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


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.

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


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

Capriottis and Restaurant365

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?


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.


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


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.