Washington Restaurant Association

WA S H I N GTO N

RESTAURANT

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Inside

www.warestaurant.org

Features

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What is the health care exchange?

You’ve probably heard the term but aren’t clear on what it means.

Find out where Washington is in the process and how you can benefit.

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The health care law is a go: Are you ready?

Amid the assumptions, confusion and anticipation, there are facts you need to know in order to comply with the Patient Protection and Affordable Care Act. Learn how the law has evolved and what you should be doing now to prepare.

Other stories

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WA S H I N GTO N

RESTAURANT HEALTHCARE REFORM

Tipping culture from the Far East provides great lessons locally

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News Briefs

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Health care law puts WRA’s position as primary source of information to the test

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Health care expert hired to guide WRA members through transition

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Finding solutions for affordable and flexible healthcare

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Will you be at the biggest industry tradeshow in the Northwest?

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2013 Boyd Coffee ProStart Invitational partners give culinary hopefuls a leg up

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Calendar/New Members

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Marketplace

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Proactively manage increasing product costs

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On the cover What you need to know now about federal health care reform.

February 2013 | 5

EDITORIAL STAFF Anthony Anton, Publisher Lex Nepomuceno, Executive Editor Heather Donahoe, Managing Editor Ross Marzolf, Contributing Editor Sheryl Jackson, Research Editor Lisa Ellefson, Art Director WRA EXECUTIVE COMMITTEE Jim Rowe, Chair Consolidated Restaurants Phil Costello, Vice Chair Stop N Go Family Drive Inn Robert Bonina, Secretary/Treasurer Washington Athletic Club Bret Stewart, Immediate Past Chair Center Twist Nancy Swanger, WRAEF President WSU WRA EXECUTIVE TEAM Anthony Anton President and CEO Teran Petrina Vice President Bruce Beckett Director of Government Affairs Lex Nepomuceno Director of Communications & Technology Lyle Hildahl Director of Education Victoria Olson Director of Business Development Susan Howe Director of Internal Operations 510 Plum St. SE, Ste. 200 Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 www.warestaurant.org

Letters are welcomed, but must be signed to be considered for publication. Please include contact information for verification.

Reproduction of articles appearing in Washington Restaurant Magazine are authorized for personal use only, with credit given to Washington Restaurant Magazine and/or the Washington Restaurant Association.

Articles written by outside authors do not necessarily reflect the views or positions of the Washington Restaurant Association, its Board of Directors, staff or members.

Products and services advertised in Washington Restaurant Magazine are not necessarily endorsed by the WRA, and do not necessarily reflect the opinions of the WRA, its Board of Directors, staff or members.

ADVERTISING INQUIRIES MAY BE DIRECTED TO: Ken Wells Allied Relations Manager 425.457.1458 kenw@warestaurant.org Washington Restaurant Magazine is published monthly for Association members. We welcome your comments and suggestions. email: news@warestaurant.org, phone: 800.225.7166. Circulation: 6,310.

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Tipping culture from the Far East provides great lessons locally

By Lex Nepomuceno, Executive Editor Service charge or no service charge? This simple question is not at the same level as “Mac vs. Windows” or “Team Edward vs. Team Jacob,” but it seems to be picking up some steam. After spending some time in the Philippines recently, where service charge is king, I have come to some interesting conclusions applicable to restaurants in the United States.

Culturally, Filipinos in the hospitality industry want to please. This can be seen in cruise ships and hotels all over the world. Indeed, one of the Philippines’ top exports is people. The term “overseas contract worker” is common amongst families in this developing country because Filipinos are known as hard workers and customer-friendly.

However, when going to some of the finer restaurants in Manila, service was spotty at best. Diners can be left unattended for 45 minutes to an hour, even in a relatively empty establishment. Wait staff walks past a diners table without even looking over to see if they need refills. This didn’t just happen at a few restaurants, it happened at almost every restaurant. Of course, there were a handful of exceptions where the service was absolutely stellar, but this was the exception and not the norm.

It occurred to me during one of these dining experiences that the Philippines doesn’t have a “tipping culture” either. Americans visiting the country are encouraged “not to tip too much” if anything at all because almost every restaurant includes a 10 percent service charge. Unfortunately, many tourists and even locals assume this service charge rule applies everywhere in the country. So I always made sure to carefully check the bill when paying to see if there was a service charge – I found this incredible annoying!

As business owners, especially those in the hospitality industry, it is vitally important to not lose touch with the needs and desires of customers. It is easy to get caught up with payroll costs, taxes, or what employees want – what is best for the customer is sometimes forgotten.

Waiters, hostesses and cooks have been conditioned in the Philippines to just accept the 10 percent service charge and not count on straight tips. Thus, the powerful incentive that tips provide is taken away and the generosity of patrons leaving a 20 percent-plus tip is viewed as getting lucky and not something earned.

It wasn’t until I returned to the United States that I realized the service here was more consistent and generally better. I find myself tipping at least 18-20 percent on a consistent basis; not because it was pre-ordained on the bill, but because the staff deserved it!

Although the opinions related to service charges vary greatly, I know where I stand on the issue the next time a restaurateur asks me if I think service charges are a good idea –do what is best for the customer. 

Primary Source of Information | News Briefs New L&I posters mailed to employers throughout state The Department of Labor & Industries has mailed a new set of required workplace posters to employers in Washington state. A major change in the workers’ compensation poster (Notice to Employees-If a Job Injury Occurs) prompted the mailing—injured workers must now see a network medical provider for ongoing care. Employers covered by Washington’s workers’ compensation program must post three workplace posters from L&I: Notice to Employees-If a Job Injury Occurs; Job Safety and Health Law; and Your Rights as a Worker.

The self-insurance version of Notice to Employees was mailed to self-insured businesses, which also receive the other two posters. Employers need to post the new posters dated 12-2012 where employees can read them, and they need to remove the previous editions. If additional free copies are needed, or posters haven’t been received, they can be ordered at www.Posters.Lni.wa.gov.

Information about other government posters and answers to questions employers may have about required posters are also provided on this Web page. Employers may also receive advertisements from private vendors that sell these and other government posters. L&I does not charge for additional copies of the posters.  IRS provides updated withholding guidance for 2013 The Internal Revenue Service today released updated income-tax withholding tables for 2013 reflecting recent changes by Congress. The updated tables show the new rates in effect for 2013 and supersede the tables issued on Dec. 31, 2012. The newly revised version of Notice 1036 contains the percentage method income-tax withholding tables and related information that employers need to implement these changes.

