How Did You Fund Your Restaurant
Owners share tips on SBA loans, regulation crowdfunding, and creative saving. One of the biggest challenges of opening a restaurant is finding the money. For some, family money or a single deep-pocketed investor is the answer. But for most hopeful entrepreneurs, finding a handful of smaller investors, securing bank loans, and crowdfunding are the only realistic options. In the interest of transparency, we reached out to restaurant owners around the country to find out how they funded their projects, learned to get savvy with loans, leaned on community, and, in some cases, have continued to operate debt-free. Here’s how they did it. “We saved up as much money as we could over the 15 years, we dreamed of opening Atoma, but $100,000 isn’t enough to open a restaurant. We went to a handful of banks, who basically laughed in our faces. We tried with some private investors, some folks that we knew in our network, but that was a tough road. What we ended up landing on was an SBA 7(a) loan, or a startup business loan. Most banks will not lend to folks who don’t have two years of very successful history owning a business. But the SBA is a government-backed loan. You can get that through banks, but the government cosigns your loan with you. They guarantee 50 percent of your loan. If we were to go belly-up, the bank will still get at least 50 percent of the money back. So, it’s a great option for people who haven’t been in business previously. There are a couple of things that are tricky, though. You do have to have a 15 percent down payment, which for us looked like $150,000. We ended up borrowing from our 401(k) to make that happen. And then we jumped through the million hoops that are required to get the loan. It’s a variable rate loan, meaning the interest rate is high. We’re currently paying about 10.25 percent interest, which is enormous. But we really wanted the opportunity to be able to keep 100 percent equity, to keep control, and the SBA loan allowed us to do that.”
Understanding the DOL’s New Salary Requirements
For FLSA-Exempt Employees. On Tuesday, April 23, the U.S. Department of Labor published a new final rule raising the minimum pay requirements for certain exemptions to the Fair Labor Standards Act’s (“FLSA”) minimum wage and overtime requirements. The final rule also provides for periodic, automatic increases in these requirements going forward. So, what should restaurants know about the new rule, and how can they stay compliant with this shifting landscape?
Background
The FLSA, among other things, requires that most employees be paid at least one-and-one-half times their regular rate of pay for all time worked over 40 hours in a workweek unless they qualify for an exemption. The most common exemption in the restaurant industry is for employees employed in a “bona fide executive, administrative, or professional capacity.” This exemption is commonly referred to as the “EAP” or “white-collar” exemption. For this exemption to apply, the DOL requires that both:
- the employee must be paid a predetermined, fixed salary that must meet a minimum salary level; and
- the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations.
Under the existing regulations, the current minimum salary level is $684 per week. Employers are permitted to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the minimum salary level under the EAP exemption.
Bielat Santore & Company – Restaurant Industry Alert
FIRM USES “TEAM APPROACH” TO SELL CATERING COMPLEX
“The yet-to-be-built catering facility identified as the ‘Princeton Farmhouse’ has been sold,” according to Barry Bielat of Bielat Santore & Company, Allenhurst, New Jersey – the broker for the sale. Bielat states that although he was the lead broker, sales associate Robert Gillis listed the property. The purchaser was a client of his partner Richard Santore, making the closing of this sale a real team effort.
Contact Richard Santore 732.531.4200 for additional information.
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How to Train for Exceptional Beverage Service
Increasing your employees’ beverage knowledge and expertise. Whether it’s a thoughtfully prepared Old Fashioned, a glass of Chianti, or a fresh, aromatic IPA, the best drink accompaniment can truly enhance a meal and the dining experience as a whole. The entire foundation of this is a confident, knowledgeable server who has the ability to answer questions accurately, make recommendations based on a guest’s preferences or food choices, describe options in a vivid and clear language, and tell the story behind the glass. The end result can be returning customers, increased beverage sales, and, most importantly, a guest who has had a memorable experience. Ryan Fletter, owner, and wine director at Barolo Grill in Denver, says in order to properly train staff for exceptional beverage service, immersion is critical—especially with such an extensive, award-winning wine program. There is a daily dialogue on beverages as well as a recap at the end of the night. The Barolo team samples wines and cocktails each day and attends tastings at other venues. Fletter invites guest speakers, vendors, and suppliers to share their knowledge. Staff beverage education is such a priority for Barolo Grill, the entire staff travels to Italy each year, visiting wineries and exploring various regions. “Be prepared for what the guest is going to ask,” Fletter says, which can include questions about an ingredient or component, pronunciation, or about the region. It’s also about having the story to share with guests and painting a picture of the region or the winemaker to enhance and add value to the experience and build a connection. When hiring staff, Fletter advises operators to look for those who already have beverage experience or are interested and want to learn more. He invests the time for each staff member to be properly prepared and doesn’t rush it. “Building confidence is a really important thing,” he says. The goal is to inspire staff, which translates into inspiring guests.
