Lawmakers Propose Raising the Federal Minimum Wage to $17 – Kill the Tip Credits
The Democratic proposal would phase in the changes over a five-year stretch. The tip credit would be phased out nationwide and the federal minimum wage raised to $17 an hour under a bill introduced in Congress today by Sen. Bernie Sanders and Rep. Bobby Scott. The proposal calls for raising the minimum wage for restaurant employees and other hourly workers to $17 an hour over a five-year stretch. The ramp-up would start with a $2.25-an-hour bump in the pay floor, currently at $7.25 an hour, three months after the law should pass. That wage of $9.50 would increase by $1.50 an hour every year thereafter until reaching $17, a five-year process. One year afterward, the U.S. Secretary of Labor would be empowered to adjust the minimum in accordance with changes in the cost of living. That authority would then be exercised every year thereafter. Because many restaurant employers already pay more than $17 an hour, the industry may be more concerned about the changes in the tip credit, the concession extended to employers of workers who regularly collect gratuities. Under the long-standing break, employers can count an employee’s reported tips as part of the minimum wage the worker is due. Under current federal law, that means a restaurant owner need pay a server or bartender just $2.13 an hour if they collect at least $5.22 on average in tips, which brings them up to the minimum of $7.25 an hour. The $5.22 is known as the tip credit. Under the newly introduced Raise the Wage Act of 2023, restaurant employers would be required to directly pay tipped workers at least $6 of the $9.50 they’d be due as their minimum pay during Year One.
Enhancing Restaurant Profitability
The role of revenue management. Running a quick-service restaurant is quite the juggling act. You’re constantly balancing customer satisfaction, order volumes, pricing, staff management, and, of course, profitability. The key to thriving in this industry? Revenue management coupled with operational efficiency. Now, this may sound like corporate jargon, but let’s break it down in a manager-friendly way. At its core, RM is about selling the right product to the right customer at the right time, for the right price, through the right channel. It’s about creating win-win scenarios where your customer feels valued and your profits rise. This involves strategic pricing (like dynamic pricing), optimizing your menu to drive higher-margin sales, and managing different distribution channels efficiently. Let’s talk about the menu. Your menu isn’t just a list of offerings; it’s a powerful sales tool. By highlighting higher-margin items and creating appealing combo offers, you can guide customers towards choices that boost your revenue and their satisfaction. This might involve upselling or cross-selling techniques like suggesting meal upgrades or add-ons. But there’s more to RM than your in-house operations. In today’s digital world, your quick-service restaurant is linked to various third-party delivery platforms like UberEats and DoorDash. These platforms increase your reach but also bite into your profits with their commissions. Your RM strategy needs to balance this dynamic by effectively managing orders across channels and driving more first-party orders, i.e., orders directly from your customers.
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The 21st-Century Shakedown of Restaurants
The business of exploitation. Tell me if you’ve heard this one: A social media influencer walks into a bar; No, wait. This isn’t a joke. This is a 21st-century shakedown. Here is how it works: An influencer walks into a restaurant to collect an evening’s worth of free food and drink, having promised to create social media content extolling the restaurant’s virtues. The influencer then orders far more than the agreed amount and walks away from the check for the balance or fails to tip or fails to post or all of the above. And the owners are left feeling conned. The swap of food for eyeballs is nothing new in our digital age; businesses can fail from a lack of exposure. But the entitled disregard — with emboldened influencers making outsize demands but not always fulfilling their end of the bargain — is a more recent phenomenon. They have come to realize that they have all the power, as defined by the number of followers they have on TikTok or YouTube or Instagram. It’s an influence seller’s market, defined by whatever the traffic will bear. In a business without boundaries, anything goes. Brian Bornemann, the chef and a co-owner of the restaurants Crudo e Nudo and Isla in Santa Monica, Calif., said that while there are reliable influencers, the “lower echelons” see a free meal as a way to build their personal brands. And the most entrepreneurial influencers, whether they have sophisticated skills or merely a prospector’s zeal, offer an ascending roster of fee-based services. Exposure packages can cost upwards of $1,000 for a prescribed number of Instagram stories, posts and a professionally made video, sometimes with performance bonuses tied to views.
Revolutionizing Restaurant Supply Chains
Impact of AI on transparency, validation, verification, and sustainability. Artificial Intelligence (AI) technology has become invaluable in the food industry. It can help improve restaurants’ transparency, validation, verification, and communication, driving key performance indicators (KPIs) like increased customer satisfaction, trust, and loyalty. AI can also improve sustainability within restaurants – and throughout their supply chains – with huge benefits that include waste and carbon emissions reduction, cost savings, and meeting consumer demand. For instance, AI can help drive the following benefits: (i) Improving transparency throughout the supply chain. Transparency is crucial in restaurant supply chains. Restaurant managers must have complete visibility into their suppliers’ sourcing practices to ensure their ingredients are safe, healthy, and high-quality. Luckily, tech innovations like AI have made it possible for restaurant managers to track every aspect of their suppliers’ operations, from acquiring raw materials to delivering finished products. By automating the supply chain, AI ensures the entire process is transparent, providing restaurant managers with real-time data on their suppliers. One example of how AI technology can boost transparency is by allowing data to be recorded in real-time and shared among multiple stakeholders. AI systems can ensure transparency and enable restaurant managers to track the movement of their ingredients throughout the entire supply chain.