In addition, employers should also begin withholding Social Security tax at the rate of 6.2 percent of wages paid following the expiration of the temporary twopercentage-point payroll tax cut in effect for 2011 and 2012. The payroll tax rates were not affected by this week’s legislation. For more information, go to http:// wra.cc/irs2013wh.  Restaurant hiring finished strong in 2012 Eating and drinking places added a net 38,000 jobs in December, their secondstrongest monthly gain of 2012. Restaurants continued to add jobs at a robust pace in December, according to preliminary figures from the Bureau of Labor Statistics.

Eating and drinking places — the primary component of the restaurant industry, which accounts for roughly threefourths of the total restaurant and foodservice workforce — added a net 38,000 jobs in December on a seasonallyadjusted basis.

December’s solid hiring output was the second-strongest gain of the year, finishing only behind a net increase of 39,600 jobs in August. In total, eating and drinking places added a net 285,600 jobs during 2012. For more information, go to http:// wra.cc/2012jobsnra. 

FDA proposes new rules to foodsafety act The U.S. Food and Drug Administration proposed two additional rules to the Food Safety Modernization Act that it says would help prevent the spread of food-borne illness. The two new rules are part of an ongoing effort focusing on safety and prevention methods associated with domestically produced and imported foods.

Proposed January 4, the first rule would require food manufacturers to develop a formal plan for preventing food products from causing foodborne illness, while the second rule proposes science- and risk-based standards for the safe production and harvesting of fruits and vegetables.

They are currently available for review and comment for the next 120 days.

For more information, go to http:// wra.cc/fdanewrules.  Correction In the January 2013 edition of Washington Restaurant Magazine, the article “New governor, new legislators, new session” listed Washington state’s minimum wage as $9.16 an hour (page15). The correct minimum wage figure for Washington state is $9.19 per hour.  February 2013 | 7

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Industry Outlook | WRA President & CEO

Health care law puts WRA’s position as primary source of information to the test It’s funny how different years tend to showcase the WRA’s various benefits. Some years, Government Affairs gets the spotlight as we fight to protect the industry from new costs and burdens, or jump through a window of opportunity to improve the business climate.

Other years, Business Development gets all the glory, with a huge Retro check or introduction to a reliable vendor in a time of uncertainty.

And a few times, it has been the WRA’s educational offerings, as new training mandates emerge and the WRA works to find and make available affordable and common-sense training programs.

But 2013 is shaping up differently. Our objective to be your “Primary Source of Information” is being put to the test.

The federal Patient Protection and Affordable Care Act is comprehensive, complex and multi-faceted. As your WRA team formulated a plan to prepare you for the law’s implementation over the course of the next several months, we realized there was not a simple way to guide you to the answers you will need to adopt the law in your business.

So we set out to prepare six different tools that would allow us to be your primary information source of information on health.

Tool #1 was launched in January and is available to you, free of charge, through the end of February. We have contracted with Donna Steward, a top-notch health care expert you can call and ask any question regarding health care reform. We have learned many of the toughest questions about the reform are specific to individual businesses and require a one-onone conversation. Donna is president of Kiawe Public Affairs, specializing in health care advocacy for small business owners.

She has 18 years of experience with health care policy at both the state and federal level and has 8 years of experience lobbying state legislators on private market solutions for health care reform. Previously, Donna worked as government affairs director for the Association of Washington Business (AWB), where she advocated for businesses on health care, education and unemployment insurance issues. During this time she developed in-depth knowledge of the federal Patient

Anthony Anton, president and CEO

Protection and Affordable Care Act. To get in touch with Donna, simply call the WRA office and we will connect you.

The magazine in your hands is tool #2 – an informational overview covering the aspects you need to be aware of within the health care reform act. Here’s my advice… and this is important: don’t try to read this magazine in one sitting. It is meant to be an ongoing resource and starting point in understanding the law. Be familiar with the top-line index pieces, and read carefully the to-do list. Keep it nearby as you need to make decisions throughout the year.

Tool #3 is our weekly health care webinars each Friday.

These online sessions will give you a broader overview of different sections of the law, and the chance to ask questions as they come up, and to get any clarifications you need.

Donna Steward will be leading these online one-hour calls throughout the end of February. To find out more, visit www.warestaurant.org.

Tool #4 is our website. Inevitably, some of you will misplace the magazine, or miss a webinar or be on the lookout for a quick reference need. All of the magazine articles, NRA resources and podcasts of the webinars, plus other key resources will be available at www.warestaurant.org.

Tool #5 is our partnership with the National Restaurant Association. As those of you who track this closely are well aware, there are still many parts of the law where the details, clarifications and related rules are not yet available. To make you aware of new developments as they are unfold, our partners at the National Restaurant Association have developed regular communications on health care reform, and the WRA is committed to passing along that information as it becomes available.

Tool #6 is a dedicated page in this magazine for the rest of 2013 on the latest developments, common questions and other useful tips you might need to successfully navigate the new law.

We are here to help you succeed; that is our mission. Being your primary source of information is one of the four ways we are committed to meeting that mission. Please use us extensively in the upcoming year. We want to be the place where your toughest questions get answers.  February 2013 | 9

Washington state proves to be a leader on health care exchange development

By Heather Donahoe, managing editor

“This conditional approval is a significant validation of the While many states still have not work that we’ve done to get our state’s health insurance exchange up and running,” Gregoire said. “We are clearly yet begun to make concrete plans ahead of the curve and well positioned to remain a national for the federally mandated health leader on health care reform. Through our exchange, we will offer coverage to more than 200,000 uninsured care exchanges, Washington is Washingtonians and boost competition in the marketplace.

The exchange will bring lower prices to consumers and among several states that are well small businesses, improve health outcomes and lower costs ahead of the game. Consumer for all of us.” enrollment in the Washington’s Here are some helpful FAQs, courtesy of Washington Healthplanfinder, www.wahbexchange.org. health care exchange will begin on October 13, with coverage Frequently Asked Questions beginning in January 2014. The What is the Washington Health Benefit Exchange? exchange even has a name— The Washington Health Benefit Exchange is a publicWashington Healthplanfinder, an private partnership with the mission to redefine people’s experience with health care. As part of national health online guide offering coverage care reform, the Exchange is responsible for Washington Healthplanfinder – an easily accessible, online marketplace and cost comparisons. In early for individuals, families and small businesses to compare and December, the federal government enroll in qualified health insurance plans. The Exchange works in close coordination with our state agency partners, gave tentative approval to the including the Health Care Authority (Medicaid), Office of the Insurance Commissioner and Department of Social Washington Healthplanfinder, and Health Services. which ultimately will become As an employer with fewer than 50 employees, Washington’s health care why does the Washington Health Benefit Exchange matter to my business? marketplace. The exchange is Because of the subsidized healthcare the product of a public-private offerings for residents with incomes up collaboration between the state’s to $44,680 for an individual and up to $92,200 for a family of four, the state health insurance industry and exchange might be a more affordable option to provide employee healthcare the state Office of the Insurance than going it alone. If you currently provide Commissioner. Former Gov. healthcare to your employees or to yourself through your business, you may want to determine whether the state Christine Gregoire applauded exchange is a better option than the path you are on today.

