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Author: Keely Hungate

Restaurant Revitalization Fund: Before You Apply, Read This

Posted on by Keely Hungate

By now, you’re probably well aware that the American Rescue Plan Act of 2021 has been passed. The Act created a $28.6 billion Restaurant Revitalization Fund (RRF) — which most are viewing as a huge win for the hospitality industry.

Of course, like any piece of legislation, the RRF comes with a lot of fine print. So we partnered with CohnReznick to answer your top questions, clear up misconceptions, and help you prepare.

Not sure if you qualify? Or what you’re entitled to? Or how is this different from the PPP? We cover it all in our Q&A below. Read on!

(Please keep in mind: this does not take the place of legal or accounting advice!)

Restaurant Revitalization Fund:

The highlights

  • $28.6 billion in funding for restaurant relief signed into law on March 11, 2021
  • Administered by the U.S. Small Business Administration (SBA)
  • Eligible entities can receive a tax-free grant of up to $10 million total, with a cap of $5 million per location
  • The amount of the grant must not exceed the “pandemic-related” revenue loss

We interviewed Stephanie O’Rourk, CPA and partner at CohnReznick, to get the lowdown on the RRF. Stephanie leads the firm’s National Hospitality Emerging Concepts and Operational and Financial Consulting Divisions. 

A lot of restaurants are pretty familiar with the PPP at this point. How is the RRF different?

There are some similarities between the PPP and the RRF, especially when it comes to tax treatment and permissible utilization of funds.

But the biggest differential between the two— and this is considered a huge win for the industry — is that while the PPP is distributing loans, the RRF is distributing tax-free grants. That means you have nothing to pay back, you won’t owe any taxes on the amount you receive, and (another bonus), as long as you follow the RRF guidelines, everything you use the grant funds for is tax deductible. 

Other things to note with the RRF:

  • A longer covered period to utilize the funds
  • No specified percentages as it pertains to how much of the funds need to be utilized for eligible payroll expenses 
  • No complex loan forgiveness process to deal with, which means there’s more flexibility for restaurant operators to utilize the funds in a manner that makes the most business sense for their day-to-day operations and  individual situations.

Can you give us a quick rundown of who actually qualifies for a grant?

Restaurants, food stands, food trucks, food carts, caterers, saloon, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar places of businesses in which the public or patrons assemble for the primary purpose of being served food or drink; including an entity located in an airport terminal or that is a Tribally-owned business. 

Who doesn’t qualify?

  • If you are a group of affiliated entities with more than 20 locations, you aren’t eligible for this grant. It doesn’t matter if you’re doing business under the same or multiple names. 
  • State and government operated entities
  • Publicly traded entitites
  • Any entities with pending or approved grants under the Shuttered Venue Operators Grant

How do you define a group of affiliated entities?

The Act defines an affiliated business as a business in which: “an eligible entity has an equity or right to profit distributions of not less than 50%,” or “an eligible entity has the contractual authority to control the direction of the business.”

How do franchisees fit into this?

Franchisees of chain restaurants are eligible, but the “not more than 20-location” rule still applies for affiliated groups. 

Let’s say you own 5 Applebee’s locations, 7 Jimmy John’s locations, and 9 Denny’s locations. The SBA is looking at all of those combined, so you would exceed the 20-location rule and none of your affiliated restaurants would be eligible for the grant.

How do I determine how much I’m entitled to?

The legislation states that the amount of the grant must not exceed the “pandemic-related” revenue loss. For businesses in operation for all of 2019, the pandemic-related revenue loss is calculated by subtracting your 2020 gross receipts from your 2019 gross receipts. 

But we’re seeing a lot of misinformation out there, largely because of the PPP. The new legislation also states that the pandemic-related revenue loss amount you’re entitled to will be reduced by any PPP loans that you received (both 1st and 2nd draw amounts) — until further guidance is released by the SBA operators should assume the total amount received regardless of whether you have repaid a portion or all  of your loan. As an example:

  • Let’s say you did the math and determined that your pandemic-related revenue loss was $30 million. 
  • At some point, you received a PPP loan for $10 million.
  • And as of December 27, 2020, you’ve returned $5 million of that PPP loan.

The SBA is saying your pandemic-related revenue loss is going to be $20 million — not $30 million, and not $25 million, making you eligible for a potential $10 million for an affiliated restaurant group, and $5 million if you operate one physical location.

We could receive more specific guidance around this in the coming weeks. But for now, the Bill states the total amount of PPP loans received must be subtracted.

With that in mind, how should restaurants be handling their PPP loans?

Restaurants have until March 31, 2021, to draw or re-apply for the PPP. Businesses that were previously approved for a PPP loan but decided to return a portion or the full amount of their PPP loan proceeds should consider whether to re-apply for their originally approved maximum loan amount.

What if a restaurant opened in mid-2019, or at some point in 2020? How do they calculate their loss?

  • For entities not open for the entirety of 2019, average monthly receipts multiplied by 12 may be used for both 2019 and 2020.
  • If the entity opened during the period beginning on Jan. 1, 2020, and ending on the day before the date of enactment, the grant is calculated by taking the entity’s eligible payroll costs incurred by the entity and subtracting any gross receipts received.
  • For an entity that is not yet open at the date of application, the grant is the amount of eligible payroll costs incurred

It’s worth noting that SBA reserves the right to implement an alternate formula for any of the above-mentioned scenarios.

What can I use the grant for?

It’s pretty well defined and very similar to the PPP. Payroll costs, principle and interest payments on mortgage obligations, rent, utilities, maintenance expenses (including construction to accommodate outdoor seating as well as walls, floors , deck surfaces and FF&E), supplies (including PPE and cleaning supplies), normal food and beverage inventory expenses, paid sick leave and any other expenses the SBA determines to be essential to maintaining an eligible entity..

You cannot use the funds for business expansion purposes as this is not deemed a permissible usage of the funds. And you’ll need to be prepared to make the same good faith certification that PPP borrowers made — i.e., current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity.

Transparency is key. We expect the SBA will reserve the right to audit businesses to ensure the grant was properly used, so excellent record keeping is important. 

If a recipient of the grant does not use all grant funds or permanently ceases operations on or before the last day of the Covered Period (defined as beginning Feb. 12, 2020, and ending Dec. 31, 2021, or an alternative date to be determined by the SBA that is not later than two years after the date of enactment) any remaining funds must be returned to the Treasury. 

What’s the timeline like, and who gets priority? (Translation: When will I see the money?)

The SBA has 60 days from the date of enactment to formulate the rules and regulations of the program, and then applications open up. 

When that happens, you’ve probably heard that the first $5 billion has been earmarked for businesses with not more than $500,000 of 2019 gross receipts. Further, for the first 21 days, all grants will be prioritized for small businesses owned and controlled by women, veterans, or other socially and economically disadvantaged groups.

Beyond that, one can not automatically assume it will be based on a first come first served basis; it’s possible that the SBA could issue additional guidance. If the current PPP round is any indication, there’s going to be a heavy focus on helping out Main Street America — those operators who really don’t have access to capital or other financial resources. Average PPP loan sizes in this last go around are hovering under $70,000, so it will be interesting to see if they prioritize the smaller grants here too, before getting to those larger ones.

So, it seems like restaurants are in a holding pattern. Is there anything they can do to prepare while they wait for applications to open up?

It’s definitely a good idea to have everything locked and loaded. There are a few things you might consider doing:

  • Gather the right financial information. For example, financial statements and tax returns for 2019 and/or 2020. If you’re a smaller operator and you don’t have sophisticated recordkeeping, you may be able to show documentation like bank statements and deposits, which were allowed on the second draw PPP loans.
  • Get a DUNS number. The Shuttered Venues Operator program required applicants to have an active registration in the U.S. government’s System for Award Management (SAM). To do that, you’ll need a DUNS number. You can learn more about the process here: [link]

What’s the general consensus about the RRF? Do we think it will truly move the needle in terms of recovery for the industry? 

