The Unlikely New Real-Estate Darling: Restaurants
Low unemployment, rising wages and lifestyles of millennials have increased dining-away-from-home. Property owners have long seen restaurants as risky tenants with a high rate of failure. Now, with Americans dining out more than ever, the restaurant business is emerging as the hottest corner of retail real estate. Food services accounted for more than 19% of all retail leases last year, rising in recent years to the highest proportion for any category since data firm CoStar Group began tracking the statistic in 2007. The uptick reflects how Americans are spending more time and money at restaurants, from fine-dining hot spots to fast-casual chains. Low unemployment, rising wages, the ascent of “foodie culture” and millennials’ tendency to marry and have children later than previous generations have likely contributed to increased restaurant spending in recent years, analysts say. Single households are less likely to grocery shop than families. It is a far cry from the depths of the pandemic, when tens of thousands of restaurants permanently closed. Four years later, robust restaurant leasing has helped power the retail-real-estate sector to its strongest position in years. “It has definitely come as a surprise,” said Brandon Svec, national director of U.S. retail analytics for CoStar. “We wouldn’t have seen as strong of a retail recovery without it.” The average household spent nearly 53% of its food budget on food away from home last year, a record-high proportion and up 10 percentage points from 2003, according to the U.S. Agriculture Department’s Economic Research Service. Total restaurant sales have never been higher. They are on track to top $1.1 trillion this year, a 5.4% increase from 2023’s record-high level, according to the National Restaurant Association, an industry group. Money spent on dining out has been rising for years. In 2018, the average household spent slightly more money dining out for the first time since the USDA started tracking the statistics in 1997. Restaurant spending tanked in 2020 but quickly rebounded as establishments reopened and infection fears faded.
Trump: ‘When I Get to Office, We Are Going to Not Charge Taxes on Tips
If elected president in November, his administration will eliminate taxes on tips. During a rally in Las Vegas, Nevada, on Sunday, Trump told the crowd his administration would not be taxing the tips of people working in hotels, restaurants, or other jobs. “So, this is the first time I’ve said this. And, for those hotel workers and people that get tips, you’re going to be very happy,” Trump announced. “Because when I get to office, we are going to not charge taxes on tips — people making tips. Tips are described as being, “discretionary (optional or extra) payments determined by a customer that employees receive from customers,” according to the Internal Revenue Service’s (IRS) website. Employees can receive cash tips, tips left through a credit or debit card, or “tip amounts received from other employees paid out through tip pools” or “tip splitting.” The IRS notes that “all cash and non-cash tips” an employee receives are “income and are subject to Federal income taxes”: All cash and non-cash tips received by an employee are income and subject to Federal income taxes. All cash tips received by an employee in any calendar month are subject to social security and Medicare taxes and must be reported to the employer. If the total tips received by the employee during a single calendar month by a single employer are less than $20, then these tips are not required to be reported and taxes are not required to be withheld. Cash tips include tips received from customers, charged tips (for example, credit and debit card charges) distributed to the employee by the employee’s employers and tips received from other employees under any tip-sharing arrangement. Tips also include tips received by both directly and indirectly tipped employees. “We’re not going to do it,” Trump added. “And, we’re going to do that right away, first thing in office. Because it’s been a point of contention for years and years and years, and you do a great job of service, you take care of people.” Trump added that his administration would not be “going after” the taxes of the people who “have jobs in restaurants” where they receive tips.
Bielat Santore & Company – Restaurant Industry Alert
BURLINGTON COUNTY, NJ SPORTS BAR FOR SALE
Photo used to illustrate “Sports Bar/Restaurant” only and not actual representation.
Spacious 5,000 square foot sports bar with (20) years of successful history and loyal clientele; area is conducive for a tavern operation due to its proximity to Rt. 38 and Mount Holly’s Central Business District. Built in 1960, the bar was completely gutted and renovated in 2005. The 2,750sf open bar area sports an exposed wood rafter roof with exposed ducting, 13’+ ceilings, and (6) large paddle ceiling fans giving it a modern spacious feel. Twenty-two TVs allow for great sports viewing from any angle. 45 seat bar gives true sport bar feel.
Contact Robert Gillis 732-673-3436 for additional information.