Washington’s health care exchange Check it out this Spring as more details become available to determine the value and costs compared to your current efforts in a statement late last year. healthcare program.

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What is Washington Healthplanfinder? Who should use it?

Washington Healthplanfinder is new way to shop for health care coverage. Individuals, families and small businesses (2-50 employees) in Washington state can use the online marketplace to compare and enroll in health insurance plans, access savings on their insurance premiums or public programs such as Medicaid. More than one million people in Washington state will now be eligible for these benefits.

Washington residents who are currently insured through their employer will most likely be able to stay on their employer-sponsored health coverage plan.

How will Washington Healthplanfinder make coverage more affordable?

Residents with incomes up to $44,680 for an individual and up to $92,200 for a family of 4 will be eligible for savings on their insurance premiums or public programs such as Medicaid. Small businesses who would like to offer health coverage to their employees may be eligible for the Small Businesses Health Care Tax Credit to help cover their monthly premiums. This tax credit is offered through the IRS. February 2013 | 11

What are some of the new features offered by the site?

Washington Healthplanfinder will allow visitors to make sideby-side health plan comparisons based on cost and quality.

The website will also offer a calculator to help individuals determine if they qualify for financial assistance to help pay for their coverage. Small businesses will be able to select a health plan or a range of health plans that allow their employees to choose the coverage that’s right for them.

How is Washington Healthplanfinder different from other online health insurance sites?

Washington Healthplanfinder is the only health insurance marketplace where you can access savings on your insurance premiums and public programs such as Medicaid.

Washington Healthplanfinder also certifies that health plans are qualified to be offered in the exchange and ensure they cover a list of required essential health benefits.

What if I need help choosing a health plan?

Help will be offered online, over the phone and in person for those who need additional assistance choosing and enrolling in a health plan. Stay tuned for more information about Washington Healthplanfinder’s certified “navigators” who will be able to provide inperson assistance in local communities.

How is it funded?

Washington Healthplanfinder is currently funded by two federal Exchange Establishment grants through 2014. However, beginning Jan. 1, 2015, the Exchange is required to be financially self-sustaining. The Exchange has worked closely with industry experts to formulate a projected operating budget and expected enrollment numbers, and recently submitted potential funding methods to the Washington State Legislature for consideration.

How can the public get involved?

We work with consumers, community organizations, small businesses, insurance carriers and agents and brokers to gather valuable input on our work. Examples include: 12 | warestaurant.org

Consumer Workgroup: The Consumer Workgroup

includes community members and organizations seeking to offer input on a variety of issues related to Washington Healthplanfinder. If you are interested in participating, please email us at hcahltbenex@hca. wa.gov.

Public Comment: All Health Benefit Exchange meetings are open to the public and open for public comment. These include our monthly Board meetings and technical advisory committees on the Role of Agents & Brokers, Plan Management, and Small Business Health Options (SHOP).

Email Sign-Up: Consumers interested in receiving regular updates from Washington Healthplanfinder may sign up for our electronic mailing list.

Under the Affordable Care Act, are my employees required to buy health insurance? What happens if they don’t?

Beginning in 2014, most people will have to purchase health insurance or pay a fine. For individuals, the penalty will start at $95 a year, or up to 1 percent of income, and rise to $695, or 2.5 percent of income, by 2016. For families, the penalty will be $2,085 or up to 2.5 percent of household income.

Are small business owners required to provide health insurance to their employees?

Starting in 2014, businesses with 50 or more employees that don’t provide health care coverage and have at least one full-time worker who receives subsidized coverage in the health insurance exchange will have to pay a fee of $2,000 per full-time employee. The firm’s first 30 workers will be excluded from the fee. However, firms with 50 or fewer After an exchange is implemented, can an individual, family, or employer still purchase a health plan in the current private health insurance market?

Yes. The exchange and private health insurance market will offer health plans under the same rules for consumer protection and rating of health plan premiums. 

Health care expert hired to guide restaurants through transition

By Heather Donahoe, managing editor

Donna Steward, Health Care Expert be able to ask questions relating to the healthcare issue and receive a response on the spot. This is a member-only benefit to WRA and WLA members.

Weekly Conference Call Schedule Call-in number: 1-800-582-3014 Participant access code: 699019287 Friday, February 8 at 10 a.m. PST Friday, February 15 at 10 a.m. PST Friday, February 22 at 10 a.m. PST

About the Expert

The details and intricacies of the Patient Protection and Affordable Care Act are significant. Knowing that, the WRA recognized the need for clarity and guidance would be great among restaurant operators trying to untangle to specifics of the new law.

In order to help address the onslaught of questions, the WRA and the Washington Lodging Association have retained the services of healthcare expert Donna Steward to help educate the restaurant industry and individually answer member questions. Every week, the WRA will conduct a toll-free conference call where members will

Steward is President of Kiawe Public Affairs specializing in health care advocacy for small business owners. She has 18 years of experience with health care policy at both the state and federal level and has eight years of experience lobbying state legislators on private market solutions for health care reform. Prior to Kiawe Public Affairs, Donna worked as Government Affairs Director for the Association of Washington Business (AWB) where she advocated for businesses on health care, education and unemployment insurance issues.During this time she developed indepth knowledge of the federal Patient Protection and Affordable Care Act, the sweeping federal health care reform legislation which will affect persons throughout the country. Steward has been actively involved on the national level providing input on how the law and proposed rules will affect businesses and proposing alternatives to items negatively impacting business owners.

Prior to her work with AWB, Steward was the Associate Regional Administrator for the federal Centers for Medicare and Medicaid Services, where she had responsibility for Medicare contractors in 36 states and $33 billion in annual Medicare claims. She also spent five years as a legislative research analyst for the Washington State Legislature, focusing on Washington state health care policy. Steward is a native Washingtonian, and graduate of the University of Washington with a BA in Economics. 

