Founded in 1933, the Indiana Restaurant represents over 1,600 member restaurant properties and industry-related services companies. It is these members that help make the foodservice industry the nation's largest private sector employer and one of the state’s most politically active and public service oriented industries. Our members are the cornerstone of the Indiana community and economy.
Help Get Out the Vote Through the NRA’s Election Resource Center The center provides information directly related to the restaurant industry
As the Nov. 6 election draws closer, the National Restaurant Association (NRA) is launching its new Election Resource Center to help guide restaurateurs and their employees through the voting process. The comprehensive program coincides with National Voter Registration Day. The program offers information about voter registration, voter time-off, various early voting rules, election analysis articles, a 2012 election map and Get Out the Vote posters. The election resource center also features industry specific information, such as a Vote for Prosperity video and the NRA's Congressional Visit Program. "This is the perfect opportunity for both staff and customers of your restaurants to get to know the candidates and the many complex issues that affect your businesses," said NRA Executive Vice President of Political and State Affairs Rob Gifford. "Moreover, with candidates and members of Congress campaigning in their home districts around the country, now is a good time to invite them to spend some time at your restaurant as a guest or working the line. The Election Resource Center is a great way for you to participate in the political process." Gifford added that this year's election is extremely important to members of the restaurant industry. Not only will the outcome determine the next U.S. President, but it will also determine 33 percent of the seats in the Senate, 100 percent of the seats in the House, 13 governors’ races and numerous state legislative seats. All of the items in the elections center are meant to be shared and distributed. The NRA asks users of the materials to include the restaurant.org/elections address in employee newsletters; to distribute voting posters in employee lounges, and to play the the Vote For Prosperity Video at staff meetings. The NRA will also assist with congressional visits to restaurant locations. To learn more, contact the NRA’s Ellen Mize.
Save the Date! Membership Meeting November 13th On Aug. 21st the Board of Directors of both the Indiana Restaurant Association and the Indiana Hotel & Lodging Association met jointly to discuss the merger of these two great organizations into one that will be stronger and more influential. We had representative from the National Restaurant Association and the American Hotel & Lodging Association on hand to be part of the discussion. We also had the CEO of the Oregon Restaurant and Lodging Association with us to discuss the recent merger that took place in that state. Soon a majority of states will have moved in this direction. As a number of members have said to me - "it just makes sense". Both Boards voted to move forward with plans to merge. We are working on the details of the new structure so that we can complete the merger by the end of the year. By combining the resources of the two associations we will be better able to represent the interests of the hospitality community across our state. The merger will also enable us to better plan for what comes next after John Livengood's retirement as President next year on Sept. 1, 2013. Over the past 15 years the two associations have worked closely together on issues and events with a common staff and office. The merger will allow us to work with your volunteer leaders to build a stronger voice for our combined efforts. The merger will make sure we move forward together in the future as well. Membership meetings will be held on Nov. 13 at 3:00pm at the Omni Severin, downtown Indianapolis to vote on the proposed merger. Please make a special effort to attend and participate in this historic meeting as we give birth to the Indiana Restaurant and Lodging Association. Page 1
Understanding the Difference: Tips vs. Service Charges Tune in Tuesday, Oct. 16, 3 p.m. ET, for the NRA's webinar on the difference between tips and service charges, and what a new IRS revenue ruling could mean for restaurateurs about how they classify and report tips versus service charges. For more info on NRA webinars go to http://www.restaurant.org/ events/webinars/
Americans with Disabilities Act: Toolkit for Restaurant Operators Recently the NRA released the “Americans with Disabilities Act: Toolkit for Restaurant Operators," an information-rich resource that helps restaurateurs comply with updated accessibility guidelines and welcome guests with disabilities to their restaurants. The new federal accessibility standards - officially, the 2010 ADA Standards for Accessible Design - represent the first major changes to the federal design standards since 1991. The 2010 Standards set ground rules for what makes a restaurant “accessible,” covering everything from restrooms to signage, elevators, ramps, and parking spaces. The 2010 standards apply to new construction and alterations starting on or after March 15, 2012. Since Title III of the ADA also requires businesses to remove barriers to guests wherever it is readily achievable, businesses should use the new standards for guidance when they remove existing barriers to guests. The 80-page toolkit includes a general overview of Title III of the ADA, and a checklist that restaurateurs can use at their operations to evaluate such features as dining areas, self-service counters and children’s play areas. The book also offers a chapter on what restaurateurs should do if they are sued under the ADA, and information on revised Title III regulations on “service animals” and the use of mobility devices. The toolkit is available at Restaurant.org/ADA (member login/password is needed). The publication is available as a complimentary download for NRA members; non-members pay $49.95 for the PDF toolkit. If you have any questions about the toolkit or the Americans with Disabilities Act please contact Angelo Amador, Vice President, Labor & Workforce Policy at firstname.lastname@example.org or (202) 331-5913.