This is a long-awaited program and has been requested by many groups that advocate for the industry, including the National Restaurant Association, the Independent Restaurant Coalition, and various State Restaurant Associations.

Again, the fact that it’s a grant, not a loan, is a tremendous win — and being that the grant is not deemed to be taxable income to the recipients and permissible expenses are tax deductible makes this program that much sweeter for the industry.

Do I think it’s going to go fast? Yes, I do. While $28.6 billion appears to be a lot of money, there are numerous businesses that continue to be in economic distress and are hungry for a program such as this one. Hopefully this fund will give these businesses the support they need to make it through the next 6, 9, 12 months — until our country gets back to some semblance of a new normal.

About CohnReznick

As a leading advisory, assurance, and tax firm, CohnReznick helps forward-thinking organizations achieve their vision by optimizing performance, maximizing value, and managing risk. Clients benefit from the right team with the right capabilities; proven processes customized to their individual needs; and leaders with vital industry knowledge and relationships.

Instant Payments 101: What Every Restaurateur Needs to Know

Posted on by Keely Hungate

Instant payments are having an identity crisis.

These days, a lot of technologies are masquerading as instant payment solutions or platforms. That’s primarily because there’s a lack of understanding or agreement as to what “instant” really means. (Case in point: Over a third of consumers claim to have used instant payments, even though the methods they use don’t even support real-time payments, according to PYMNTS.com research.)

We’ll refrain from referring to Webster’s, but suffice it to say: the definition of instant has gotten stretched and softened to the point where it’s frequently used in a way that’s misleading, or even #fakenews.

It’s a problem for a lot of industries, but especially for the restaurant and hospitality space. These employers understand the importance of instant payments for their employees, and they seek out the best ways to make it happen — often without realizing that the methods they’ve chosen aren’t actually instant, after all. 

So: here’s a breakdown of what instant payments really are, what they’re not, and why they’re so important for restaurant teams.

What are instant payments?

Instant payments are the immediate transfer of funds from one party to another. For restaurant employers, that means the moment money leaves your hands is the same moment your employees receive it. 

Cash is the “OG” of instant payments, and it’s still the greatest visualization of what real-time actually means. When you hand your employee a dollar bill, there’s no waiting, no holds, no delays: it immediately becomes theirs.

Unfortunately, as payments have gone digital, what’s categorized as “instant” has gotten a little cloudy. The bottom line is that just because a payment is digital or automated does not mean it’s instant. 

If you’re evaluating instant payment methods for your restaurant, keep in mind:

  1. Confirmation is not payment. Instant confirmation is a major culprit when it comes to confusion around instant payments. Once a digital payment has been initiated, it’s not unusual for both the sender and the recipient to receive an immediate notification that they’ve been debited or credited a certain amount. But an email, text message or phone notification doesn’t mean the transaction has actually been completed (or even initiated!).
  2. “Next business day” isn’t instant, either. Along those same lines, instant payments — by definition — shouldn’t come with a waiting period, whether it’s 2 a.m. or Christmas Day.
  3. Instant means instant for sender and recipient. On a digital payment platform, once the sender hits “send” or “submit,” they can essentially move on. It may not matter if there’s a lag time between the initiation and completion of the transaction. But for employees waiting on the other end, it can be a source of major frustration or anxiety if you don’t know when you’re going to get access to your funds.
  4. Access is a big part of the equation. Speaking of access to funds, we’d argue that it’s only an instant payment if it’s available for use immediately following the transaction, without unexpected fees or waiting periods.

Why are instant payments important?

Simply put: your people are your greatest asset — and that’s especially true in the restaurant space. 

Generally speaking, restaurant employers genuinely care about their teams. They want their workers to be successful and happy. And of course, successful, happy employees are also great for your bottom line. Why?

  • Keeping your employees happy is one of the best ways to keep your customers happy, too. There’s a lot of focus on delighting customers, and without question, that’s critical in the restaurant business. But delighting your employees is equally, if not more important. They’re the ones who interact with your customers day in, day out; they have a lot of power over the customer experience. .
  • Satisfied employees stick around. That means lower turnover, and less time and fewer resources funneled toward non-revenue generating activities — i.e., recruiting and training new employees.

Instant payments are “low-hanging fruit” when it comes to taking care of your employees in a way that benefits them and your business. That’s because:

  • They’re in it to get paid daily. Hospitality workers are some of the hardest-working people around. Even if they’re passionate about their jobs, it can be mentally and physically taxing work. Part of the appeal is the fact that they can get paid their tips on a daily basis. Unfortunately, cash shortages due to increasing credit card transactions have made that more of a challenge. Some restaurants have switched to payroll or prepaid cards: but the former means they don’t get paid daily, and the latter means they have to wait for transfers and/or pay exorbitant fees. And (excuse our French) that kind of sucks for employees who expect and deserve to get access to their earnings after each shift.
  • They deserve financial security. For many employees, getting paid right away is more than a perk; it’s a necessity. There are mouths to feed and bills to pay, and especially with shifts getting cut during Covid, instant payments are more important than ever.
  • Transparency matters. Restaurant managers are no strangers to tip disputes. Lag time between work and payment can lead to drama about who earned what. Instant payments go a long way in eliminating those questions (and ultimately, in building a culture of trust). 

How to choose an instant payment method

For restaurant employers who are looking into instant payment methods, our advice is simple: be a skeptic when you see the word “instant.”

Some digital payment solutions throw that word around, but often, there are caveats. Many of these solutions require you to load payments onto a prepaid card — and while that might feel “instant” for the employer, it’s certainly not the case for employees.

There may be a limited number of retailers or institutions that accept those cards, and if employees try to relocate funds to their bank, it could take up to 5 business days. Plus, many of those transactions come with unexpected, predatory fees. 

Instant (cashless) payments should pass this test:

  • Funds immediately debited from sender’s account
  • Funds immediately available to recipient
  • Money placed in or tied to recipient’s central banking account
  • No unexpected fees 

There are a lot of hidden problems with cash payments, especially when it comes to tipping out your employees. But cash’s biggest virtue is that it’s truly instant — which means it’s a great litmus test when you’re evaluating instant payment technology. Ask yourself: Is the method I’m considering as fast and seamless, for both parties, as handing over a dollar bill?

And if the answer is no, then it’s probably not instant — and you’ll be missing out on the most powerful benefits that true instant payment solutions have to offer.

Restaurant Technology Audit: 7 Ways to (Majorly) Cut Tech Costs

Posted on by Keely Hungate

Guest contribution by Andy Freivogel, Co-Founder & CEO, Science on Call

It’s never been more important to monitor your restaurant’s spending. Software, dues and subscriptions, and other technologies can be big-ticket budget items — yet they’re often the most difficult to cut back on.

What goes first? Are there options to lower the tier of support without losing out on real value and potential sales?

Running a “tech audit” can help bring down your IT spending significantly. In fact, we’ve seen restaurants achieve thousands of dollars in savings. Here are 7 key areas that restaurants should consider evaluating now and on a regular basis going forward.

7-Step Tech Audit for Restaurants 

1. Internet service

Believe it or not, owners/managers have been in situations where they were flat-out sold a bill of goods. Internet bills have included TV service, phone service, static IP addresses, backup connections, firewalls, and more. 

As a restaurant, nearly all of these costly features are unnecessary and add virtually no value.

And keep in mind: there’s no need to purchase add-ons like the internet provider’s own failover product or firewall service. Most restaurants don’t need a firewall, and getting two internet connections from one provider is just asking for more problems. Real redundancy means two separate companies, two separate bills — and it doesn’t have to cost an arm and a leg. 