February 2013 | 13

The health care law is a go: Are you ready?

By Heather Donahoe are NRA staff As the restaurant industry’s primary source of information, the WRA team understands that the federal government’s Patient Protection and Affordable Care Act is quite possibly the most challenging issue this industry will ever face. Accordingly, this team recognizes how crucial it is to provide the state’s restaurant operators with the resources and information that will make the transition to compliance as smooth as possible.

The WRA’s partners at the National Restaurant Association have been tireless in monitoring developments around the healthcare law, and interpreting what those emerging details will mean for restaurants. This month’s issue of Washington restaurant magazine will serve a roadmap to compliance. As with any law for which there is no precedent, the coming months and years will be a learning process. The Restaurant Association community, however, is devoted to guiding you through the process.

Preparing to comply

Big health care changes are headed your way soon, if the Obama Administration’s plans proceed as expected in implementing the 2010 health care law.

The most significant changes under the landmark 2010 health care law hit businesses in 2014, when employers of 50 or more full-time-equivalent employees will be required to either offer qualifying health plans to full-time employees and their dependents or shell out per-full-timeemployee penalties for failing to offer a plan or failing to offer a plan that meets certain standards.

Employers need to get familiar with the fine print of the law now. The law is complex, and each regulatory proposal adds new layers of complexity while also providing some additional flexibility. Some implementing regulations have not been released, and most regulations affecting employers aren’t in final form yet. But employers can use the proposed regulations in place now to plan for 2014.

Some large employers confronted with decisions may find that the law is more workable than they anticipated. Others may find the law imposes costs and administrative burdens that could make it easier for a business to opt for paying penalties instead of offering health coverage.

Either way, getting ready for the law takes a lot of advance planning – including time with tax advisors, insurance brokers, payroll providers and key staff -- to understand the impact of the law and think through your options for implementing it in your business.

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There’s little time to wait. Important changes start taking effect in a few short months, when the health care law requires employers to begin providing employees with information about new government Health Insurance Marketplaces (also known as “exchanges”) that on Oct. 1 are supposed to start signing people up for 2014 coverage.

These marketplaces – some operated by states, some by states working jointly with the federal government and some by the federal government alone -- are designed to be one-stop shops where some small businesses and people who don’t get coverage through their employers can shop for insurance.

While some dates and deadlines may slip, the law is moving forward, and employers need to understand what lies ahead.

The National Restaurant Association has been working since the law was enacted to highlight the restaurant industry’s compliance challenges, and continues to press regulatory agencies for answers and maximum flexibility for employers as the rules are written. The NRA continues to urge Congress and the White House to address the provisions that have the greatest impact on employers’ ability to create jobs.

The NRA keeps its members updated on new developments at its Health Care Knowledge Center at Restaurant.org/ Healthcare, including ongoing information as federal agencies, Congress and states take further steps on health care.

TOP 10 STEPS TO TAKE NOW

1

Don’t assume you’re too small to be covered by the employer mandate. Most restaurant operators understand the law requires employers with 50 or more full-time-equivalent employees to offer “minimum essential coverage” to their full-time employees (and their dependents) or face potential penalties. However, many employers with more than one business entity don’t realize that they might need to consider their employees as one group. That could push you over the 50-FTE threshold.

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Consult your tax advisor. If you’re part of business that has multiple entities, contact your tax attorney or accountant to ask about whether you need to combine all employees to figure out whether you’re covered by the employer mandate.

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Know your workforce. The new law requires a series of calculations to see whether you’re covered by the law’s employer mandate and if so, which employees must be offered health care coverage. Know your workforce: How many full-time employees do you have? What are the hours worked by part-time and seasonal employees? Although you are not required to offer benefits to part-time employees, their hours (and those of seasonal employees) are included in the calculation for determining whether you meet the 50-FTE threshold for the employer mandate. The answers to these questions will help you better understand the potential impact of the law on your business.

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Evaluate your payroll and I.T. capabilities. Starting Jan. 31, 2015, employers covered by the employer mandate will be required to report extensive information to the IRS and their employees about their health plans, full-time employees and their dependents. You’ll likely need to pull information from your payroll system, plan documents and other sources. Consider the processes that will be needed to aggregate this information.

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Tell your story to your elected officials. Because of the labor-intensive nature of the restaurant workforce, the restaurant our industry is impacted by the law like almost no other. Help lawmakers understand how the law affects you.

Consult your insurance broker. Consider whether you should make any changes to your current health plan(s). Your broker will be able to help you determine more options as regulatory agencies release more rules.

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ARE YOU COVERED BY THE EMPLOYER MANDATE?

Learn what the law will require of employees. The law requires almost all Americans to obtain insurance starting in 2014. Tax penalties for individuals who fail to obtain coverage for 2014 start at $95 a year, or 1 percent of a person’s taxable income, whichever is greater. Employees with incomes between 100 percent and 400 percent of the federal poverty level (currently $11,170 to $44,680 for a single person, or $23,050 to $92,200 for a family of four) may qualify for premium tax credits or cost-sharing reductions to buy coverage on an exchange in their state.

If a full-time employee qualifies for premium tax credits to buy a plan on an exchange because the can’t get affordable coverage at work, the employer faces potential penalties – so employers need to be aware of how employees may interact with exchanges.

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Develop a strategy to talk about the health care law with employees. The law requires most employers to provide basic information for employers about how to access the new exchanges, who qualifies for tax subsidies to help them buy insurance, and more. Your employees might look to you for answers to their questions about the health care law in general. It is wise to think about how you will explain the impact of the law on them and your business.

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Understand your state exchange. States have the option of setting up their own exchange, running a joint exchange with the federal government, or deferring the obligation to the federal government entirely. No matter what path your state chooses, be sure state officials hear from business owners to make sure exchanges work for employers.

Stay abreast of new developments at Restaurant.org/Healthcare.

The health care law’s employer mandate – the requirement that employers offer coverage to full-time employees and their dependents or face possible penalties -- covers “applicable large employers” (also referred to here as “large employers”). An applicable large employer is defined as a business that employed an average of at least 50 fulltime-equivalent (FTE) employees on business days during the preceding calendar year.

SEPARATE ENTITIES

Q: If two or more companies have a common owner or are otherwise related, are their employees combined for purposes of determining whether they employ enough employees to be subject to the employer mandate?