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AI Can Drive Restaurant Industry Revenue and Profits
Here are 8 ways that AI can alleviate restaurant problems. Restaurants should be celebrating the continued tech innovation that creates new efficiency opportunities in their kitchens. But the industry’s old and new challenges threaten to outrun some of that opportunity. Technologists tend to offer “more tech” as the blanket solution restaurateurs need. As the rise of generative artificial intelligence embeds itself in practically every industry and institution, owners and operators are naturally skeptical. ChatGPT’s aptitudes don’t extend to dishwashing or preparing omelets (yet). Yes, there is a lot of hype around what gen AI can do. But there are practical roles for this rapidly advancing tech in easing many of the difficulties restaurants are dealing with right now. Even with gen AI’s current growing pains, it’s not going away. And neither are restaurants’ mounting headaches: inflationary pressures remain relentless in squeezing operators and consumers alike; the supply chain, labor, and arguably tighter-than-ever profit margin strains are keeping food service executives up at night. Restaurateurs, as much as anyone — and maybe more than most — have senses that are particularly fine-tuned to big promises from tech. Many view the latest software and tolls as costly distractions from the daily goal of pleasing the guests that drive revenue and profits. Tech is simply a way of life for everyone. Restaurants can’t ignore that. Jumping on the AI bandwagon is not a strategy, of course. It’s also not about experimenting for what might become the norm in the near future, though there is value in such preparation. The truth is, even in this relative early moment in the AI Era, many restaurant brands are getting in on the AI action. And they’re quickly finding ways to make it work in practical terms. Importantly, AI isn’t just for the major brands. Just as every restaurant faces the same pressures we mentioned earlier, here’s how AI can help alleviate and even turn problems into growth opportunities…
U.S. Restaurants Added More Than 24k Jobs
In May. After a soft patch to begin the year, restaurant job growth started to regain some footing in recent months. Eating and drinking places* added a net 24,600 jobs in May on a seasonally-adjusted basis, according to preliminary data from the Bureau of Labor Statistics (BLS). That represented the third time in the last four months that the industry added at least 24,000 jobs, which is roughly on par with the average monthly job growth during 2023. On a non-seasonally-adjusted basis, eating and drinking places added more than 380,000 jobs in April and May. That puts restaurants on track to add more than 500,000 seasonal jobs this summer, according to National Restaurant Association projections. Restaurant job growth was choppy in recent months, but overall employment levels continue to climb above pre-pandemic levels. As of May 2024, eating and drinking places were nearly 69,000 jobs (or 0.6%) above their February 2020 employment peak. The full-service segment experienced the most job losses during the initial months of the pandemic – and it still has the longest path to recovery. As of April 2024, full-service restaurant employment levels were 234,000 jobs (or 4%) below pre-pandemic readings in February 2020.
How Private Equity Rolled Red Lobster
Angry that your favorite Red Lobster closed down? Wall Street wizardry had a lot to do with it. Red Lobster was America’s largest casual dining operation, serving 64 million customers a year in almost 600 locations across 44 states and Canada. Its May 19 bankruptcy filing and closing of almost 100 locations across the country has devastated its legion of fans and 36,000 workers. The chain is iconic enough to be featured in a Beyonce song. Assigning blame for company failures is tricky. But some analysts say the root of Red Lobster’s woes was not the endless shrimp promotions that some have blamed. Yes, the company lost $11 million from the shrimp escapade, its bankruptcy filing shows, and suffered from inflation and higher labor costs. But a bigger culprit in the company’s problems is a financing technique favored by a powerful force in the financial industry known as private equity. The technique, colloquially known as asset-stripping, has been a part of retail chain failures such as Sears, Mervyn’s, and ShopKo as well as bankruptcies involving hospital and nursing home operations like Steward Healthcare and Manor Care. All had been owned by private equity. Asset-stripping occurs when an owner or investor in a company sells off some of its assets, taking the benefits for itself and hobbling the company. This practice is favored among some private-equity firms that buy companies, load them with debt to finance the purchases and hope to sell them at a profit in a few years to someone else. A common form of asset-stripping is known as a sale/leaseback and involves selling a company’s real estate; this type of transaction hobbled Red Lobster.