Case in point: Recently, we advised the operator of a fine dining establishment who claimed she was happy with her Internet service. Upon further digging, we found that she was paying a shocking $600 a month for bundled phone and internet services.

Even a restaurant with a cloud-based point of sale, internet-based music system, and 10 telephones (see below!) does not need a lot of bandwidth. 100Mbps is more than enough. That should cost $150, at most, for a restaurant. 

2. Phone service

 Many restaurants end up with expensive phone systems and multiple phone lines that their internet service provider sold them. Voice-over-IP (VOIP) makes the need for that obsolete.

Large restaurants, and concepts that have always relied on delivery and takeout (hello, pizzerias and Chinese restaurants!) have traditionally relied on phone systems with a lot of physical devices and a lot of phone lines. The advent of VOIP obviates the need for many phone lines and expensive PBX systems.

Case in point: An iconic, 100-year-old burger joint on Chicago’s North Shore transitioned from a 30-year-old point of sale system. With the new system, they all of a sudden had native online ordering, giving their customers a new way to order that didn’t require picking up the phone. 

However, they were still saddled with an older phone system that required them to purchase lines from one provider and pay another just for “management,” and to perform services like reprogram voicemail.  

Moving this customer to a VOIP product saves them $100 a month, and gives them more control over the experience.  

3. Accounting software

 Traditional accounting software packages can cost $500-$1000 per month. While this may seem like the only option for what is certainly a “must have,” recent technology advances have made these costly packages obsolete. Cloud-based accounting programs are the new and cheaper method of managing accounting, and it can be as low as $50 per month.

Case in point:  Quickbooks Online is probably the gold standard for online accounting.  For desktop users, it makes sense to review what you’re paying and how you’re hosting it. 

If you’re hosting it on a single computer and have a good backup strategy in place, that may be fine — as long as you have a plan to recover it if there’s a problem with your PC. If you’re hosting it on a remote server, make sure that provider has a backup plan in place, and look at your fees. 

For anyone paying more than $100 per month for hosting or access to Quickbooks company files, there’s a good chance you could be saving money by transitioning to Quickbooks Online. 

Xero is a similar online accounting software, and includes native integrations with some point-of-sale solutions, such as Square, while QBO might require you to use a 3rd party integration tool (which means higher fees, too).

4. Expensive service contracts

 Many of the devices used in a traditional, larger restaurant may have lease or rental fees associated. If you use a big workhorse copier/printer, ask yourself:

  • Could I achieve the same goals by reducing printing? (With QR codes and digital menus/payment, you might not need to print 100 menus everyday!)
  • Could this work be performed on a smaller device?

Printer leasing, usage, and service costs can run up to $500 per month. Today’s restaurant can achieve most of what it needs on an inexpensive laser printer, for as little as $400-500. That’s a one-time fee, not an annual expense of $6,000!  

Case in point: A Science on Call customer recently found that they’re paying nearly $250 per month, per location, across 6 properties. That was a total spend of almost $18,000 per year on printer leases, service, and consumables. Right now is probably the best time to revisit your costs, and maybe even your workflow.

5. Guest WiFi/engagement services (that aren’t being used)

We understand the allure of marketing software that allows customers to access public WiFi — and that allows you to create user profiles on these customers and therefore track future visits and deliver targeted ads. However, these services are usually very costly, and are unnecessary if they’re not being fully utilized.

Case in point:  An enterprise guest WiFi solution was costing another merchant $700 a month to gather email addresses and re-market to customers. The pandemic all but prevents customers from setting foot onsite in many of this merchant’s locations, and with the trend toward MAC randomization on mobile devices, the returns for measuring guest traffic are even lower.  

Discontinuing this service saved this particular merchant $8,000 a year.

6. Miscellaneous subscriptions

These can add up and often don’t add enough value to justify the costs. Ask your staff what they are actually using and what they truly need to do their jobs. Examples of these subscriptions may include Office 365, Gsuite, Adobe, and Spotify.

Case in point:  Simply auditing the number of paid user accounts in Office365 for one of our hospitality customers revealed that many accounts had been kept active for one reason or another, even after employees had moved on. For a larger restaurant group, auditing the number of users can quickly lead to thousands of dollars in annual savings.

7. Third-party ordering, delivery, and reservation platforms 

These can be very important given the current climate, so make sure you don’t get rid of something that is actually helpful to your operations! However, nearly all of the third-party ordering and delivery apps charge higher fees than you’ll pay if you use the native online ordering capabilities of your point-of-sale solution.

Case in point: We recently discovered one of our customers was being charged above the city mandated 15% commission fees and demanded that they offer reimbursement for recent orders, giving them back hundreds of dollars.

Audit, evaluate — and ask!

After running through these areas and cutting what you can, keep in mind: It never hurts to ask. You’d be surprised at the willingness of your tech vendors to offer deals or discount services in order to keep you as a happy customer. 

If you need additional help taking inventory of all of your IT subscriptions to find cost savings, Science on Call can help make those calls for you! Get in touch.

About Science on Call: Restaurants and retailers need technology to survive. Science is a cost-effective subscription to restaurant technology support and expertise. We provide restaurant owners and staff with one number to call (or text) 24/7 when tech hits the fan – even on nights and weekends. Our support empowers staff to focus on the guest experience, instead of wasting their time trying to fix things they don’t understand.

10 Ways to Increase Restaurant Sales in 2021

Posted on by Keely Hungate

Even when we’re not in the midst of a pandemic, the restaurant business is one of the tougher ones. Competition is tight, and margins are too. Trends, technology and regulations are constantly changing. These days, it’s all a restaurant operator can do to keep things running smoothly and maintain status quo — much less increase restaurant sales. 

And for some restaurants, that’s just fine. But if your goal is growth: read on for 10 ways you can increase restaurant sales in 2021 and beyond.

1. Evaluate your technology

Hospitality innovation didn’t slow down in 2020; if anything, it picked up speed as everyone was forced to come up with creative solutions to keep diners and employees safe and satisfied. 

Many restaurants have tapped into tech that supports the major shift we’ve seen toward off-premise sales due to Covid. Think: online ordering, delivery, contactless payments, etc.

Assuming we return to (some semblance of) normalcy later in 2021: start thinking ahead as to how you’ll continue to leverage that new technology. Maybe you considered some of those investments interim solutions, but it’s likely that consumer expectations have changed for good. Patrons will continue to demand a more seamless and automated experience, whether they’re dining in or carrying out. 

And don’t forget about your employees — the backbone of your business. During the pandemic, prioritizing the health and financial security of your people has been imperative. That shouldn’t change, no matter what happens in 2021. Take advantage of tech that makes their experience better — e.g., team communication tools, scheduling platforms, and digital tipping software. 

2. Formalize your marketing plan (and your contingency plans, too)

Maybe you’ve never had a marketing plan before, or maybe you “waved the white flag” after getting blindsided by a pandemic and battling shutdowns throughout 2020. 

Repeat after us: the past is in the past. It’s a new year, which is a great time to put together a fresh marketing plan and budget that’s specifically designed to increase sales in your restaurant. 

While no one has a crystal ball, we’ve all got a much better idea of how Covid can impact our businesses, which makes it easier to put contingency marketing plans in place. That means if your city gets hit with another shutdown, you won’t have to hit the pause button on your efforts; instead, you’ll be prepared to change gears and pull the levers that will support your growth goals until things open back up.

Not sure where to start? Check out our post on building a marketing plan for your restaurant. As you’re mapping it out, think through how your messaging and channels might shift if circumstances change (again) due to Covid.

3. Strengthen your digital presence

Another by-product of 2020: your customers are more internet-savvy than ever before. If you don’t have a website yet, it’s time! You can set up your own (no coding skills required!) with a platform like Squarespace, or you can hire a freelancer or development team to create one for you. You’ll want to make it incredibly easy to find your menu, hours of operation, location, contact information for reservations or questions, etc.

