WA S H I N GTO N
RESTAURANT October 2011
THE TRUTH ABOUT
Formerly The Front Burner
SPECIAL ELECTION COVERAGE Facts on I-1183 Off-year elections vitally important
The WRA hits the airwaves with radio show Liquor privatization myths debunked Considering Groupon?
PRSRT STD US POSTAGE PAID OLYMPIA, WA PERMIT NO 668
YES on 1183 gets the state out of the business of selling liquor and focuses state resources where they belong – on enforcing our liquor laws YES on 1183 provides millions in new revenues for vital public services The initiative will generate an estimated $440 million in new revenue for public services in the first six years. Businesses that get licenses to sell liquor will pay a percentage of their revenues to provide new funding for state and local services – including education, health care and public safety.
YES on 1183 strengthens enforcement and increases penalties The initiative doubles penalties for retailers selling spirits to minors. It also increases compliance requirements for retailers and dedicates a portion of new revenues to increase funding for local police, fire and emergency services across the state.
YES on 1183 sets strict requirements for stores selling liquor The initiative limits liquor licenses to medium and large grocery and retail stores, subject to approval by the Liquor Control Board. The initiative also prevents liquor from being sold at gas stations and small convenience stores.
Join The YES on 1183 Coalition Please show your support for the initiative by joining our coalition of consumers, taxpayers, restaurants, retailers, grocers, wineries and other businesses and organizations across the state. Join online at YESon1183.com. “By allowing competition in the distribution and sale of any product, including liquor, you bring about efficiencies, better product availability and more choices for customers.”
Anthony Anton President & CEO, Washington Restaurant Association
Read the facts for yourself YESon1183.com Paid for by The YES on 1183 Coalition, 300 Queen Anne Ave N, 380, Seattle, WA 98109-4599
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Off-year elections matter greatly It may be an off-year election, but November’s ballot features a vitally important decision affecting many of the state’s full-service restaurants—I-1183.
The truth about liquor privatization The opposition to I-1183 has publicized erroneous information regarding liquor pricing and taxes. Learn the truth about what this initiative will do for the state, consumers and businesses.
Tips as wages and tip pooling WRA members consistently pose questions about tipping and the regulations surrounding the practice. Find out what you need to know about the outlook on tips as wages and tip pooling.
Considering Groupon? As a business owner, you’ve probably been approached by any of several popular daily deal couponing companies—perhaps you’ve even advertised with one. Find out how these programs work and whether they make sense for your restaurant.
The WRA hits the airwaves with radio show This month, this WRA began a first-of-its-kind radio show, spotlighting members and showcasing the industry. Find out what we’re doing on the airwaves.
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This article is worth sharing with your managers, chefs, bartenders or other restaurant staff.
WA S H I N GTO N
The WRA hits the airwaves with radio show
Formerly The Front Burner
SPECIAL ELECTION COVERAGE Facts on I-1183 Off-year elections vitally important
Liquor privatization myths debunked
Two major issues, one important edition
Big issues in tough times for the full service crowd
Tips and tipping in the real world
What can we learn from Maine about liquor privatization
Tips laws: keeping your restaurant compliant with the IRS
WRA partners with Spot Check for Allergy Safe Certified training
BPA’s EnergySmart Grocer Program is serving up the savings
Ask the Expert: The key to boosting your lunch sales
9/28/2011 6:25:07 PM
On the cover Have a question about tips in your restaurant? In this issue, you’ll find details on topics ranging from tip reporting, tips as wages and how to help your servers maximize sales and tips.
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EDITORIAL STAFF Anthony Anton, Publisher Lex Nepomuceno, Executive Editor Heather Donahoe, Managing Editor Shawn Sullivan, Contributing Editor Lisa Ellefson, Art Director WRA BOARD OF DIRECTORS Bret Stewart, President Center Twist Jim Rowe, Vice Chair Consolidated Restaurants Robert Bonina, Secretary/Treasurer Washington Athletic Club Steve Simmons, Past Chair S & S Hospitality, Inc. Naja Hogander, WRAEF President Daniel’s Catering WRA EXECUTIVE TEAM Anthony Anton President and CEO Teran Petrina VP Internal Operations Bob Decker Director of Membership Bruce Beckett Director of Government Affairs Lex Nepomuceno Director of Member Info & Resources Lyle Hildahl Director of Education Victoria Olson Director of Business Development 510 Plum St. SE, Ste. 200 Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 www.WRAhome.com
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: The Silver Agency 109 North Tower, Ste. 200, Centralia, WA 98531 T 360.736.8065 F 360.330.7960 www.silveragency.com Washington Restaurant Magazine is published monthly for Association members. We welcome your comments and suggestions. email: news@WRAhome.com, phone: 800.225.7166. Readership: 6,310.