A: Yes. The IRS will apply its longstanding “common control” standard -- found at Internal Revenue Code § 414(b), (c), (m) and (o) – in these situations. Under this standard, companies that have a common owner or are otherwise related generally are combined together for purposes of determining whether or not they employ at least 50 full-time-equivalent employees. If the combined total meets the 50-FTE threshold, then each separate company is subject to the law’s employer mandate, even those companies that individually do not employ enough employees to meet the threshold. Businesses should consult with their tax advisors about specific circumstances.

February 2013 | 15

CALCULATION

threshold, the IRS allows employers to measure their workforce for any six consecutive months in 2013 --- rather than the full 12 months -- to determine if they had 50 or more full-time-equivalent employees during that period.

So, for example, an employer could use the period from Jan. 1, 2013, through June 30, 2013, and then have six months to analyze the results, determine whether it needs to offer a plan, and, if so, choose and establish a plan.

Calculate whether you meet the threshold as follows: Step 1: For each of the 12 months an employer must look back and determine how many employees (including seasonal employees) averaged 130 hours or more in a calendar month. That will be the number of full-time employees you employed during that month.

CHECKLIST FOR SMALL EMPLOYERS

Q: How do I calculate whether my business meets the 50FTE threshold?

A: You need to look at each of the preceding 12 months to determine the average number of full-time equivalents you employed over those months. (You can use a period as short as six months in 2013 to calculate your status for 2014 – see below question on “transition year.”)

Step 2: Next, the employer must add together the hours of all other employees (including seasonal employees), but not count more than 120 hours per person. The total hours worked by all others is then divided by 120. That determines a full-time-equivalent number for your non-fulltime employees.

Step 3: Next, the employer must add the number of fulltime employees to the number of equivalents, to get the total number of full-time-equivalent employees.

Finally, the employer must: Repeat the process for each of the remaining 11 months Add each of the 12 numbers together Divide by 12 for the average annual full-time-employeeequivalent number. That is the number that employers must use to determine whether an employer is considered an applicable large employer.

If the total number of full-time-equivalent employees is 50 or higher, the employer is subject to the mandate. If the number is below 50, the employer is not considered a large employer subject to the mandate, but is subject to other provisions of the law.

Note: If your workforce exceeded 50 FTEs for less than 120 days or four calendar months, and if the employees in excess of 50 during those months were seasonal employees, you may qualify for a “seasonal employee exception” from the employer mandate. The IRS offers more details in its regulations.

TRANSITION YEAR

Q: When do I do the calculation to see if I’m subject to the employer mandate in 2014?

A: For employers who are on the edge of the 50-FTE

16 | warestaurant.org

Employers who employ fewer than 50 full-time-equivalent employees in the previous calendar year are not subject to the law’s employer mandate in the subsequent calendar year. These businesses are not required to offer health benefits to their employees and will not owe federal penalties if they fail to offer health benefits.

However, small employers are covered by other parts of the law: Small employers must provide required notice to all employees about exchanges starting later this year.

Small employers may be eligible to buy insurance through a federal or state-run Health Insurance Marketplace.

Small employers who offer health plans must comply with the 2010 health care law’s insurance reforms. Your insurance company should this for you in your plan design.

Small employers with health plans are also covered by other rules under the health care law, including nondiscrimination rules, the 90-day limit on maximum waiting periods, and restrictions on flexible savings accounts, health savings accounts and health reimbursement accounts. Like all employers that offer health plans, small employers must offer a “plain English” Summary of Benefits and Coverage to employees.

Employers that file fewer than 250 W-2 forms a year must report the value of health care coverage on W-2 forms beginning in tax year 2013.

LARGE EMPLOYERS: GENERAL RULES

Starting in 2014, applicable large employers – those with 50 or more full-time-equivalent employees—must offer “minimum essential coverage” to all full-time employees and their dependents. Large employers who fail to offer such coverage, or who offer coverage that is not affordable or of minimum value, may face penalties.

Large employers must follow other rules as well, including the insurance reforms outlined above for small employers. Large employers also face expanded reporting

requirements, including new requirements requiring them to file returns with the IRS each January 31 starting in 2015 with information on full-time employees and their dependents. And like almost all other employers, large employers will be required to notify employees of the existence of exchanges starting this coming summer/fall (date TBD), along with information about how to access the exchanges.

LARGE EMPLOYERS: WHAT KIND OF HEALTH PLANS MUST BE OFFERED?

To fully avoid penalties, large employers must offer fulltime employees and their dependents a health plan that’s affordable and meets a minimum value standard. To be considered affordable, the employee’s share of premiums for self-only coverage must not exceed 9.5 percent of their household income (see Affordability, below). To meet the minimum value standard, the plan must coverage at least 60 percent of the total allowed cost of benefits expected to be incurred under the plan.

MINIMUM VALUE

Q: How does an employer know whether its health plans provide minimum value?

A: The Treasury Department and the IRS still need to issue regulations spelling out how a plan meets the minimum value standard. These regulations will be important in shaping plan design and hence the cost of the employer’s health plan. Most of today’s workplace plans – with the exception of very bare-bones coverage -- are expected to comply with the minimum-value requirement. However, that will not be clear until regulations are issued.

Once minimum-value regulations are issued, employers will have a variety of ways to prove their plan meets the standard. The IRS and Department of Health and Human Services will make a minimum value calculator available online, for example. Employers can input information about the plan, including deductibles and co-pays, to find out whether the plan provides minimum value by covering at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.

LARGE EMPLOYERS: WHICH EMPLOYEES MUST BE OFFERED COVERAGE?

To avoid penalties, large employers must make an offer of coverage to full-time employees (and their dependents).

DEFINITION OF FULL-TIME

Q: Which employees must receive an offer of health care coverage?

A: The health care law requires employers to offer full-

time employees (and their dependents) the opportunity to enroll in a health benefits plan. Proposed IRS regulations define a full-time employee as a person who averages 30 “hours of service” per week in a given month. Hours of service is a broad category that includes each hour for which an employee is paid or entitled to be paid for their service, even if no work is performed. In calculating whether an employee has averaged 30 hours a week during a month, for example, the employer must count each hour for which an employee is paid, or entitled to payment, for periods during which no duties are performed due to hours worked and paid time for service such vacation, holidays, illness, incapacity, layoff, jury duty or leaves of absence. Employers can use 130 hours per calendar month as the equivalent of 30 hours per week.

LOOKBACK PERIOD/FULL-TIME STATUS FOR EXISTING EMPLOYEES

Q: My full-time employees’ hours can vary from month to month. How do I some stability in assessing their full-time status?

A: Determining full-time employee status on a monthly basis may cause practical difficulties, the IRS acknowledges.

