivate your employees to grow as your restaurant grows is a strategy that shows you care about them, your guests, and your brand.

With historically tight margins, the restaurant industry has always been a challenging environment for the newcomer as well as the established operator. Successful concepts are those that are flexible, relevant, and managed as efficiently as possible.

These concepts elevate a brand and provide customers with a memorable, high value experience.

This post was contributed by Gary Levy and Marshall Varano of Cohn Reznick.

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!

Creator of Capriotti’s “Bobbie” Sandwich Passes Away

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The Bobbie.  It is my favorite sandwich at Capriotti’s Sandwich Shop and has the perfect balance of a Thanksgiving dinner on a sandwich.  I was saddened to hear that the Bobbie’s creator, Lois Margolet, passed away Thursday.  I’m thankful for Lois and the iconic brand and sandwiches that I have come to know, crave and love.

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

 

Restaurant365 Adds Pictures to Company Announcements

One of the new features of Restaurant365 is the ability to upload images directly from your mobile phone on our R365 App.

You can have managers upload images of LTO menu items or the picture of an employee on their birthday.  Think of it as Instagram within your own company!

 

Morgan Harris

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.