Please help welcome the newest Members of the IRA family! We are proud to announce our newest members. Please extend a warm welcome to them! Jersey Mike's Franchise Systems Jeff Berns Libertyville www.jerseymikes.com Page 2
2251 FranchiseSeminar Ad.indd 1
9/26/12 1:57 PM
An Overview of Tax Provisions Expiring in 2012 The chart comes from a Congressional Research Service (CRS) and is entitled “An Overview of Tax Provisions Expiring in 2012”. The chart highlights all of the provisions in the tax code that expire at the end of 2012 and those that have expired at the end of 2011 (i.e.15-year restaurant depreciation, work opportunity tax credit) that Congress is expected to address either in the lameduck session or early next year. OVERVIEW OF EXPIRING PROVISIONS
SAVE THE DATE! 2013 HOOSIER HOSPITALITY CONFERENCE
MARCH 12-13, 2013 @ HILTON INDIANAPOLIS DOWNTOWN
FEATURING KEY NOTE SPEAKER: JIM KNIGHT Jim Knight is a 35-year veteran in the Training & Development world. He spent 21 years with Hard Rock International, as the Senior Director of Training for the brand’s School of Hard Rocks, which oversaw all learning initiatives for the global cafes, hotels and casinos, including their corporate university, Rock 101. During that time, his team garnered several industry awards for print materials, video and e-learning courses and was recognized by Training Magazine as one of the Top 125 training organizations in the world. Jim’s session, “Employee Branding That Rocks”, is centered on creating, maintaining and even revolutionizing an organization’s internal culture in every area of the Employee Life Cycle, regardless of the current state. www.hoosierhospitalityconference.com Page 4
U.S. restaurant industry outlook: Slow and steady improvement While restaurants are naturally positioned as discretionary for consumer spending, there are some reasons to be optimistic in a still-sluggish economy. Bob Bielinski, CIT's managing director of corporate finance, spoke about the U.S. restaurant industry outlook in the recent CIT Executive Insights Video Series. Highlights include: Middle market and large restaurant companies are experiencing access to financing for acquisitions, system growth and remodeling efforts. "Lenders that stepped away from the market during the downturn have returned and there have been some new entrants as well. Strong companies are able to get debt financing on very attractive terms," Bielinski said. For example, California-based Domino's franchisee Hishmeh Enterprises recently received a $5.6 million term loan to refinance existing debt and a $1.5 million development line of credit for growth capital from GE Capital, Franchise Finance. About two weeks later, GE Capital, Franchise Finance also provided a $6.7 million credit facility to Pizzerias LLC, a Papa John's franchisee that operates in the Miami market, to refinance debt. In March, KK Group of Companies, a Subway franchisee, received $4.5 million to help with remodeling and reimaging updates. Mergers and Acquisitions activity has been steady in 2012, but not overwhelming. This is especially compared to a busy 2011, when Dunkin' Donuts went public; California Pizza Kitchen went private; Arby's was sold by Wendy's; A&W and Long John's Silver's were sold by Yum! Brands; Corner Bakery changed ownership; and the largest franchisees for Pizza Hut, Applebee's and Taco Bell were involved in M&A activity. In February, Bielinski predicted a slower M&A pace, saying "there simply aren't as many mature deals left in private equity portfolios." However, so far in 2012, there have been some franchisee transactions driven by the sales recovery and the potential increase in taxes next year, he said. The IPO market has been "extremely strong" for restaurant companies in 2012. "There are a number of formerly public companies that have gone private that are now public companies again," Bielinski said. "The real exciting news in the public markets is the access that smaller companies (such as Ignite Restaurant Group, Chuy's and Del Frisco) now have." Burger King is probably the biggest example of a company returning to the New York Stock Exchange this year, and began trading under BKW in June. However, CKE Restaurants, parent to Carl's Jr. and Hardee's, balked at going public in August, citing unfavorable market conditions. Franchisee consolidation is expected to continue in 2012 and beyond. "It's a great time to sell a business currently because valuation multiples are very high and the debt markets are strong, so buyers can get financing," Bielinki said. "However, the restaurant companies that were sold in 2010 and 2011 have new owners and these new owners are not yet ready to sell." Slow economic recovery and unemployment are not as bad as they seem. "The consumer is out there and spending," Bielinski said. "When you're thinking about the outlook for the restaurant sector, you have to keep one eye on the economy and the other eye on gasoline prices. If jobs continue to be created, restaurant sales will be OK. For a meaningful increase in restaurant sales, we're going to need to see the unemployment figure come down." Bielinski's statement came before the most recent jobs report was released Oct. 5, showing the unemployment rate down to 7.8 percent - its first time under 8 percent since early 2009. At the same time, however, gas prices have experienced a rare fall spike, setting an October record high. Bielinski leads the restaurant industry practice within corporate finance at CIT. He has more than 20 years of restaurant and retail financial management, investment banking, corporate lending and transaction experience. Page 5
Darden tests limiting worker hours as health-care changes loom by Sandra Pedicini, Orlando Sentinel