Before you build all your functionality from scratch (like online ordering or payments), take a look at your existing technology; there may be out-of-the-box digital offerings or add-ons you can use to save time and money.

Of course, your website is just one piece of the digital puzzle. Evaluate your social media presence (particularly Facebook and Instagram) to showcase your food, location, and additional offerings, like take-out, delivery or catering. You’ll also want to use these platforms to share news and promotions. Photography is key: if you’re not great with your iPhone, find a team member who is. In fact, it’s a good idea to have a social media point-person who can lead the charge on sharing consistent, on-brand content with your digital audience.

4. Optimize your off-premise/delivery channel

If you currently offer delivery, make sure you’re making it as easy as possible for your customers to order, pay and have their food delivered to them. While third-party delivery apps are an option, fees are high, so it’s important to evaluate if this model is truly feasible for your business. Whatever direction you choose to go, make sure all of your processes — from customer service to staffing to food preparation — are as streamlined as possible to ensure a smooth, transparent experience for your patrons. (Not sure if you should use a third-party service or DIY? Download our free guide!)

5. Refine your recruiting processes 

Your people affect every aspect of your business: day-to-day operations, the customer experience, your company culture, and ultimately, your bottom line.

Even if you think things are hunky-dory with your team structure, take a look at:

  • Your org chart: Do you have the right people in the right places? Where do you foresee changes happening in 2021? When will you need extra support? Are there new roles you need to add to the team? (For example: maybe college-aged employees are planning to head back to campus when schools reopen, whenever that happens. Maybe tourist season won’t be quite as touristy this year, and you’ll need fewer hands. Maybe you’re ready to up your marketing game and you want to bring on someone to lead the charge.)
  • Your recruiting process: Once you have an idea of upcoming or potential needs, go ahead and optimize your recruiting processes. Identify and codify your ideal employee profile: what qualities does every person on your team need to have? What specific experience do you require for each role? It’s also important to consider how you’ll “sell” the job to candidates, especially in a tough labor market. Do you offer benefits? Is scheduling flexible? Do your employees get instant access to their earnings? Even small perks like free food are worth mentioning. (Check out our interview template for more tips!)

6. Reduce your turnover 

Once you’ve got the right people in place, how do you encourage them to stick around? Recruiting and training new candidates take time and ultimately cost you money, so it’s worth investing in the employee experience. 

Ultimately, that means making them feel cared for and respected, especially during a pretty intense time for hospitality workers. What can you do to keep them healthy and financially secure during a pandemic and the aftermath? Here are a few ideas:

  • Most importantly: keep the lines of communication open, so employees feel comfortable sharing any issues before they become major problems.
  • Be as flexible as possible when health or family/childcare needs arise.
  • Prioritize employee safety by enforcing sanitation procedures, social distancing regulations, etc. (that goes for customers, too!).
  • Give them financial security by providing instant access to tips and earnings.
  • If you’re in a position to do so, consider offering some level of benefits to your people
  • Help them stay in the know when it comes to government support for workers. 

7. Improve employee training

Excellent, ongoing employee training is an often-overlooked way to increase restaurant sales. Aside from keeping operations running smoothly and efficiently, having properly trained employees improves the customer experience and ensures your people are confident in their roles (which contributes to employee satisfaction and retention).

Set up a training program for each new employee type, and try to make it templated so you don’t have to reinvent the wheel every time. Consider investing a bit of your time to develop an employee handbook that covers things like:

  • General expectations and company values
  • Dress code
  • Technologies in place
  • Daily operations and workflows
  • Cleaning checklists
  • Safety protocols 
  • Beginning- and end-of-shift processes (e.g., clocking in and out)
  • Payment and tip-out policies

Training shouldn’t just be a one-time deal. Consider setting up monthly or quarterly team sessions focused on areas where your people may need a refresher, or where you can introduce new tools or policies. Solicit feedback on the training so you can continuously improve your training program.

8. Launch a loyalty program

This tactic might be part of your broader marketing plan, but we felt it was worth calling out. We know, we know — everyone’s sick of talking about how “unprecedented,” “challenging,” and “uncertain” these times are…but suffice it to say, there’s no shame in going after low-hanging fruit to increase restaurant sales.

So while a big chunk of your marketing efforts may seek to draw in new customers, don’t neglect the captive audience you’ve already got. Loyalty programs are a great way to incentive patrons to return to your establishment over and over again. Typically, loyalty programs are based on a points system that tracks how many times customers frequent your restaurant, rewarding them with discounts on food and merchandise, buy-one-get-one-free coupons, and even free appetizers and desserts. (Here’s a little inspiration to get your own loyalty program started.)

9. Freshen up your menu

Perform a menu audit to determine which items are working and which aren’t, and rotate in some new options. It’s a great opportunity to experiment with flavors and capitalize on food trends that could help your restaurant bring in a broader audience. 

It’s also a good opportunity to communicate with current and potential customers. Consider surveying your VIP patrons about their favorite (and least favorite items). If/when you make changes, make a splash about it. Share photos of your new dishes to share on social, invite local reporters, influencers or food writers to stop by, and promote everything through your tried-and-true channels.

10. Think through your pricing

Now may not be the time to jack up prices, but it’s never a bad idea to take a look at your margins, your clientele, your competitors, etc. and see if it makes sense to shift your pricing around.

You certainly don’t want to upset loyal customers or catch them off guard. But it may be possible to increase pricing on certain items enough to significantly impact your bottom line without significantly impacting your patrons. If you do make changes, ensure you’ve updated your menu everywhere — not just in your restaurant, but also wherever it exists online. Communicate price changes with your employees, and train them on how to respond to any questions or concerns from customers. 

(If pricing makes your head spin, here are a few basic calculations that can help!)

What to Look for When Buying a Restaurant Business

Posted on by Keely Hungate

When people are looking to get into the hospitality industry, they often make the assumption that they’ll need to start from scratch: come up with a concept, lock down real estate, purchase equipment, build a team — the list goes on. But that’s not always necessary.

Buying an existing restaurant business can allow restaurateurs to jump right into daily operations, without a lot of the legwork that’s required when you’re just starting up.

Buying a restaurant isn’t exactly risk-free, though — and it comes with its own set of challenges. If you have dreams of running your own restaurant or bar (or if you’re already in the biz and want to explore other options), here’s what to know about making a restaurant acquisition. 

6 benefits of buying an existing restaurant 

We’ll start with the upsides to buying an existing concept, versus getting your own off the ground. The running theme here is that the groundwork is laid, so a lot of those big decisions, and investments (as well as all the time and brainpower they require) are often already taken care of. 

 

1. You might have a ready-made team

 

The recruiting and hiring process is a big part of launching a restaurant, and the team you build can have a direct impact on your success. But finding (and retaining) good talent is tough: the hospitality labor market has been extremely competitive in the past few years. It can be hard to find qualified, reliable employees who work well together. 

When you buy an existing restaurant, you’ll likely already have a team (and a team culture) in place. While you may find there are some kinks to work out or changes to make once you get a feel for overall strengths, weaknesses and gaps, having a team who knows their role and each other can save you a lot of headache.

 

2. You don’t have to play the real estate game

 

You know what they say: location, location, location…can be a nightmare to find. Another perk of buying an existing restaurant is that you may not have to go through the grueling process of finding a good restaurant location. 

While a previous owner may be selling an existing restaurant because the lease is expiring, this isn’t always the case. In many instances, existing leases sell at below market value. If you have to buy a new lease, the landlord can reset it to a price that’s consistent with the going market rate, which means essentially, that you’ll be charged more. 

Our advice: take advantage of an existing lease to save money. But be sure there is enough time left on the lease to recover your expenses. Also, make sure it will protect you from unexpected liabilities. 