Felony Convictions Could Cost Trump Liquor Licenses
At 3 New Jersey golf courses. New Jersey’s attorney general’s office is looking into whether Donald Trump’s recent felony convictions in New York make him ineligible to hold liquor licenses at his three New Jersey golf courses. A spokeswoman for the office said Monday that it is reviewing whether Trump’s conviction on 34 felony counts involving payment of hush money to a porn star and falsifying business records in an attempt to hide it should impact the former president’s continued ability to hold liquor licenses. State law prohibits anyone from holding a liquor license who has been convicted of a crime “involving moral turpitude.” The New Jersey Division of Alcoholic Beverage Control, which is part of the attorney general’s office, “is reviewing the impact of President Trump’s conviction on the above referenced licenses, and declines further comment at this time,” a spokeswoman for the office said in an email Monday. Part of what goes into that calculation is a requirement that “a person must have a reputable character and would be expected to operate the licensed business in a reputable manner,’ according to the division. Its handbook goes into further detail, saying, “the term `moral turpitude’ denotes a serious crime from the viewpoint of society in general and usually contains elements of dishonesty, fraud, or depravity.” Trump owns golf courses in Bedminster, Colts Neck, and Pine Hill in New Jersey, each of which has an active liquor license. He no longer owns any casinos in Atlantic City, where his former company, Trump Entertainment Resorts, once operated three. Messages left Monday with Trump’s presidential campaign, as well as with The Trump Organization, the former president’s company, were not immediately returned. Trump is scheduled to be sentenced in the New York case on July 11, shortly before he is to receive the Republican nomination for president in the November general election.
A Noisy Restaurant Can Impact Your Food Choices
Even how it tastes. Nothing quite ruins a nice night out like a meal where you have to shout to talk to your dinner mate. And as it turns out, there’s scientific proof that loud noises aren’t just drowning out your conversations — they may also be influencing your meal choices. “There’s not a very high level of awareness and education about what comprises a dangerous sound environment,” said Gregory Scott, founder of SoundPrint, a smartphone application that allows users to measure and track decibel levels (dBA) in public places. Dealing with hearing loss, Scott created the app after his own frustration of not being able to have conversations with people in public spaces. People have “never been exposed to sound level guidelines or they misunderstand them,” Scott noted. While he is not a health professional or researcher, SoundPrint data provides a snapshot of U.S. restaurants and other public spaces, including cafes and movie theaters. From the data collected in 2023, SoundPrint found that 63% of restaurants were too loud for conversation. SoundPrint categorizes the sound levels of public spaces in four categories: quiet (under 70 dBA), moderate (71-75 dBA), loud (76-80 dBA) and very loud (over 81 dBA), which means that a majority of restaurants tested with the app were categorized as loud or very loud. Loud noise can have a deleterious impact on people’s hearing. The National Council on Aging reports 70 dB is the threshold for healthy sounds; below 70 dB is safe, over 70 dB can be harmful. 60 dB is a normal conversation, and 120 dB is an emergency vehicle or sawmill. Researchers point to recent changes in restaurant architecture, where sound-softening curtains and fabrics are replaced with bare wood and walls that amplify sound.
Did You Know?
What operators should know about the “Food Bowl” trend. Over the past several years, the concept of the “food bowl” has become increasingly popular—for a number of reasons. First, they’re versatile, allowing operators to combine an array of ingredients for a complete meal all in one convenient bowl. Second, they’re infinitely customizable, so diners can pick and choose the foods they want—and don’t want—to eat. And finally, they allow operators to experiment easily with different flavors, textures and ingredients, while still offering their customers a familiar format they’ll be comfortable trying. As bowl meals continue to trend, here’s why operators should add them to the menu—and some recipe inspiration for doing so.
Employee Tip
Restaurant workers’ battle for higher minimum wage goes national. US restaurants grappling with high costs and penny-pinching consumers are making a tough pitch to voters: that boosting base pay to millions of workers is a bad idea. At least four states are set to vote on measures to make restaurants pay servers a minimum wage regardless of how much they earn in tips. It’s a contentious move that business owners say will raise menu prices and kill jobs, Michelle Korsmo, chief executive officer of the National Restaurant Association, said in an interview at Bloomberg’s office in Chicago.