In an experiment apparently aimed at keeping down the cost of health-care reform, Orlando-basedDarden Restaurants has stopped offering full-time schedules to many hourly workers in at least a few Olive Gardens, Red Lobsters and LongHorn Steakhouses. Darden said the test is taking place in "a select number" of restaurants in four markets, including Central Florida, but would not give details. The company said there has been no decision made about expanding it. In an emailed statement, Darden said staffing changes are "just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time." Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled togo into effect in 2014. Under that law,large companies must provide affordable health insurance to employees working an average of at least 30 hours per week. If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange - an online marketplace - for insurance. "I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week," said Matthew Snook, partner with human-resources consulting company Mercer. Darden said its goal at the test restaurants is to keep employees at 28 hours a week. Analysts said limiting hours could pose new challenges, including higher turnover and less-qualified workers. "It's a real problem for restaurants," said Howard Penney, a restaurant analyst and managing director for Hedgeye Risk Management. Darden, the world's largest casual-dining company and one of the nation's 30 largest employers, said it offers health insurance to all its approximately 185,000 employees. Many are offered a limited-benefit plan. That type of coverage is being phased out under health-care changes, which will ban annual limits for most plans. About 25 percent of Darden workers are full time, meaning they work more than 30 hours a week. Though employees say Darden already offers traditional health insurance to full-timers, Janney Capital Markets analyst Mark Kalinowski said the cost of providing that could become higher for Darden under the Affordable Care Act. Because that law requires everyone to have health insurance, more workers will likely choose its coverage, Kalinowski said. "Even a modest jump up in the amount of employees that decide they want the insurance you're offering could have a meaningful impact on your bottom line," he said. Under the system Darden is testing, employees are to be scheduled for no more than 28 hours each week. They can run over that if things get busy, but Darden acknowledged they are not supposed to exceed 30 hours. At a new Olive Garden in Stillwater, Okla., former busboy Keaton Hasty said employees were routinely limited to 29 1/2 hours. "It was 29 1/2, and they'd kick you out," said Hasty, a college student who now works at a pharmacy. "They'd always print off a little slip every day and say who was getting close." And Michael Walker said when he applied for a job at a new Olive Garden in Hammond, La., he was told that except for a few "key training positions," only part-time jobs were available for hourly workers. "Without having full health care ... I don't see that as an option," Walker said. He decided to stick with his current job at another restaurant. Darden told analysts last year it would consider changing its mix of part-time and full-time employees to reduce costs. Darden has been aggressively keeping labor costs down. It has cut bartenders' pay and required servers to share tips with them. It also has eliminated busboy positions at Red Lobster and reduced the number of servers working each shift at that chain. Labor costs as a percentage of sales have dropped steadily from 33.1 percent in fiscal 2010 to 30.8 percent in the most recent quarter. For more information, please contact email@example.com or 407-420-5240.
New PAC Nickname & Logo Restaurant PAC is the new official nickname of the National Restaurant Association Political Action Committee! The name Restaurant PAC better describes who we are and what we stand for. We're excited about this change and have updated our logo as well. We kindly ask that you begin using the new logo for future PAC events or publications. You can access the logo and brand guidelines on the state extranet under the home tab and under new NRA Branding. You can access updated PAC collateral materials on the state extranet under the home tab under Restaurant PAC.
Fast Casual Industry Council The NRA's Fast Casual Industry Council is the primary advocate for, and resource to, the fast casual segment. The Fast Casual Council's goal is to convene senior executives from the fast casual segment to discuss common concerns and advise the NRA on how priority issues would impact fast casual restaurants. The group serves as a networking and educational venue, provides input on research, segment definition and member benefit program development. Any individual employed by a current National Restaurant Association member company is eligible to participate. The NRA invites restaurant operators to meet at the NRA 2012: Fast Casual Trends and Directions Conference. Operators will gain a reliable and detailed vision of this fast-growing segment, where it's headed and how to capitalize on opportunities. Armed with Technomic and Digital Coco's research and insights, these leaders will be better prepared to: • • • • •
Develop business-building strategies Position or reposition their brand Refine marketing plans Assess existing and emerging competition Leverage growth opportunities
Special sessions will include: • • • • • •
Ron Paul's State of the Industry Hot Growth Concepts Spotlight with Darren Tristano Evolving Consumer Attitudes and Usage in Fast Casual Menu and Culinary Perspective and Operator R&D Panel by Ross Kamens Paul Barron's Social Brand Report The Future of Fast Casual
In addition, attendees will participate in two FCIC (Fast Casual Industry Council) facilitated table discussions. NRA members take advantage of special savings and sign up today!
Caution advised in Visa-Mastercard Class Action Lawsuit You may be getting calls, letters and e-mails from law firms and other third parties about collecting a pay-out or selling your 'share''of the proposed settlement from the Visa-Mastercard Class Action Lawsuit. IRA continues to urge caution if our members get any solicitations from third parties. The settlement is not a done deal. It is premature for any class merchant to consider or sign on to anything, at this time. The National Restaurant Association has opposed the settlement offer as has many of the others parties to the suit. Page 7
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Published on Oct 16, 2012