The problem is particularly acute if employees’ hours vary from week to week or month to month, the agency said.

This could “churn” some employees in and out of employer or exchange coverage from month to month, increasing costs for everyone. To address these concerns and give employers more flexibility, the IRS is giving large employers the option to determine each existing employee’s full-time status by looking back at a measurement period of three to 12 months.

If the employer determines that an employee was employed on average at least 30 hours of service per week during this “standard measurement period,” the employer treats the employee as a full-time employee during a subsequent corresponding stability period, regardless of the employee’s number of hours of service during the stability period. The stability period would be at least six consecutive months or the length of the lookback period, whichever is greater.

If the employee did not work full-time during the lookback period, the employer would be permitted to treat the employee as a pat-time employee not a full-time employee during the subsequent stability period. Employers are permitted add an “administrative period” of up to 90 days between the lookback and stability periods to determine which employees are eligible for coverage and to notify and enroll employees.

February 2013 | 17

FULL-TIME STATUS FOR NEW AND SEASONAL EMPLOYEES Q: How can I determine the full-time status for a newly hired or seasonal employee if I don’t think they will work 130 hours per calendar month?

A: Employers may know at the outset that a newly hired employee will be employed on average 30 hours of service a week. In these cases, to avoid any penalty, the employer must offer health care coverage to the employee at or before the conclusion of the employee’s initial three calendar months of employment (i.e., the 90-day waiting period).

If, however, a new employee is a variable-hour or seasonal employee, and the employer can’t reasonably determine if the employee will work full-time, the employer can use an “initial measurement period” of between three and 12 months to measure hours of service and determine the employee’s full-time status . Employees determined to be full-time over this initial measurement period must be offered coverage during a subsequent corresponding initial stability period of at least six months, and no shorter than the initial measurement period. If the new variable-hour or seasonal employee is determined not to be a full-time employee during the initial measurement period, the employer is permitted to treat the employee as not a fulltime employee during the stability period that follows the initial measurement period.

With certain limitations, the IRS will allow an administrative period of up to 90 days between the initial measurement period and the subsequent stability period to notify and enroll employees in coverage. If an employer chooses a 12-month initial lookback period, then the combined lookback and administrative periods cannot be more than 13 months plus a fraction of a month.

MORE INFORMATION

Q: Where can I get more details on how to measure the full-time status of my employees?

A: The IRS regulations on how to measure full-time status for many of your employees (lookback periods for existing employees, initial measurement periods for new variablehour and seasonal employees, and stability periods for all these employees) are complex, and address multiple scenarios. A link to the IRS’s proposed regulations is available at Restaurant.org/Healthcare.

LARGE EMPLOYERS: PENALTY SCENARIOS

Large employers covered by the law’s employer mandate face two possible types of penalties: A) Penalty “A”: If a large employer does not offer any coverage, or offers coverage to less than 95 percent of his 18 | warestaurant.org

or her full-time employees, and any full-time employee uses a tax credit to purchase insurance on an exchange, the employer is liable for a $2,000 annual penalty times the total number of full-time employees, minus your first 30 full-time employees. This is the 4980H(a) penalty, named for the section of tax code that contains it.

B) Penalty “B”: If a large employer offer coverage to full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an exchange – either because the employer-provided insurance is not affordable or fails to provide “minimum value” -- the “4980H(b)” penalty applies. You’ll face a $3,000 penalty for every full-time employee an exchange certifies as eligible for a premium tax credit to help them purchase insurance on an exchange. The payment is computed separately for each month. The amount of the payment for the month equals the number of full-time employees who receive a premium tax credit for the month multiplied by 1/12 of $3,000. Your liability in this scenario can never exceed the total penalty you’d pay for not offering coverage at all.

Q: How will employer payments be assessed?

A: An employer will be notified by the exchange and the IRS when an employee receives a premium tax credit.

However, the IRS is developing a separate process for assessing penalties against employers that will involve the agency issuing a “notice and demand” for a year’s worth of an employer’s tax liability after the employer files required its required reports and the individuals file their income taxes.

Q: My business offers a non-calendar-year plan that starts in 2013 and runs into 2014. When am I required to begin complying with the employer mandate rules?

A: If you are a large employer who as of Dec. 27, 2012, maintains a non-calendar- year plan, you won’t face penalties until the first day of your plan year beginning in 2014.

LARGE EMPLOYERS: AFFORDABILITY OF HEALTH CARE COVERAGE

Large employers can face penalties if the coverage they offer to full-time employees is not affordable. As noted under Penalties, above, failing the affordability test can be costly for an employer. If a full-time employee goes to an exchange and the exchange certifies that an employer’s plan is unaffordable for a particular employee and that the employee qualifies for a federal premium tax credit to help them buy insurance on an exchange, employers can be assessed $3,000 a year for each full-time employee that does this.

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TIMETABLE THE 9.5% RULE

Q: How does an employer know whether the coverage it offers is affordable?

A: If the employee’s share of the premium for employer-offered coverage would cost the employee more than 9.5 percent of that employee’s annual household income, the coverage is considered unaffordable for that employee. If an employer offers multiple health-care coverage options, the affordability test applies to the lowest-cost option available to the employee that also meets the minimumvalue requirement.

Because employers generally will not know their employees’ household incomes, employers can take advantage of one of the affordability safe harbors outlined in proposed regulations issued by the IRS in December 2012. Under the safe harbors, an employer can avoid a 4980H(b) penalty if the cost of the coverage to the employee would not exceed 9.5 percent of the wages the employer pays the employee that year, as reported in Box 1 of Form W-2, or if the coverage satisfies either of two other design-based affordability safe harbors based on the employee’s rate of pay and the federal poverty line. Tip income is included in wages for the affordability calculation.

DEPENDENTS AND SPOUSES

Q: Are employers required to offer affordable health benefits to spouses and dependents?

A: The affordability test is based on whether the plan is affordable for the full-time employee for individual coverage. The offer of coverage does not have to be affordable to an employee’s dependents; the affordability test is based on single-only coverage for the employee. An employer covered by the mandate is required to offer coverage only to full-time employees and their dependents; an offer of coverage is not required for an employee’s spouse, since spouses are not considered dependents.

20 | warestaurant.org

2013

2013

• Notification to employees. In summer/fall (date to come) employers must inform all current employees and any new hires about the existence of Health Insurance Marketplaces in their states and how employees can access it. The Labor Department has indicated it will issue guidance and a template about how the information must be provided.