Two major issues, one important edition By Lex Nepomuceno, Executive Editor Two main themes dominate this month’s issue of Washington Restaurant Magazine—tips and elections. The constantly developing landscape surrounding how restaurateurs handle tips for their employees has yielded a perpetual flow of queries to the WRA. Clearly, operators are yearning for more information on managing tips correctly. “Restaurant Doctor” Bill Marvin provides some advice to servers in “Tips and tipping in the real world” (page 9). Marvin outlines ways servers can build their tips via increasing sales or increased tip percentages received. The summary of tip laws, as well as information on tip reporting is covered by Managing Editor Heather Donahoe starting on page 14. The WRA consulted with IRS staff to present its members with the most up-to-date overview on employer/employee compliance, as well as expectations on the reporting of tips to the federal agency. “Tips as wages, tip pooling: Can we, can’t we and where is it all heading?” On page 16, by WRA Government Affairs Director Bruce Beckett, is a great article that covers many of the questions facing restaurant operators in the state. On the elections side, thousands of restaurants across the state depend heavily on liquor sales and profits. Initiative 1183, which WRA is a major supporter of, is one of the main ballot measures being closely watched during the 2011 off-year election. Bruce Beckett provides an overview of the significance of this year’s elections for the restaurant industry (page 10). Beckett gives his insight on the major ballot measures as well as special elections taking place to fill vacant seats in the state legislature. Finally, Beckett goes into I-1183 by reviewing the initiative’s background and key features. Speaking of 1183, we included two great articles from staff writer Shawn Sullivan – “Dissecting truths about liquor pricing and taxes” (page 12) and “What can we learn from Maine about liquor privatization” (page 13). Both articles provide restaurant owners and management unique perspectives concerning this important ballot measure. Another issue that restaurants across the state have been asking the WRA about is how to approach daily deal websites such as Groupon and Living Social. Shawn Sullivan presents both sides of the issue in “The truth about online coupon sites”(page 20) where he interviews WRA member Randy Marsh of Vancouver Skippers Seafood and Chowder, as well as WRA member, Living Social’s Marie Griffin. There are many other great articles that can be found in this special “tips and elections” issue. Everything from the WRA’s new radio show/ podcast, DineNW, to the “Ask the Expert” focus on lunch sales by Rick Braa. As always, we welcome and encourage our members to provide feedback. If you would like to provide a “Letter to the Editor,” please email firstname.lastname@example.org.
October 2011 | 5
Primary Source of Information | News Briefs WRA prepares for special legislative session Gov. Chris Gregoire announced in late September that the state Legislature will convene a 30-day special session beginning Nov. 28 to address what is projected to be at least a $2 billion shortfall in the state budget. The WRA government affairs team will be active during this special session, as new revenues— taxes, fees, etc.—will be the centerpiece of discussion. Dept. of Homeland Security expands E-Verify Self Check program to include Washington Employees in Washington and 20 other states can now check their eligibility to work in the United States via “E-Verify Self Check,” a service of the Department of Homeland Security. The self-check system is aimed at helping employees clean up discrepancies in their employment-eligibility information before they are hired by an employer who participates in the DHS’s E-Verify program. Self Check is the first online service offered directly to U.S. workers by E-Verify, a DHS program administered by U.S. Citizenship and Immigration Services (USCIS) in partnership with the Social Security Administration. Employers can use the Internet-based E-Verify service to determine employees’ eligibility to work in the United States through information reported in the employee’s Form I-9 (Employment Eligibility Verification). USCIS says it intends to expand the Self Check service nationwide by next spring. Visit www.uscis.gov/selfcheck for more information. City of Seattle passes sick leave measure After months of working tirelessly on behalf of Seattle’s restaurant community during the paid sick leave debate, the Seattle Restaurant Alliance watched as the Seattle City Council passed its mandatory paid sick leave ordinance last month. The new law takes effect September 1, 2012. While this measure places a new financial requirement on the city’s business, the SRA’s influence throughout the process did achieve several notable gains. Certain provisions within this new legislation, including the allowance for shift swapping, were included in the final ordinance at the urging of the SRA’s Josh McDonald, the organization’s local government representative.
