Restaurant Solutions: How to Track Expenses the Smart Way

By Derek Miller

When it comes to running your restaurant, your expenses are probably one of your biggest headaches. If they get out of control, you’re in the red. Yet, it can be challenging to stay on top of them with so many other tasks to take care of. Here’s how to ensure that you manage and track your expenses like a boss.

1. Use Restaurant-Specific Software

It’s a lot more challenging to stay on top of restaurant expenses if you’re using a spreadsheet to log them. Accounting software is really affordable these days, and some are geared specifically toward restaurants, and include features like inventory management and purchase order management.

If you use inventory software (in addition to or as part of your accounting software), your expenses are recorded as soon as you place an order for more artichokes. And your point-of-sale system can link up to your inventory and ordering systems so that, when someone orders the second-to-last ribeye, you automatically put in an order for more.

2. Assign Someone to the Job

It might be your job as restaurant owner or manager to oversee expenses, but if anyone else is involved with inventory management, get a plan for who will be responsible for logging the expenses in your accounting software.

If your chef does the ordering but you handle the expense management, make sure he gives you a receipt or invoice for everything that he orders. Your best bet is to scan any outstanding invoices into your accounting system to pay rather than letting them pile up on your desk and risk them getting lost in the mess. Teach the process for getting expenses logged in the training process to ensure that new hires know how to handle them.

3. When You Charge It, Log It

Using a business credit card can help you keep cash flowing in your business, but use it wisely. First, pay off the balance each month, otherwise you end up spending far more than you budgeted for anything you charge, thanks to interest rates.

Second, record the expense as soon as you buy something with your card. You may not remember in a few weeks that the $298.45 charge on your card was for your napkin service, so record and categorize the expense as soon as you charge it. This saves you time later digging back through invoices to match to the expense.

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Restaurant Profitability and Failure Rates: What You Need to Know

By Rory Crawford

Success in the restaurant industry isn’t easy.

The statistics aren’t pretty: 60 perrcent of restaurants don’t make it past their first year and 80 percent go out of business within five years. Despite the hurdles, many restaurant owners and operators believe that as long as they’re making money, they’re doing “good enough.” 

The failure in this approach is that it doesn’t account for a universal truth—costs increase.

According to an IBISWorld report on single location full-service restaurants in the U.S., 67 percent of a restaurant’s costs go directly to wages and purchase expenses. Additionally, the average profit margin for a restaurant, after removing all other costs, is only 6.2 percent. With a profit margin this slim, insolvency is unfortunately never far away.

The biggest risk for the restaurant industry is rising wages and food costs. If you’re not constantly working to improve profitability and grow your revenue, the costs will take over. It’s imperative that you’re consistently and actively reducing costs to maintain your current level of success. How can you do this? Improving efficiencies.

More Restaurant Competition, Lower Menu Prices

Competition in the restaurant industry is at a recent high. Sales at casual, fine-dining and fast-casual restaurants will grow at a slightly faster clip this year, according to a forecast from Technomic. And sales at restaurants was expected to reach $825 billion in 2018, according to the National Restaurant Association, the ninth consecutive year of sales growth for the industry.

It’s classic supply and demand economics—the greater the supply, the lower the prices. Competition amongst restaurants in the United States is both driving down menu prices and making it more difficult to increase them. And it’s not just competition from similar concepts. Limited service restaurants (including quick service and fast casual) are one of the fastest growing segments in the food service industry. 

Restaurant Wages are Rising

Wages represent a significant portion of your operating costs—34.6 percent, according to IBISWorld—and you can expect that number to increase for a few reasons:

Our national unemployment rate is the lowest level in decades.

Minimum wage laws in 18 states and dozens of other cities and counties is increasing payroll costs

Thanks to the high turnover rate and a record low unemployment rate, it’s becoming harder and harder for restaurant owners to keep people without increasing payroll. If your restaurant is in one of the 18 states with new minimum wage laws, you may already be experiencing the crunch. All of these factors create incredible opportunities for those looking to work in the restaurant industry, but it’s not so great for your bottom line.

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How Bars, Pubs and Restaurants Must Adapt to Stay on Trend

By Amy Hodgetts

According to several studies, more  people are electing to stay in rather than going out. For example, where there were 60,800 pubs across the UK in the year 2000, by 2017, this number had dropped to 48,350. With super-cheap alcohol available in shops, to the younger generation preferring teetotal, pubs and restaurants are struggling to entice people to leave their homes for a night out. So, what are these businesses doing in order to stay relevant and innovative enough to encourage customers? 

Value for Money

When it comes down to it, no one like to spend more. So, it’s a difficult pitch for bars and restaurants really — travel somewhere else, pay for a meal you could cook at home for less, then travel home. Pros? You get your food cooked for you, you don’t have to do the washing up, and it’s cooked by a professional. 

Cons? You have to pay for travel, be it in fuel or taxi fare. You have to pay more for the food than buying the ingredients yourself. You can’t always tell what’s in the food, and for now at least, you can’t really tell how healthy the meal is. In a world that is becoming more conscious of health and wellbeing, that last point can be a real put-off for eating out. 