• FICA tax increases. Beginning in 2013, taxpayers with incomes over $200,000 (single) or $250,000 (married filing jointly) will pay increased Medicare taxes (3.8% on unearned income) and the Medicare Hospitalization Insurance tax (.9% tax increase for employee).

• Flexible spending accounts limited. Beginning in 2013, employees’ contributions to flexible spending accounts can be no more than $2,500.

• Exchange open enrollment. Beginning October 1, 2013, individuals and small businesses will be able to enroll in coverage purchased on the exchanges for plans beginning January 1, 2014.

FOR IMPLEMENTATION OF THE HEALTH CARE LAW 2014

• Employer mandate. Employers with 50 or more full-timeequivalents must offer “minimum essential coverage” to all employees who average 30 or more hours a week in a given month, or potentially be liable for penalties.

• Individual mandate. The law requires most individuals to obtain health insurance coverage, through their employers, state exchanges, Medicaid/Medicare, or elsewhere, or face an annual tax penalty. In 2014, the tax penalty will be $95 for not obtaining minimum coverage or 1 percent of income, whichever is higher.

• Health Insurance Marketplaces open. Each state must establish a Health Insurance Marketplace by Jan. 1, 2014, to provide affordable health care options to individuals and small group employers. If they choose not to, the Department of Health and Human Services will set up and operate one in that state. The exchanges are envisioned as marketplaces that will offer individual and small group plans that are administered by private insurance companies. It is anticipated that all restaurateurs will have a great deal of interaction with the exchanges in their states, even if they do not purchase coverage through the exchange, because of the reporting requirements in the law.

2014

2014 cont.

• 90-day waiting period. All group health plans are allowed up to a 90-day waiting period before offering coverage.

• Automatic enrollment. Employers with 200 or more fulltime employees must automatically enroll their full-time employees into one of the plans the employer offers after the applicable waiting period. But the Labor Department says it won’t have compliance guidance ready to go by 2014. The DOL says employers won’t be required with this section of the law until regulations are issued.

• Exchange reinsurance fee. From 2014 to 2016 health insurers and self-funded plans will contribute to a fund that will be used to make sure the exchanges function properly. The fee is $5.25 a month per capita, or $63 in the first year. Health insurers are likely to pass this cost on to small employers.

2017

• Health Insurance Marketplaces grow.

From 2014 to 2016, only individuals and small group employers are eligible to participate in the state exchanges; beginning in 2017, states may elect to allow large group plans (100-plus) to be sold on the exchange as well. States may also form regional exchanges.

2017

2018

2018

• “Cadillac” plans.

Beginning in 2018, the law imposes a new 40 percent excise tax on the value of coverage that exceeds certain dollar thresholds. For 2018, the dollar thresholds for the excise tax are $10,200 for individual coverage and $27,500 for family coverage.

February 2013 | 21

Finding solutions for affordable and flexible healthcare

By Holly Hahn, HIHIT President

As a member of the Washington Restaurant Association, you have access to a health care plan that was designed especially for the hospitality industry - the Hospitality Industry Health Insurance Trust (HIHIT).

HIHIT was created so that the hospitality industry in Washington could have access to affordable health care. It is a unique health care plan that is not available to the general market. Both flexible and affordable, with HIHIT you can qualify to participate in the plan with as little as three enrolled employees and contribute as little as 50 percent of the employee monthly premium.

For smaller business owners, this means an opportunity to attract and retain quality employees. For larger business owners, you have the opportunity to organize different policies under one comprehensive plan.

Not only is HIHIT flexible, it offers great plan choices for you and your employees. There are five medical plans and six dental plans. Medical plan deductible options range from $500 to $3,000. A qualified Health Saving Account (H.S.A) medical plan also is available. Plus, enrollees can keep their existing doctors, choose from 800 Group Health providers, or select from more than 9,000 First Choice Health Network providers. Dental plan maximum go as high as $2,000 with Washington Dental Service and unlimited if you choose Dental Health Services. Can’t contribute to a dental plan?

No problem. HIHIT offers a voluntary dental plan with Dental Health Services for under $29.00 a month per employee.

Looking for something to help employees with personal issues, lower absenteeism, and increase overall productivity?

Offer an Employee Assistance Program (EAP). The HIHIT EAP program is through Horizon Health and offers up to six face to face visits with a counselor along with Legal, Financial, and ID Theft consultation. When you offer this program to employees they won’t have to miss work to take

22 | warestaurant.org

care issues. With Horizon Health EAP they have access 24 hours a day 7 days to a consultant. The cost to offer this to your employees is under $2.00 per employee per month.

Once you have picked your plans and coverage to offer Northwest Administrators put it all on one invoice and manages all the enrollment and COBRA administration.

Are you confused by federal health care reform? We can help you. Since, 1997 HIHIT has been helping employers find affordable plans to offer employees as well as helping employers stay educated and in compliance with the changing laws.

HIHIT was developed by hospitality industry leaders for those that work in it. Don’t wait to learn more about this unique program. Call your HIHIT representative today at 877-892-9203 or contact your existing insurance broker and ask about HIHIT. Visit www.hihittrust.com for more information.  --The HIHIT Team and CLG Employer Resources.

Will you be at the biggest industry tradeshow in the Northwest?

By Heather Donahoe, managing editor

The countdown is on for the 51st annual Northwest Foodservice Show, April 21-22 at the Oregon Convention Center in Portland, Ore. Anyone working in the foodservice or hospitality industries should make plans now to attend the largest and longest-running restaurant and foodservice trade show in the Pacific Northwest. Hosted every Spring by the Washington Restaurant Association and the Oregon Restaurant & Lodging Association, the

industry services, the Northwest Foodservice Show is a comprehensive resource for new products, networking and educational opportunities. This is the place restaurateurs come each year to gather new ideas and reestablish a connection to their industry peers.

Northwest Food Service Show alternates years between Portland and Seattle.

directory, a show schedule and more. Best of all, online registration is free through April 12 ($25 per person after that date/at door). Registration includes access to the trade show exhibit hall, chef demonstrations, tasting pavilion (21 years and older) and education sessions. Special training and certification classes require separate registration and payment.

This year’s event will feature more than 450 vendor booths, along with educational seminars, the always-popular chef demonstration state, a green products eco-center and a beer and wine tasting pavilion. The 2013 Northwest Foodservice Show is expected to attract more than 7,500 attendees.

Previous attendees know that this show features most everything a foodservice professional could possibly need to run a successful operation. From food products and kitchen equipment, to new technologies and

Want to know exactly which companies will be there?