Where Tax Credits and Incentives Add Zest to Every Bite
FICA tip. As a restaurant owner, managing your finances effectively is crucial for the success and growth of your business. One area that can significantly impact your bottom line is understanding and utilizing tax credits and incentives available to restaurant owners. These incentives can help reduce your tax liability, increase cash flow, and promote business expansion. Based on the National Restaurant Association report, it is estimated that the foodservice industry is forecast to reach $997B in sales in 2023 and the workforce is projected to grow by 500,000 jobs, for total industry employment of 15.5M by the end of 2023 and surpassing pre-pandemic levels.* Businesses can help meet the needs of their surrounding communities by taking advantage of many government-sponsored incentives that are available to them. These programs allow businesses to put money back into their budget, and in doing so, help their community grow and prosper by creating jobs and revenue. The FICA Tax Tip Credit is a federal tax credit available to businesses that have employees who receive tips. If you operate in the food and beverage industry, this credit could reduce your tax liability, and be a game-changer for your business. It allows you to receive a credit on a portion of the Social Security and Medicare taxes that you pay on behalf of your employees who receive tips, up to a maximum of 7.65% of their tips. To qualify for the FICA Tax Tip Credit, a business must meet several criteria.
Sticker Shock in Restaurants
Still there, despite a food price drop. Morgan’s Brooklyn Barbecue in Downtown Brooklyn did something last month that went against an economic trend in restaurants: It reduced prices on some items on the menu. The fried chicken platter dropped to $25 from $29. The two brisket options, one fatty and one lean, cost $3 less. The $19 pork ribs became the $17 pork ribs, and the wedge salad — iceberg lettuce, bacon and blue cheese dressing — was cut to $15, from $16. “We had to take some price increases over the past couple of years,” said Mathew Glazier, an owner. “Everything went up. Then some things came back. Where we could pass that on, we felt that we should.” But cost-of-living figures suggest that far more restaurants have kept menu prices where they were. For some customers who have finally returned to restaurants this summer amid waning concerns about Covid-19, the “check, please” moment is followed by indigestion-inducing sticker shock. Overall, consumer prices in the New York metro area were 2.5 percent higher in June than they were in June 2022. Prices of some grocery items actually fell during that time: the meat, poultry, eggs and fish category was down 1.1 percent. But the “food away from home” category — which includes takeout and restaurant meals — was up 7.2 percent over the year in the New York area, slightly less than the 7.7 percent increase nationally. The Bureau of Labor Statistics breaks down the national number into two components. One is full-service restaurants, where prices were up 6.2 percent from June of last year to June of this year. The other, “limited service,” includes fast-food restaurants, where they jumped 7.8 percent in the same 12 months. So, both locally and nationally, the cost of cooking at home has leveled off while the cost of dining out has continued to rise at a steady pace.
Bud Light Falls From First to Fourth
Most popular beer in restaurants and bars. Bud Light fell from first place to fourth place behind Miller Lite, Michelob Ultra, and Coors Light on the list of most popular beer brands in restaurants and bars, according to a study. The report by hospitality data firm Union found that sales of Bud Light, whose partnership with transgender influencer Dylan Mulvaney sparked a nationwide boycott, fell by 34% at high-volume bars and restaurants in the second quarter. In contrast, Miller Lite, which is property of the Molson Coors conglomerate, was catapulted to the top spot, seeing a 20.7% increase in sales during the three months that ended on June 30, according to data from Union. Michelob Ultra, which like Bud Light is a product of Anheuser-Busch InBev, took second place, seeing a 3.6% uptick in sales. Coors Light, which is also part of the Molson Coors family of beers, came in third place. Its sales leaped by 19.4% in the second quarter, according to Union. Other beers are threatening to leapfrog Bud Light, including Irish lager Guinness and the Mexican upstart Modelo Especial. The latest sales figures at retail outlets show that Modelo and Yuengling have been taking up Bud Light’s market share. Sales of Bud Light fell by 26.1% for the week that ended on July 15 — which is slightly worse than the 23.6% drop that is suffered over the Fourth of July holiday period, according to data from NielsenIQ and Bump Williams Consulting.
Did You Know?
Scammers impersonate delivery service support to rip off drivers and restaurants. You may have heard about food delivery services like DoorDash or Uber Eats: you order through a restaurant’s website or a delivery service’s mobile app and drivers deliver your food. We’re hearing about a new scam targeting food delivery drivers and restaurants. Scammers posing as “support” from food delivery services are contacting delivery drivers and restaurants and trying to steal their personal and financial information. In one scenario, the scammer tells delivery drivers and restaurants they’re sending a free tablet or printer to handle food delivery orders. To do that, they say, they need to “verify” your phone number, email and login, Social Security number and bank account to send the equipment.
Six Connecticut restaurants ordered to pay $858K to workers deprived of tips/wages, court rules. More than 100 workers at a half-dozen Connecticut restaurants will share $858,000 in back pay and damages, on the heels of a U.S. Department of Labor investigation into whether the businesses violated overtime and tip provisions in employment law. A court document shows workers will be given outstanding wages and damages ranging from $40 to as high as $55,000.