6 | www.WRAhome.com
Washington’s minimum wage to increase to $9.04 next year The Dept. of Labor & Industries announced Washington’s minimum wage will increase to $9.04 per hour beginning Jan. 1, 2012.The 37-cent increase reflects a 4.258 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI¬W) since August 2010. For more information, go to wrahome.com. WRA remembers former Spokane chapter president Past WRA Spokane Chapter president, Geneva Ward, passed away early September. The WRA is proud of the legacy Geneva leaves as a restaurant industry professional and a champion for the issues that impact restaurants. Geneva’s career in the industry began at the Flamingo Restaurant in Spokane. Later, she learned the finer points of restaurant management from her dad and became owner of the Sportsman Cafe & Lounge. Geneva cherished her relationships with loyal employees and customers throughout the years. State budget forecast bleak As if last year’s legislative session wasn’t fraught enough with threats to business, the outlook moving forward isn’t much improved. The state’s chief economist, Arun Raha, said in September that Washington is projected to collect around $1.4 billion less than expected in tax revenue between now and the end of June in 2013. This news will force lawmakers to consider a whole new slate of cuts and revenue-generating methods. Gov. Gregoire already has warned that state agencies may see cuts as deep as 10 percent. State’s Auditor Brian Sonntag announces retirement Washington’s longstanding auditor, Brian Sonntag, stunned the state’s political community when he announced unexpectedly that he will call it quits when his term ends next year. After 20 very productive years in office and gaining the respect of Democrats and Republicans alike, Sonntag undoubtedly will leave a legacy of accomplishment.
Industry Outlook | WRA President & CEO
Big issues in tough times for the full service crowd Quick service restaurants, please don’t feel ignored this month—three of your biggest issues are likely to be front and center as legislators meet this December and through the winter. But, this month’s magazine is dedicated to two of the biggest issues that face our brethren in full service restaurants: tips and alcohol distribution. These two topics are dominating the calls coming into the office—members looking for clarification, answers and/or advice. This is not surprising, given the news this year. The U.S. 9th District Court ruling on tip pooling, and the subsequent rule issued by the Department of Labor, has most full service restaurants at least evaluating all their tip policies. Furthermore, anyone behind a bar is abuzz with talk about the millions of dollars in advertising being spent on Initiative 1183, which would break the state monopoly on alcohol sales and bring competitive elements to the libation side. Both tips and alcohol are big issues that make our industry unique from the rest of the business community. When we talk about these issues in public arenas, political circles or business roundtables, we often get glazed looks of confusion on issues that seem obvious and second nature to us. But both these issues also are key parts of what makes the restaurant industry equally parts risky and rewarding. As a preteen dishwasher in my dad’s restaurant, I remember vividly the first server who shared a portion of her tips with me and then her explanation to me as why I was getting it. As a bartender in college, I remember the couple who left me my first $100 tip, and the rewarding feeling of having many customers show their appreciation for my effort to give good service. And as a junior lobbyist, I recall countless occasions of educating legislators about how, in full service restaurants, the minimum wage workers (servers) were usually the highest earners in the house, earning more than $20 an hour total with tips factored in. That wage places them above many union hourly positions that legislators were touting as the good jobs.
Anthony Anton, president and CEO
As CEO, I have tried to help restaurants tackle the multiple complications of dealing with tips: IRS reporting, the explosion of credit card use, tipping out, tip jars, tip pooling, mandatory tip policies and tax implications, etc. Those new to the industry quickly learn that it’s not simply a dollar left behind on the table. Many of the articles in this edition aim to provide improved clarity on the do’s and dont’s around tipping policies. And that other big issue of 2011? Close your eyes and imagine a world where you could only buy your produce from a single grocery store in town. The grocery store would have no incentive to provide good customer service, to deliver, check stock, check accuracy of your order, provide competitive prices, inform you about new products or available bargains or even have a conversation with you on which product would best help your type of business. Then open your eyes and realize that is exactly the situation we have with probably the second biggest supplier to your business—your local liquor store. With every other element of your supply chain, when customer service slips or prices start creeping or new technology emerges, you have the option to switch to protect your life investment. Initiative 1183 will give you that same opportunity with your alcohol supply and that is the bottom line. Please do not interpret this as a slam on the Washington State Liquor Control Board. It isn’t. Within a monopolistic system, many local liquor stores do work hard at providing good service. But without competitive elements that drive improvements, competitive prices and customer loyalty, we cannot not arrive at what your business needs: a strong partner in your alcohol distributor. You’ll find several articles in this edition provide insight on how I-1183 will help our industry and your business. We are working hard at being your primary source of information to help you succeed, and I believe this focused edition of the magazine will provide the guidance you need on two pivotal issues.