Visit www.nwfoodserviceshow.com for a complete vendor

We’ll see you on the show floor!  Interested in exhibiting? It’s not too late! Contact Ken Wells at 425-457.1458 or email kenw@warestaurant.org.

February 2013 | 23

2013 Boyd Coffee ProStart Invitational partners give culinary hopefuls a leg up

By Lyle Hildahl, WRA Education Foundation director

This past weekend I spent some time watching the NFC and AFC football championships. These elite athletes are amazing to watch. On March 2, high school sophomores, juniors and seniors will be teaming up to represent their school in the state Boyd Coffee ProStart Invitational, featuring culinary and restaurant management competitions. These students are elite in their own way—and are certainly amazing to watch. They don’t get paid. They don’t receive endorsements or receive any kind of compensation for competing, but their passion, commitment, drive, and energy is no less than what you see on super bowl weekend.

If you don’t believe me then ask someone who has been there. Better yet show up and be part of this amazing event.

Approximately 30 teams will compete for the chance to go to the national competition in Baltimore where 41 states will compete for the national title.

It’s the Super Bowl of high school culinary competition.

bike event in the spring, we got right into discussing the passion and enthusiasm that ProStart brings to the restaurant business. Boyd Coffee not only understands the importance of ProStart in shaping the future leaders of our industry, but they also get that connecting with these kids builds a brand awareness in their minds as they become not only the leaders, but the buyers and shapers of our economy. As we left the cupping room, Jeff Newman, Boyd Coffee president and CEO, stopped us outside his office and commented how much he appreciated ProStart and the work Katy was doing as the voice of ProStart for Boyd Coffee.

Boyd Coffee, once again, is our title sponsor this year.

Long-time industry supporters of the event include Heartland Payment Systems, Foodservices of America, SYSCO, Coca-Cola, Bell Anderson Insurance, General Biodiesel, Kalispell Tribe, Puyallup High School competes at the 2012 Boyd Coffee ProStart Northern Quest, BargreenCulinary teams are judged Invitatational. on shipping and receiving, Ellingson, Chefworks, teamwork, safety and Consolidated Restaurants, sanitation, knife skills, plate Farrelli’s Woodfire Pizza, presentation, menu and recipe presentation and taste.

Culinary Institute of America, Dexter Russell, Duck Delivery, Management teams are judged on restaurant concept, menu, Ecolab, Maitre’ D by Posera, Mercer Tool, Washington Athletic marketing plan, critical thinking, visual display and recipe Club, Auntie Anne’s Pretzels, Northwest Restaurants Inc., Stop costing. The students practice and study before and after N Go Family Drive In, Cascade Culinary Institute, Art Institute, school and on weekends. They work with mentors from Johnson and Wales, WSU School of Hospitality and Business industry to coach and guide them along the way. The students Management, New England Culinary Institute and Le Cordon do what it takes to perform at their best on game day. Wouldn’t Bleu. Additionally, we are so fortunate to have the time and you want to have these students working for you? talents of our judges and volunteers, who show so much support and enthusiasm for this event.

I had the pleasure of meeting with Katy Boyd Dutt last week to discuss Boyd Coffee’s ongoing support as our title sponsor for We are creating tomorrow’s leaders of the foodservice industry the ProStart Invitational. As we were heading to the cupping today. Be a part and get involved. Let me know if you want a room, we crossed paths with Dick Boyd and he asked if he seat on the game floor. Prepare to come face-to-face with the could join us. After I agreed to join the “ride around Oregon” next industry movers and shakers. Drop me a line! lyleh@ warestaurant.org.  24 | warestaurant.org

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Ask the Expert | Restaurant Profit Coach

Proactively manage increasing product costs

By Rick Braa, CHAE

Q: I know product costs are going to continue increasing. What are the realities we’re facing in 2013?

A:

The summer of 2012 brought a severe drought throughout the mid-west and much of the United States. Though some prices have increased, substantial price increases will hit in 2013 according to the USDA Economic Research Service (http://www.ers.usda.gov/data-products/ food-price-outlook/summary-findings.aspx).

Increases are expected to be 3.0 to 4.0 percent. This cost increase is another $8,400 per $1 million in sales with an 80 percent food sales mix and a 30 percent food cost.

Beverage pricing will continue to feel pressure as well.

Implement these recommendations to avoid falling victim to inflation pressure:

Increase pricing on best sellers. Evaluate your best

sellers and take small, insignificant price increases on those items. Price sensitivity tends to be less on best selling items. Nearly all menus have best sellers so taking a small increase on the highest volume items will add up. The important exercise is to look at your item sales for an entire year or extrapolate them if you don’t have the data (food AND beverage). The restaurant business has a surprisingly high number of small transactions. For example, if only 28 burgers are sold per day that number reaches 10,000 burgers sold per year. If a burger price increases from $8.50 to $8.95 that’s $4,500 per year and the guest impact will be minimal. Take slow movers off the menu and replace them with products that have a better margin or better fit the brand.

Use I-1183 to your advantage. It’s time to change the way of doing business with liquor. Some companies have had phenomenal success by changing their 30 | warestaurant.org

approach to purchasing and are reducing their liquor cost leaps and bounds. Get familiar with different brands that have easy to tell, wonderful stories of artisanship and community, not to mention better pricing. Use brands that are not as easily recognized but are often better product. The big brands have the best marketing and advertising but rarely the best product for the price. There are many superior, less well known brands that will produce a better end product and the consumer will be thrilled with the taste and quality. You’ll be thrilled with the price.

It’s simply an education process for staff, be sure to compare taste of the products against the better known, more popular brands. Once you have buy in from staff, sales will soar, they love to fight for the underdog.

Work with your vendors. Vendors are one of the most underutilized resources in the industry. You’ll learn something every time you take the time to sit with them and discuss your business. Your product distributors make their money by selling full cases and having full trucks coming to your location. It costs the average vendor between $50-75 to stop their truck, unload the truck, check in product, take care of the paperwork and drive away. The fuller, faster, and easier you make their deliveries, the better price they can offer. Start with two simple questions with your sales rep, “What can we do to make your business more profitable on our account and on what items can we get better pricing by changing our behavior?” Mutual benefit creates trust and better relationships and ultimately better pricing. Don’t cherry pick your items, work through a conversation on every item of cost consequence to the restaurant and use the 80/20 rule.

It’s better to pay a little more on some items and less on items with higher usage.

This year is sure to bring a unique set of challenges. Being proactive and take action immediately to make sure this is the best year in the history of your business.  For a more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.

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