 

3. You might be able to leverage current operating licenses

 

Applying for operating licenses when you open a restaurant can often be a monumental task (check out our post on getting your liquor license, if you haven’t already!). When you’re looking at buying a restaurant, you may be able to use the existing license while your applications are processing, saving you a good chunk of time and money.

 

4. You have access to equipment and other physical assets

 

One of the biggest benefits of buying an existing restaurant is that it will already come with the equipment you’ll need to operate the business, as this is a costly and time-consuming expense. (Keep in mind, though, that the state of the assets will likely be reflected in the purchase price.) Some of the equipment and machinery you’ll most likely find include:

  • An HVAC system
  • A fully-operational kitchen
  • Code-required fire-prevention system
  • A ventilation system 

Of course, you’ll want to evaluate the equipment to make sure it’s in proper working condition. Hire a professional to inspect it if necessary.

Something else to think about is whether the restaurant equipment is owned or was being leased by the previous owner. If it was leased, be sure whatever contract was negotiated can be easily transferred to you with the same terms and conditions. Some questions to ask about previously-owned equipment are: 

  • When was the equipment purchased?
  • Are there any current issues? 
  • When was the equipment last repaired?
  • Is any of the equipment still under warranty?

5. You’ve got an existing customer base

 

Because the restaurant you’re interested in buying has already been in operation, it’s (probably) already got a built-in customer base. While this doesn’t necessarily mean you’ll spend less on marketing and advertising — that’s usually necessary whether you want to maintain or grow your business — it does mean there’s a little less risk involved. That is, have a general idea of what to expect in terms of volume, whereas opening a new restaurant is always a gamble.

 

6. Less financial risk

 

Generally speaking, it costs less to buy an already established restaurant than starting a new one, especially when you consider the risk you’re mitigating and the time you’re saving compared to launching your own restaurant.  

Questions to ask before buying a restaurant

Just like you would before any big purchase or investment, you need to do your due diligence prior to buying a restaurant business. (In fact, it’s never a bad idea to consult a professional advisor, like an attorney, business broker, or even an M&A advisor, depending on the size of the transaction.) 

While this certainly isn’t an exhaustive list of questions to ask, here are a few to get you started. And remember: don’t just rely on the previous owner’s answers. Make sure you’ve got access to financial/accounting records, contracts, permits, etc., and do your own market research so you get a clear, accurate picture of the state of the business.

 

  • Why is the owner selling the restaurant?

This should be the first question you ask. Maybe the owner wants to pursue other career opportunities or retirement — but there could also be some operational, financial, or team issues that you need to know about. They might not be dealbreakers, but just like you’d inspect a home before you buy it, you certainly want to know the good, the bad and the ugly before you sign on the dotted line.

 

  • How is the restaurant performing? 

A common practice when looking at buying a restaurant is getting access to any and all financial records the previous owner has kept. This will help provide valuable insight into the state of the current business. 

A (very) general rule of thumb is that many restaurants are valued at three to five times the yearly profit — but of course, that’s highly dependent on a wide range of variables. (Here again, it’s helpful to have an advisor who’s been through the process before to help answer questions around business value.)

 

  • What’s the competitive landscape like?

Which restaurants does your target compete against? How do you stand out among them? How do you expect that to change in the next 3-5 years? It’s not a bad idea to do a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to get a really good understanding of how the business is positioned in the market.

 

  • Which employees can you expect to stay on after the transition?  

When you’re buying a restaurant, it often comes with employees who have a history with the establishment. But sometimes when a new owner comes in, it can change the culture (for better or worse). Plus: some employees — especially key employees — may have developed strong working relationships with the owner. All of this can lead to personnel shifts. Some may be inconsequential, but if a chef or top managers chooses to leave, that could have a direct impact on the business.

You can probably get good insight from the seller, but as soon as you’re ready to let the rest of the team know about the potential (or pending) sale, have some very candid conversations with the current employees and get a feel for culture, chemistry, and their willingness to stay on board. 

Red flags and mistakes to avoid

While there are plenty of good reasons to buy a restaurant, that doesn’t mean there aren’t potential roadblocks to consider. When looking to buy a restaurant, you have the right to know about any past problems that affected the business. Here are some things to watch out for:

 

  • Liabilities and legal issues

Before you make your purchase, make sure there are no existing issues, legal or otherwise — like health code violations, unpaid taxes, ongoing litigation, etc. If there are, they could become your problem. You’ll also be responsible for all financial obligations so it’s vital you have a clear picture of the business’s financial history.

 

  • The restaurant’s reputation and brand

If you’re serious about buying a particular establishment, you’re likely already aware of any serious reputation/brand issues. But just in case: make sure you know how the business is perceived and whether it’s something you’d like to address.

For example, maybe the restaurant you’re buying is geared more toward business professionals, but you’d like to make it a hot weekend spot; or perhaps you get a lot of college kids and you want it to become more family friendly. Even if you’re buying a fixer-upper and you’re well aware that the brand needs work, it’s still worth understanding what needs to change. So: dig into review sites like Yelp, check out social media pages, or even do some research on your local Subreddit and other local online communities. 

 

  • Refusal to sign a non-compete

While this doesn’t have to make or break the deal, if the owner declines to sign a non-compete agreement—a contract stating that employees will not start their own version of the restaurant you’re buying in direct competition—it’s something to be wary of. This is especially true if the owner is also the chef, which means he or she might be able to take the recipes and menu concept with them, forcing you to start over and create your own.

To launch or to buy?

Launching your own concept is exciting — and it puts you in the driver’s seat. Like building your own home, you get to have a say in every single decision from the get-go. 

But it also takes time, money, and a whole lot of patience. If your goal is to simply get into the restaurant business and you don’t have a concept that you’re set on bringing to life, consider feeling out the market and seeing what’s out there. When you ask the right questions and do your due diligence, buying a restaurant can be just as rewarding (personally and financially) as starting your own.

Tipping Goes Digital: An Interview with PYMNTS.com

Posted on by Keely Hungate

In case you missed it: our very own Brian Hassan made a recent guest appearance on PYMNTS.com’s “On the Agenda.” Brian spoke with Ingo Money CEO Drew Edwards and Reed Daniels, CEO of Minnesota-based pizza chain (and Kickfin customer!) Red’s Savoy, about how employee tip outs are going digital.

The big takeaways:

  • Restaurants are embracing change. Restaurant owners are being proactive about making strategic shifts to their operations right now — not in spite of Covid-19, but because of it. According to Brian, restaurants previously had little bandwidth to evaluate what’s working, what’s not, and where they can find efficiencies, but they now have a reason to double-down on making improvements that will serve them well in the pandemic and beyond.
  • Customers are adapting well: Change can be unpredictable, and quite frankly, a little scary. But another silver lining of Covid-19 is that customers seem to be extremely understanding and willing to adapt, Reed said. That’s yet another reason restaurateurs are finding that now is a great time to make strategic changes not only to their day-to-day systems and processes, but to their entire model.
  • Digital tip payments are on the rise: One of the key changes we’re seeing is a shift in the way restaurants pay out tips. This trend started long before the pandemic, but there’s now a greater sense of urgency around enabling cashless, contactless tip payments. Concerns about viral transmission are driving up credit card transactions and off-premise sales. As a result, there’s less cash on hand to pay out tips. That means more bank runs — which take even longer now, with Covid restrictions in place. And on the employee side, with a shaky economy and shifts being cut, workers need immediate access to their earnings now more than ever. 
To hear more from Brian, Reed and Drew, watch the full interview here!

4 Things to Know About Hiring a Restaurant Consultant

Posted on by Keely Hungate

When it comes to restaurant survival, the numbers are rather grim: 60 percent fail in their first year, and 80 percent don’t make it past the 5-year mark, according to FSR Magazine. (And of course, in 2020, Covid-19 isn’t doing anyone any favors.)