The Business of Brunch is Still Booming
Learn what’s brewing in the A.M. eatery segment. As the popularity of brunch continues to soar, so too does the demand for innovation on the morning menu. From savory items that blur dayparts to indulgent sweets with flashy toppings, restaurants are flexing their culinary chops to stand out in an increasingly crowded category. For Hash Kitchen, menu development is all about complementing the brand’s “party place” atmosphere, complete with DJ booths, disco balls, and playful wall graphics. “When the DJ’s rocking, you want the menu to go with the vibe and the music,” says Joey Maggiore, Hash Kitchen co-founder. “That means big stacks of pancakes, crazy cocktails, and fun hashes with piles of leeks on top.” The brunch chain has recently found success with braised meats that showcase Latin flavors. It’s been spicing up breakfast dishes with chipotle-braised chicken and Coca-Cola-braised pork. Chile-braised beef birria is also making its way into dishes across categories, from bao buns and frittatas to the brand’s aptly named “Best F#*%ing Breakfast Hash.” Maggiore says the biggest challenge is striking the right balance between creativity, complexity, and replicability. Offerings need to be fun and exciting, but also executable within a 12-minute ticket time. That’s where simple, high-margin items off the griddle like pancakes and French toasts come into play. They’re attractive from a food cost perspective and easy for employees to prepare. All it takes is some “crazy stuff on top” to elevate the presentation and add an element of novelty. Take the brand’s Banana Split Brioche French Toast as an example. It features caramelized bananas, sweet mascarpone, mixed berries, and salted caramel drizzle, all topped with an ice cream cone. Similarly, Hash Kitchen’s growing cocktail menu features eye-catching garnishes like cotton candy, color-changing glitter, and boba, with drinks served in creative containers like disco balls and roller skate cups.
3 Tips to Maximize Every Square Inch of Your Kitchen
Taking care of team members is a paramount component to the success of a business. Operating a successful restaurant requires more than just high-quality ingredients, exceptional recipes, and state-of-the-art equipment. Efficiently maximizing your space plays a major—but frequently overlooked—role in creating a frictionless operational process and ultimately, driving ROI. According to RestaurantKitchens.com, a well-organized commercial kitchen can spur up to a 30 percent increase in productivity. No matter the size and space of a kitchen, the stress of maneuvering and optimizing the layout to meet the individual needs of your team remains the same. The common mistake operators often make is thinking their space is simply too small to optimize. But, as I’ve learned throughout my career, there is opportunity in every challenge. For back-of-house pros who have given blood, sweat, and tears in kitchens, navigating the chaos of orders – take a second to picture a meticulously designed kitchen. A space where every square foot is perfectly optimized for efficiency and productivity, minimizing wasted space, and streamlining operations to ensure every aspect of a restaurant runs like a well-oiled machine. These three components make up what we’ve coined as the 400-square-foot engine, representing a paradigm shift in today’s restaurant designs, to focus on compact—yet highly functional—spaces that optimize workflow and minimize waste. Efficiency isn’t just about physical space—it’s crucial that operators also understand the importance of leveraging technology and innovative designs to simplify processes and empower team members. From efficiency partners like Kitchen Armor and automated cooking equipment, to fully integrated POS systems like Toast and loyalty programs like Thanx, today’s restaurateurs have a wealth of tools to enhance efficiency and drive profitability.