At least restaurants have the pull of professionally-cooked food and new tastes on offer. For bars and pubs, the game is even harder; there aren’t many brands of drink on offer at a pub or bar that you can’t buy more of, cheaper, at a supermarket. Then, you can have them at home, with your friends, away from other people, doing your own thing. Why sit in a pub trying to chat with your friends over the sound of a band you don’t particularly like when you can sit at home, chat to your friends with the same drinks, more money in your pocket, and Spotify on with band you do like? 

Therein lies the problem. People have so much technology at their disposal now that pubs and bars can seem a little dated. Without change and renovation, pubs in particular have felt the sharp sting of decline.Continue Reading

7 Ways to Finance Your Dream Bar

BY. Loren Bornstein

So you want to open a bar…how are you going to pay for it?

In nearly a decade of working behind the stick (behind the bar), I’ve had many a customer talk about how they want to open a bar. A few even spoke to me about helping them open it. But when we start to talk beyond dreams, most don’t want to talk about the reality behind it all. The reality being finances.

For those of you serious about owning a bar, it’s imperative you do the research to understand all the options available to finance your business. I asked Dave Bertelo, who spoke at length about red flags in bar failures, about what it takes to finance your own bar. He and his partner just secured funding for their own bar, thanks in part to a private investor. Dave gave me a list of the various financing methods they considered.

Take notes, my ambitious industry enthusiasts and entrepreneurs!

When it comes to starting any business, you need to be serious about money. Your options are pretty varied, some of which include: the SBA, micro loans, crowd source funding, home equity loans, private investor, self-raised funds, credit cards, and merchant account funding.

I know a lot of these terms are intimidating. Thankfully, Dave gave better explanations of each for you:

SBA (Small Business Administration)

What is it? The Small Business Administration is a great place to start when looking at loans for your bar. The 7(a) Loan Program is SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes—including your new bar!

Benefits: The money isn’t coming out of your own pocket and there are regulated interest rates, so they can’t just change on you should your financial stability also change. This is a great starting point for many a person intent on opening a bar.

Hazards: A downside is many banks don’t offer these loans. There is a lender match attachment to SBA’s website which helps deal with finding a good lender, but, as Dave and his partner found out, a lot of banks don’t offer these loans unless you are also interested in purchasing the real estate too—which is usually way above the money many potential bar owners can shell out.

Ideal Lendee: You need to have a professional quality business plan and demonstrate financial competency. Talk to a few banks and financial advisors to get a better understanding before starting the loan process.

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Does your business need an alcohol beverage license to serve free drinks in Florida?

Original article by. GrayRobinson PA

Who doesn't enjoy a sipping a glass of wine during a relaxing pedicure--especially if that glass of wine is free?

While there is no such thing as a free lunch, offering a free drink to customers is a practice regularly seen at a variety of businesses, including at beauty salons, gyms, and upscale boutiques. But is this activity legal, or do these businesses need an alcohol beverage license before serving an alcohol beverage to patrons?

Under Florida law, "[i]t is unlawful for any person to sell alcoholic beverages without a license . . ." Fla. Stat. 562.12(1). "Sale" or "sell" is defined as "any transfer of an alcoholic beverage for a consideration, any gift of an alcoholic beverage in connection with, or as a part of, a transfer of property other than an alcoholic beverage for a consideration, or the serving of an alcoholic beverage by a club licensed under the Beverage Law." Fla. Stat. 561.01(9). This law comes with serious consequences, as selling alcoholic beverages without a license in Florida is a seconddegree misdemeanor. See Fla. Stat. 562.12(1).

Florida courts have interpreted the definition of "sale" or "sell" broadly. For example, in the case Dept. of Bus. Reg., Div. of Alcoholic Beverages & Tobacco v. Cost Plus Imports of Tampa Bay, Inc., 513 So. 2d 763, 764 (Fla. 2d DCA 1987), Second District Court of Appeal found that furnishing alcoholic beverages in connection with a limousine rental was a sale within the meaning of Fla. Stat. 561.01(9). This is because the patron paid to rent the limousine, which is consideration (or something of value in exchange) for the alcoholic beverages. Id. According to the Division of Alcoholic Beverages and Tobacco ("DABT"), the entity that regulates Florida alcohol beverage retailers, distributors, and manufacturers: "Any payment for services or products which provides the access to the alcoholic beverage is not considered complimentary (costing nothing) and thus is considered a sale of alcoholic beverages and requires a license."1

So for example, if a patron pays for a pedicure at a salon and is offered a free glass of wine, it is considered a sale and requires licensure. But if the patron does not purchase a pedicure or any other service at the salon, and is still offered a free glass of wine, it is probably not a sale. Alcoholic beverages can be expensive, and if a salon only wants to serve drinks to paying customers, it should obtain an alcohol beverage license.