Those stats won’t come as a shock to most people in the restaurant business. Restaurateurs understand the odds aren’t necessarily in their favor, but they forge ahead because they’re passionate about their work, and often they’ve got the talent, experience and resources to make a go of it. 

But even the sagest restaurateur can benefit from the help of a restaurant or hospitality consultant. Whether you’re opening up a new restaurant or looking to revamp your current concept, restaurant consulting services can provide valuable insights and guidance that can help you stand out from the competition, delight your customers and avoid costly mistakes.

If you’re interested in engaging a restaurant consultant, here are four things to know about their services so you can decide whether it’s the right move for you. 

1. What does a restaurant consultant do?

A restaurant consultant is a professional advisor you can engage to help you run your establishment more smoothly and profitably. They may operate independently or as part of a firm. They may be hired to identify and address specific issues or challenges with your business. Or they can provide general guidance around your operations, employees, financials and more, with the goal of making your business achieve sustainable growth and success.

Restaurant consulting services may include any of the following: 

  • Brand and concept design 
  • Financial planning and accounting services
  • Menu development and pricing
  • Establishing efficiency in staff hiring and training
  • Location and property selection for your restaurant
  • Assistance with franchising

2. Who needs a restaurant consultant?

Restaurant newbies, veterans and everyone in between can find a restaurant consultant’s services useful. 

For those who are launching a new restaurant (especially owners who haven’t ever opened a restaurant before), a consultant can guide them through the necessary steps and processes to ensure their launch is as smooth as possible. That could include developing a concept, building out your brand, staffing, selecting technology, and more.

For restaurateurs who are currently running a restaurant, a consultant can help them pinpoint areas that can be optimized or to resolve problems that could be hurting their business. For example: some restaurateurs struggle with high turnover; a consultant could help them to evaluate hiring processes and workplace culture to ensure they’re attracting and retaining the best talent (and staying competitive with your peers). A consultant can also help you identify ways to automate operations, cut costs, run more effective marketing campaigns and more.

3. What can you expect when working with a restaurant consultant?

If you’re already operating an established restaurant, the first thing a restaurant consultant will do is spend time observing your restaurant’s daily operations, both in the front and back of the house. Other ways the restaurant consultant will get a feel of how you are currently running your establishment is by sampling your menu and interacting with your customers, hosts, servers, bartenders, and staff.

Then the consultant will offer suggestions, depending on your area of need, from changes to the menu, interior design, brand and concept, spending, kitchen operations, customer service, among other aspects of your business. You’ll work with the restaurant consultant to establish and implement a plan of action. That could mean making big shifts — like rebranding or moving/adding locations — or less drastic changes, like retraining staff, implementing new technology, cleaning up financials, etc. Depending on the structure of your engagement, a consultant may simply deliver recommendations and hand them off to your team, or they may execute on those recommendations and ensure they’re successful.

If you’re launching a new restaurant and you’re planning to use a consultant, it’s wise to bring them on early in the process — i.e., well before the grand opening, so you’ll have time to lean on their expertise and act on their advice. Expect your restaurant consultant to talk to you about the ideas you have for your business, brainstorm ways to implement them, establish a plan, and check in with you periodically while you work to open your establishment. Your consultant will most likely check in after you’ve opened to ensure everything is running smoothly. 

4. How much does a restaurant consultant cost?

How much a restaurant consultant costs depends on their fee scale. There are a few options you can typically choose from.

Hourly, daily, or monthly retainer

While it depends on experience and what region of the country you live in, restaurant consulting fees generally range from $250 to $1,000 a day, or $40 to $120 per hour, if done on-site.  You can always negotiate the option of a monthly retainer fee if that’s easier. 

Project- or goal-based 

Restaurant consultants can also charge per project, or according to the goal you want to accomplish. You can ask the restaurant consultant to include in the proposal the estimated amount of time it will take to complete the project, and the hourly rate to be charged. Then an option will be included stating that if the project goes beyond the estimated time, the restaurant consultant will be paid hourly or per day for the remainder of the project. 

Many times, out-of-pocket and travel expenses are billed separately and should be included in the proposal. 

Be efficient with your restaurant consultant’s time

Remember that you’re paying for your consultant’s time. Make sure you give as much information about your needs as you can from the beginning so you won’t waste time having to redo missed steps necessary to achieve your desired end result.

How To Plan a Restaurant Grand Opening

Posted on by Keely Hungate

You’ve spent months crafting your restaurant brand, renovating your new space, installing kitchen equipment and dining room fixtures, hiring the perfect staff, and going through the process of getting your permits and licenses. You’ve ordered all of your food and bar supplies, and now, you’re officially ready to open.

But have you figured out how you’re going to open?

In the restaurant world, hosting a traditional grand opening is not just a way to announce to the public that you’re officially in business; it’s an important marketing opportunity that can create momentum from day one and set the tone for success. 

How “grand” should your opening be? Read on…

Restaurant grand opening objectives 

Before you start planning your restaurant grand opening event, think about your objective. What do you ultimately want to accomplish?

 

Some restaurateurs want a grand opening in every sense of the term. Their goal is to start their business off with a bang, which means generating a lot of buzz and fanfare — and getting as many people through the doors as possible. 

And that’s not a bad idea: the launch of a restaurant often is a newsworthy event in and of itself. That means it can be relatively easy to get (free) media coverage, which can be incredibly valuable for any new brand.

 

If your goal is to work out kinks and make sure you’re 100% ready to serve and delight customers, a traditional grand opening may not be for you. Instead, a soft opening allows you to launch quietly and optimize your operations before you start vying for customers’ attention. 

Some restaurants will simply open their doors to the public and give customers time to find their way in. Others may host a “friends and family” type gathering, where you can create a little buzz and a feeling of exclusivity without the pressure of full-fledged celebration. (Bonus: you can also solicit valuable feedback from trusted guests.)

 

All of that to say: before you start planning, know your goals!

Restaurant grand opening ideas and inspiration 

If you’ve determined that a true grand opening is right for you, you’ll need a strategy to attract your first patrons. Sure, you may get some people who drop in out of sheer curiosity, or passersby who are in the right place at the right time. But to get a meaningful crowd, give them a reason to come in. 

Here are a few restaurant grand opening ideas to hook your audience and draw them in: 

 

  • Special pricing: A great way to bring in new customers is to run a promotion. Whether it’s a “buy one, get one free,” “free appetizer or dessert with purchase of meal,” or a discount off the entire bill, the bottom line is that people like free stuff. 

 

  • Bring-a-friend deals: Fill up your tables faster by incentivizing your guests to bring friends and family with them and offering deals based on the size of the party. 

 

  • Make it exclusive: Consider making your grand opening VIP-style. Why? Exclusivity makes people feel important (and it can create some intrigue among people who may not have made the list). Plus: if you’re intentional about your invitees, they can actually do your marketing for you. Members of the local media, influencers, community leaders and well-connected family and friends could all become valuable brand ambassadors, assuming they have an excellent experience in your restaurant. 

 

  • Invite influencers: Even if you don’t do a VIP event, it’s still not a bad idea to invite any local influencers to your opening. That goes beyond reporters or journalists. Depending on where you live, there could be bloggers or social media influencers with large followings who can review your restaurant in exchange for a meal.  

 

  • Swag: Again, everyone likes free stuff. Get your logo stamped on hats, T-shirts, koozies or cups and make sure no customer leaves empty handed. That way, everyone becomes a walking billboard for your brand.

 

  • Live entertainment: There’s nothing like live music to really bring an event to life. If your venue allows it (and depending on the vibe of your restaurant), hire a popular local band, acoustic guitarist or even a DJ to enhance the mood of your restaurant grand opening. And if there’s room, set up a dance floor to make your event feel even more like a celebration. 
  • COVID-friendly ideas: If you’re opening a restaurant in 2020 (or possibly 2021), Covid-19 is likely throwing you a curveball. It’s still possible to successfully celebrate the launch a restaurant, even during a pandemic. Of course, safety is a priority. If at all possible, utilize outdoor space. Encourage social distancing between different parties, and provide masks and sanitation stations. If you’re hoping to draw a big crowd but your space can’t safely support it, consider setting up a temporary take-out area — or even renting a food truck — that will allow you to serve larger numbers of people and expose them to your brand without exposing them to Covid.