Tight Labor Market
The new normal. The tightening labor market of 2024 presents a complex set of challenges for business owners, from a shrinking labor force to the increasing prevalence of counteroffers. The labor market landscape has shifted recently in ways that few could have predicted even a few years ago. As we press on into 2024, it’s crucial for business owners to recognize the complexities and nuances of these shifts so they can stand the best chance of winning the talent race. In March, the Bureau of Labor Statistics (BLS) reported a slight uptick in February unemployment to 3.9 percent, rising by 334,000 to 6.5 million, alongside a significant increase in non-farm payroll by 275,000. Employment in food services and drinking places, for example, increased by 42,000 in February, according to BLS data, after changing little over the prior three months. This scenario underscores a labor market gradually cooling from its post-pandemic fervor yet maintaining its robustness, evidenced by the ratio of 1.45 jobs for every unemployed individual in January — a figure still surpassing the pre-pandemic average. Looking ahead, the labor force participation rate (LFPR) is on a projected decline from 62.2 percent in 2022 to 60.4 percent in 2032, indicating a tighter labor market may be our new reality for the foreseeable future. And it’s not just due to the state of the economy — the aging population is another significant factor, with projections showing that by 2050, 22 percent of the global population will be aged 60 and above. This demographic shift, coupled with reduced fertility rates and changes in immigration policy, means that finding enough workers will become increasingly challenging regardless of the economic outlook.
Restaurants are Competing for Frugal Diners’ Dollars
Dining out these days might seem like a luxury for Americans pinched by inflation. For some restaurants, it feels like a battle to get them to spend. Starbucks reported a 3% decline in same-store sales during its latest quarter, marking its first decline since 2020 and a sharp contrast to a 12% gain the prior year. Same-store sales tumbled 11% in China, the coffee chain’s second-biggest market. Starbucks also lowered its full-year sales outlook. The coffee giant said that customers are spending more cautiously and less frequently, weighing on the company’s top line. “Many customers have been more exacting about where and how they choose to spend their money, particularly with (pandemic) stimulus savings mostly spent,” said Starbucks CEO Laxman Narasimhan on the company’s earnings call. That’s in line with what companies have reported over the last several months: Consumers are tightening their purse strings as they grapple with sky-high interest rates, sticky inflation, depletion of pandemic-era savings and an uncertain economic outlook. Now, companies say they’re stepping up to win customers’ dollars. Starbucks is rolling out sugar-free customization options for drinks, a zero-to-low-calorie energy beverage and new upgrades to its mobile app to both attract new customers and encourage “occasional customers” to order more frequently. Americans have turned to eating at home to save money in light of rising menu prices. Prices of food consumed at home were unchanged on a monthly basis in the March Consumer Price Index report, while prices away from home gained 0.3% from the prior month. This shift in consumer behavior to eat more home-cooked meals has shown up in McDonald’s balance sheet. The fast-food chain reported global same-store sales growth of just 1.9% during the first quarter, down from 12.6% growth the year before. The fast-food chain, which has previously flexed its pricing power with its customer base, acknowledged earlier this year that diners are becoming fed up.
Did You Know?
DoorDash says it’s getting more affordable. The third-party delivery company has reduced customer fees by 12% over the past two years. But delivery still remains far more expensive than carryout. While restaurant menu prices continue to climb, DoorDash says its prices are going down. The third-party delivery company said it has reduced fees by 12% over the past two years for customers who aren’t part of its DashPass subscription program. That includes the service fees, delivery fees, small order and legislative fees that it tacks onto customers’ bills. The fees help DoorDash cover its operating costs and typically add a significant sum to the order total.
Employee Tip
Five ways to treat employees like family. Your employees are the foundation of the organization. They are not just individuals who perform tasks but are the driving force behind innovation, productivity, and success. To foster a positive work environment, further passion for the brand, and increase employee retention, it’s important that employees feel valued, supported and respected by their employers. Treating employees like family has an array of benefits for businesses including improved teamwork and collaboration, increased morale and a sense of loyalty that goes beyond a typical employer-employee relationship, which all contribute to employees staying for years. When employees feel valued, the entire business and its customers benefit.