All businesses that serve alcoholic beverages to patrons should review Florida's alcohol beverage laws and regulations, and consult with a Florida alcohol beverage attorney to help comply with Florida's alcohol beverage laws and regulations. 

‘Stillpubs’ — brewpubs for liquor — could be coming to Illinois as craft distiller licensing bill clears state House

BY.

Alexia Elejalde-Ruiz

Like brewpubs? Get ready for stillpubs.

Legislation approved Thursday by the Illinois House would license craft distillers similar to the way craft brewers are regulated, with the aim of giving a boost to the burgeoning community of artisan spirits makers in the state.

The bill, which still faces a vote in the Senate, would create a license that allows small distillers to self-distribute some product, removing a major hurdle for unknown brands trying get on store shelves, and another license that allows distillers to open up to three satellite locations where they can serve their house-made spirits as well as other alcohol in a pub environment.

The changes would allow craft distillers to build brand awareness and new revenue streams, helping them grow and encouraging new distillers to set up shop in the state, said Noelle DiPrizio, who co-owns Chicago Distilling in Logan Square.

“Based on our surrounding states it would make us one of the more favorable states to start a business,” said DiPrizio, president of the Illinois Craft Distillers Association, which pushed for the bill.

There are 34 businesses federally licensed as craft distillers in Illinois, up from 2 in 2010, DiPrizio said. If the bill becomes law, that number “could double very quickly,” she said.

For her business, the new rules could mean drawing customers with what she calls a “still pub” in hipster Logan Square while moving production to a less pricey neighborhood. While Chicago Distilling has a tasting room that serves cocktails made with its vodka, gin and whiskeys, it can’t serve booze it doesn’t make.

“Often I’m turning away private events because I can’t also provide them with wine and beer as an option,” DiPrizio said.

Nick Nagele, co-founder of Whiskey Acres in DeKalb, said the ability for some distillers to sell their products directly to retailers will also be a game-changer. Some distillers are located in parts of southern Illinois that aren’t serviced by distributors, and others are so small that they need to establish some accounts before a distributor will take them on, he said.

But, he added, “this legislation is not a way for us to get away from the three-tier system” in Illinois that requires manufacturers to sell to wholesalers that in turn sell to retailers. “We do not want to become a delivery organization.”

The Wine and Spirits Distributors of Illinois initially opposed portions of the bill but after a series of negotiations got on board.

“WSDI appreciates the discussions we have been engaged in with the craft distillers guild and believe that the bill as passed out of the house today represents an agreement that fairly established a long term plan for craft distillers in Illinois,” said Executive Director Karin Lijana Matura.

The bill passed the house 108-2.

Rep. Mike Zalewski, D-Riverside, co-chief sponsor of the bill, said the legislation creates parity with the booming craft beer industry by creating a two-tier licensing system.

A Class 1 license permits a distiller that produces no more than 50,000 gallons per year to self-distribute or sell directly to consumers from their tasting room up to 5,000 gallons of spirits made on site. They can also purchase vermouth from a licensed distributor for use in cocktails at their tasting rooms.

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Duopoly or pro-business? Shots taken in liquor distribution fight

By. Tress Savage

The difference between “shall” and “may” in one portion of Oklahoma’s new alcohol laws has left liquor stores, a locally owned wholesaler and some legislators pushing to break up what they call a duopoly in the liquor distribution market.

Thanks to a few lines of amendment within voter-approved SQ 792, the nation’s top brands of liquor now distribute their products in Oklahoma exclusively through either Central Liquor Company or Jarboe Sales Co., two longtime Oklahoma businesses that struck deals with national distributors: Republic National Distributing Company (RNDC) and Southern Glazer’s Wine and Spirits, respectively.

The change dramatically hurt the business of Tulsa-based Boardwalk Distribution and other now-defunct wholesalers, and the Retail Liquor Association of Oklahoma says the effect on liquor stores has been equally problematic.

“These people who have exclusive rights to these spirits and these wines have continued to slowly decrease service and slowly increase price,” said RLAO President Bryan Kerr, owner of Moore Liquor. “The sharpest part of that knife pokes at the rural areas where they have really seen severely reduced service and availability of product since the passage of the law.”

To address similar concerns from other liquor stores and Boardwalk Distribution, Rep. Chris Kannady (R-OKC) dropped language into SB 608 on April 2 that would define “top brand” as one of the 25 most-sold spirits and wines over a 12-month period. The bill would require manufacturers to sell those top brands to any wholesaler wanting to purchase and distribute them.

Kannady joined Kerr in saying reduced wholesaler competition has allowed RNDC and Southern Glazer to reduce delivery frequencies and quantities while increasing bottle-handling fees.

“I have not had a single liquor store say they are against it,” Kannady said of his language in SB 608. “Restaurants have the same problem. You’ll have restaurants in downtown Oklahoma City who run out of product because they’re not getting deliveries. So if that’s happening in Oklahoma City, imagine what’s happening in rural Oklahoma.”Continue Reading