 

Restaurant grand opening marketing: ways to get the word out 

So you’ve got a grand opening plan in place, and you’ve got an event that your guests can get excited about. Now, you need to make sure they know it’s happening.

 

If you’re running with a VIP event, then you can approach this like any other private event and send out personal invitations. (This may be worth doing for select guests, e.g. reporters and influencers, even if you’re doing something that’s open to the public.)

 

Your budget may dictate what kind of promotion you can do. Whether or not you can afford a big spend, take advantage of free social media platforms. Create profiles on Facebook, Twitter, and Instagram, make connections, and start posting. (You can find some marketing best practices in one of our previous blog posts.) 

 

While Instagram and Twitter are great for cross promotion, Facebook has event-specific tools that you can take advantage of. Create an event page through your restaurant’s Facebook page where you provide all the details, then invite locals. You can keep track of how many people are interested are planning to attend, and you can also sponsor event posts to increase your visibility in people’s Facebook feeds. (Learn how to set up an event page via this Facebook tutorial.)

 

Another low-budget tactic: run a small PR campaign. Create a press release and distribute it to local media. If you’ve never done it before, HubSpot offers a great tutorial on how to write a release. Here’s a basic template:

 

  1. Headline – A short, punchy, attention-grabbing title consisting of no more than 8-10 words describing your event. This is the first thing your readers will see so it’s important that it draws them in so they will want to read more. 
  2. Lead – This is your first paragraph that summarizes what your event will be. Make sure to answer the five W’s – Who, What, Where, When, and Why. 
  3. Body – Here you’ll further elaborate on your event by specifying more about the details such as what kind of food will be served, if there will be any live performances, games or other fun activities. If there are any deals you’re offering that night, include those here as well. Be sure to include background on your restaurant and why you started it, and what your menu will be like. 
  4. Publish date – Include the date you’d like your release to publish.
  5. Boilerplate – This is a short description, usually a paragraph in length, that describes your restaurant, which makes it easier for the reporter to write about it. 
  6. Contact information – Include your name, phone number and email, website address, and your restaurant name so it’s easy for the reporter to contact you for more information. 

(For more tips on writing a press release, and a free downloadable template, FirstSmallBusiness.com has you covered.) Once you have your release written, you’ll need to send it out to local media, including TV stations, newspapers, and radio. 

 

Another free promotional tactic:  create flyers and post them anywhere you can around town. Believe it or not, they can still be highly effective in our continually-evolving digital world. Here’s a little inspiration. 

 

If you’ve got a marketing budget, consider running sponsored posts and ads on Facebook, Instagram, Twitter and Google Ads. More traditional channels — like TV, radio, print and billboards — can also be highly effective for restaurants. (The downside is the time and costs required to produce those ads, and unlike digital ads, it’s hard to track and measure effectiveness.)

Keep your eye on the prize

Planning a restaurant grand opening is a lot of hard work. But if it’s well-executed, you’ll see swift ROI in the form of a packed house, plenty of positive publicity, and a lot of happy customers who can’t wait to return again soon. 

Liquor License 101 for Restaurants and Bars

Posted on by Keely Hungate

If you’re starting up your own restaurant, bar, brewery, or event space and you plan on serving alcohol, you’re going to need a liquor license. It doesn’t matter the state where your business will be located: it’s always illegal to serve alcohol without a proper license. 

But getting a liquor license can be difficult and time-consuming. And once you have one, you can lose it if you violate state guidelines, whether it’s over-serving your customers, serving minors, selling alcohol during restricted time frames, or disorderly conduct in your establishment. And now with Covid-19 in the picture, state liquor authorities are temporarily revoking liquor licenses from restaurants and bars violating mandated health and safety protocols related to the pandemic.

Here’s everything you need to know about getting a liquor license in 2020: what it is, how much it costs, and what to expect from the process. 

What is a liquor license?

A liquor license makes it legal for your establishment to sell alcohol. Liquor licenses are issued by the state in which your business operates, as different states have different regulations relating to alcohol sales. Requiring restaurants and bars to obtain a liquor license makes it possible for the state and municipal government to enforce their alcohol policies.

What kind of liquor license do I need?

The type of license you need depends on how you sell or serve alcohol. The two primary “categories” are on-license and off-license.

  • On-license: This is for businesses that are selling or serving alcohol to be consumed on-premises. (Also called on-premise or on-sale licenses.) This is the type of license that a restaurant or bar needs to obtain.
  • Off-license: Specifically for businesses selling alcohol to be consumed elsewhere. Liquor stores, wine shops, and grocery and convenience stores are all examples of businesses that sell alcohol for “carry-out,” requiring an off-license.

There are several types of on-licenses that restaurants and bars may need to apply for, depending on the type of alcohol you’re serving and the manner in which you’re serving it. A few common examples:

  • Restaurant liquor license: This is generally known as the “all liquor license” because it allows a business to serve all types of alcohol
  • Beer and wine liquor license: Unlike the “all liquor license,” a beer and wine liquor license doesn’t permit you to sell stronger spirits.
  • Tavern liquor license: This is commonly used for restaurants that serve both food and alcohol but have at least 50% of sales generated solely from liquor. 
  • Server license: Some jurisdictions require individual servers to apply for a server license in addition to a liquor license. Any staff serving alcohol of any kind must take a liquor class prior to getting this license, which educates them on the kinds of alcohol there is, the legal amounts in which to serve it according to the state, and DUI and DWI laws. 

How much does a liquor license cost?

How much a liquor license costs depends on the state you’re operating in and the type of license you’re applying for. The range can be anywhere from $50 to more than $300,000. The average, however, is around $1,400. 

Keep in mind that you might be expected to pay additional processing fees depending on your local regulations. Some states have Liquor License Quotas, which means that only a certain number of licenses can be in use at the same time, depending on the population of the area. If that’s the case, then a new liquor license can be more expensive due to limited supplies. 

How do I apply for a liquor license? 

Applying for and obtaining a liquor license is a bit of process. There are a number of steps you have to take (and hoops you have to jump through) not only to get your license, but to maintain it.

  • Know your state’s liquor laws 

Before you can apply for a liquor license, you have to know what you’re applying for. Remember, there are different licenses available depending on what kind of establishment you’re opening: a restaurant, a tavern or bar, or a liquor store. Also be sure to brush up on any additional requirements your city or county may have in place. You can consult your local Alcohol Beverage Control (ABC) board for this information, or you can check with your state’s alcohol or liquor agency.

  • Get all of your business permits

Before you apply for your liquor license, check to see what kinds of permits you’ll need for your application. Here again, your local ABC board can be a great resource. Check their website to see which ones you’ll need. (Once you have them, keep all of the paperwork secure and on-hand, as you’ll most likely have to present it.)

  • Apply with your local ABC board

Once you’re familiar with your local laws and know the type of license you’ll need, then it’s time to apply with ABC board in your area. You can do so in person, or in some cases, you may be able to apply online. 

  • Defend your proposal 

You might need to defend your case as to why you want to sell alcohol in a public hearing if a member of your local community protests your application. 

  • Renew your liquor license and permits

Applying for a liquor license isn’t just a one-time thing. Expect to renew your license and permits every one to three years. And keep in mind: if you’re found to be in violation of liquor laws, you could have your license suspended or revoked altogether. 

How long does it take to get a liquor license?

Like we said: getting your liquor license is a process. In some cases, expect to wait weeks or even months for your application to be processed and approved. The standard waiting time to hear back from your local ABC board is up to six months.  If you live in a state with quotas, it can take longer, as you’ll have to wait for another business to forfeit theirs (or you can try to buy one on the secondary market).

So if you know you want the option to sell or serve alcohol, our advice is apply for your license as soon as you can in your startup process.

Liquor licenses: worth the hassle?

Getting your liquor license requires a lot of patience and planning — and it can be a financial investment, too. Beyond obtaining the license itself, there are other costs that go into serving alcohol, like equipment, server training, building out a drink menu, etc.

For bars, obviously, getting a liquor license is a no-brainer; for other establishments, you’ve got to decide whether it’s worth the hassle on and cost on the front end as well as the effort to maintain it. Take into account your location, hours, menu, and customer base/demographic. For example, a family or kid-focused establishment may choose not to serve alcohol. The same goes for restaurants that operate only on weekdays, during regular business hours — like breakfast spots, or cafes and coffeehouses catering to working professionals.

But many customers expect alcohol as an option, especially if your restaurant operates on evenings and weekends, or if your menu lends itself to alcohol pairings. It’s also important to note that alcohol sales generally have higher margins than food sales, so financially speaking, a liquor license is often worth the up-front hassle. 

Bottom line: before pursuing a liquor license, be sure that serving alcohol in your establishment is actually going to benefit your business. If you decide to move forward, don’t be intimidated by the process. Simply do your research on the front-end: determine the licenses you need, learn about the regulations that apply, and understand the associated costs and timeline. 

(Need help staffing your bar? Read our tips for hiring a bar manager here!)

COVID, Cold Weather and Restaurants: Preparing Your Space for Fall and Winter

Posted on by Keely Hungate

Now that restaurants have reopened and are learning to co-exist with Covid-19, there’s yet another threat looming on the horizon: cold weather. 

Many restaurants have restricted indoor seating to somewhere between 25% to 50% capacity. To make up for that reduced capacity, wherever possible, they’ve expanded outdoor seating options. That’s worked out well amid balmy spring and summer temps, and even as we head into crisp autumn days, patios mostly remain open.

But the clock is ticking. Winter will be here soon (and in some cases, it’s already arrived — we’re looking at you, Denver). And this year, it’s coming with a side of impending doom for many restaurant owners, especially in states that experience regular snowfall and freezing temperatures.

In a recent Chicago Tribune story, Michael Roper, owner of the HopLeaf Bar, says, “We’re in terror of it. The patio represents most of our business right now.”

In Massachusetts, one in five restaurants have permanently closed since the beginning of the pandemic in March, according to the Boston Herald. And though most restaurants that are still open can stretch their outdoor seating into the early fall, the state will ban that option in November due to extreme temperatures. 

Suffice it to say: for a lot of establishments across the country, everything’s about to change all over again. The good news is that you can anticipate and manage the circumstances. If you’re operating a restaurant in an area where seasonal change is going to impact your current setup: here are three things you should be doing right now.

1. Make a (new) plan

We get it: you probably feel like you’re finally getting the hang of this whole operating-a-restaurant-in-a-pandemic thing. Just when you’ve perfected your Covid-19 contingency plan, it’s time to go back to the drawing board.

But if 2020 has taught us anything, it’s that restaurants must be nimble to survive. By and large, the industry has risen to that challenge — quite admirably! — over the past seven months. And fortunately, seasonal change is less of a curveball because we know it’s coming, and we can prepare for it. Here are a few ways to shore up and “winterize” your current Covid-19 setup.

  • Evaluate everything. Take a step back and review the policies and procedures that you’ve put in place since March. Are they still necessary? Are your employees adhering to them? How will the winter months impact their feasibility or effectiveness?
  • Ask for feedback. Hopefully you’ve been in constant communication with your team all along, but now is a great time to solicit input from your team. Talk to them: ask them what they believe has been going well in terms of the changes you’ve made, and what has been challenging or confusing. (If you’re worried about putting people on the spot, you can also gather feedback through a simple survey with anonymous responses.) 
  • Do your research. As we mentioned above, some states are already putting new rules in place regarding seasonal change. Be sure you’re tuned in to any upcoming regulatory shifts by following legitimate, credible news outlets and industry publications at both a local and national level. 
  • Assess your physical space. Outdoor seating has been a lifesaver for restaurants, but it’s going to be a whole lot trickier if temps start to fall in your area. Be realistic about the safety and comfort level of your patrons, and plan accordingly. Your course of action depends on the climate you’re in, the layout of your restaurant, and your budget. It may make sense to invest in outdoor heaters or to explore ways to partially enclose patios and porches. If outdoor dining really isn’t an option, think through ways to maximize indoor dining capacity — like installing plexiglass dividers between booths and tables. 

Don’t get complacent with your cleaning and sanitation procedures. While it’s best to avoid over-the-top stockpiling, make sure you’ve got a “responsible” surplus of soap, hand sanitizer, toilet paper, cleaning supplies, and other items that may be susceptible to shortages. 

2. Tighten your purse strings

Whether your bottom line is hurting or business is booming, the reality is that no one is out of the woods yet. 

When it comes to managing expenses and budgeting, savvy restaurateurs are continuing to be very discerning as we move into the colder months. In addition to the impact cold weather could have on your operations (e.g., further reducing seating capacity), it’s also more conducive to the spread of germs. Not only do we still have Covid to worry about; we’re now coming up on flu and cold season, and no one really knows how bad it could get. Unfortunately, that means we can’t rule out another shutdown. 

So for most restaurants, now isn’t the time for risk taking. Instead, it’s prudent to remove as many variables as possible. That may mean putting off scheduled expansions or renovations, or temporarily cutting back your operating hours.

Many restaurants have uncovered savings and efficiencies by streamlining their menu. For example, Boston-area HIghland Kitchen reduced its offerings and changed its focus to fried-chicken tenders and sandwiches, along with tiki cocktails — all to-go. (They also cut back on the days and hours they’re open.) Making strategic menu changes gives you the opportunity to focus on higher-margin items, reduce supply/inventory costs, and/or to make your back-of-house more efficient. 

3. Get creative

If there was ever a time to think outside the box, now is it. Here are a few ideas to manage the “winter edition” of Covid-19.

  • Offer cold-weather items (think: blankets, gloves, beanies) for guests to use while dining outside. You could tap into your marketing budget and brand these items, making them a giveaway. Or you can allow guests to borrow them — but you’ll need to ensure you’ve got proper cleaning procedures in place (and be sure you’ve communicated those to your guests).
  • Invest in outdoor heaters, igloos or winterized tents. (Remember, you’ll still need to adhere to social distancing between parties, especially if you’re creating enclosed spaces.)
  • Create a large outdoor fire pit surrounded by (socially distanced) seating.
  • Take advantage of your parking lot by converting a portion of it into a covered/heated patio space.
  • Reimagine your layout. Eating a full meal in chilly temperatures isn’t ideal, but your patrons may be open to enjoying a pre-meal cocktail outside. Consider setting up a (heated) outdoor bar area — even better if you can make it feel festive with fall or holiday decor. You’ll free up indoor dining space at your regular bar area, and you’ll provide extra (safe) space for diners to hang out while they’re waiting to be seated.

Change is here to stay

No one has a crystal ball, but we’re confident this Q4 will be unlike any other. (Let’s be honest: that’s pretty much been the theme of 2020.)

The silver lining here is that we’ve got a little time, and a lot of fresh experience, on our side. The hospitality industry has already been blindsided by a pandemic and upended by an unforeseeable shutdown; we can prepare for the worst because — well, we know what the “worst” looks like. 

So as you look ahead to the coming months, keep doing what you’ve been doing: stay nimble. Anticipate every outcome. Collaborate with your peers and, yes, your competitors.

And most importantly, continue to put the health and safety of your people and your patrons ahead of everything else. 

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