October 2011 | 7
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Tips and tipping in the real world Some advice to servers
PASS IT ON
By Bill Marvin
You have chosen to make your living, at least for awhile, in the hospitality industry— one of the few places people go these days expecting to have a good time. What a great place to be! A unique feature of the service business is the practice of tipping. For most professional service folks, tips are effectively their entire source of income. Now you can love tipping or you can hate it, but you can’t argue that tips are instant feedback on how your guests feel about your work. The quality of the interaction with your guests not only establishes your income but it effectively determines how they feel about your restaurant—so in many ways, the success of the business is also in your hands! If you take these ideas to heart and make them part of your service style, you should see the results where it counts—in your pocket! There are basically two ways to build your tips - you can increase your sales and/or you can improve the percentage you receive from each sale. Let’s look at these two options and how they may figure into your financial future: Option 1: Increase your sales Tip income is a percentage of what your guests purchase, so higher sales are likely to mean greater tips. The approach most people take to build sales is to increase the check through a technique called “suggestive selling.” Done with sincerity and skill, it can be very effective. Done poorly, suggestive selling can come across as insincere, shallow and manipulative. Another problem is that if your attention is focused on how much money your guests are spending, it can be a distraction that might get in the way of establishing a personal connection with your guests—and it is the level of personal connection that determines how well-served your guests feel. So your tips really come from serving people, not from serving food. If you get the big sale tonight and lose the guests’ future business in the process, then pushing the check average was not a very smart strategy for maximizing your income over the long term.
Another way to achieve sales growth is to have your guests return more often. When you focus on repeat patronage, your goal is to delight your guests rather than simply trying to increase sales (although the two are not necessarily incompatible). Repeat patronage is the safest way to build sales volume. Take a guest who normally comes in twice a month. If you can treat them in such a way that they come in just one more time a month instead of going to a competitor, you have just increased your sales from this person by 50 percent—without any increase in the average check and without any pressure on the diner. Option 2: Increase Your Tip Percentage If your guests left a bigger percentage of the check as a tip you would also increase your income. So, for example, if your tips went from 10 to 20 percent of sales, then you could double your income on the same sales volume! Your tip percentage may be determined in a number of ways. Some people tip because it is the custom in this country (and if you have served guests from other countries you know that in many cultures tipping is definitely not the custom!) Some people will leave a tip, even if the service was poor, because they would feel guilty if they didn’t. But the biggest factor in tipping—the thing that will determine whether diners leave you 10 to 30 percent—is the level of personal connection you establish with your guests. The greater the bond, the higher your tip is likely to be. At the least, when the guest is deciding what to leave you at the end of the meal, personal connection will cause them to round up instead of rounding down! Do you have regulars who always ask for you? Do you typically get a better tip from them? If so, it shows what personal connection can do for your tip income. The good news is that the same thing can happen with virtually every table...and more often than not! Reprinted with permission from Bill Marvin, The Restaurant Doctor. Originally published in “50 Tips to Improve Your Tips: The Service Pro’s Guide to Delighting Diners”. For further information, contact Bill at 800.767.1055.
October 2011 | 9
Off-year elections vitally important Please get informed and VOTE By Bruce Beckett, WRA director of government affairs
The upcoming “off-year” election in November does not carry with it the drama of a presidential election, governor’s race or other prominent state office election; nor does 2011 have members of Congress up for election. Regardless, voters certainly shouldn’t ignore those November ballots. To the contrary, it is incredibly important to read up on the issues and make informed choices. Consider that Washington voters will decide:
How tolls are set in Washington state
and how funds from tolls can be used for the construction and maintenance of transportation infrastructure. Whether to require training and education for home health care workers. If “extraordinary” revenue growth raised by the state should be dedicated to newly created “Budget Stabilization Account”.
Additionally, measure impacting local government and school funding will be on the ballot across the state. There are also two special elections to fill vacant seats in the Legislature:
In the 4th legislative district, Sen.
Jeff Baxter (R), who was appointed to fill longtime Sen. Bob McCaslin’s seat following his passing, is running against former Rep. Mike Padden (R) for this important seat. In the 49th legislative district, Rep. Sharon Wylie (D), who was appointed to fill Rep. Jim Jack’s position late in the session, is being challenged by Republican Craig Riley.
If your business is in either of these districts, become informed about the candidates – if you have questions, please contact the WRA Government Affairs team.
10 | www.WRAhome.com
But the foremost issue on the November ballot for the hospitality sector is Initiative 1183 – which would privatize the sale and distribution of liquor in Washington state. I-1183: How did we get here? Washington is one of a handful of states that still fully control the retail sale and distribution of liquor. The system, which was established following Prohibition, requires all consumers, including licensees, to purchase their supply of spirits from state-operated stores. In recent years, liquor prices have been set in the political process in order to assist in generating revenue to help balance the state’s budget. The market does not set the prices, as it does in most states. Washington restaurateurs, hoteliers and other licensee customers have long sought changes to the state system that would bring about market-based pricing, customer service, product options and delivery options. In 2010, the WRA supported I-1100, which would have completely deregulated the retailing and distribution of beer, wine and liquor. Distributors and labor unions vigorously opposed the measure, and voters turned it down by a narrow 3 percentage points. Following the voters’ action in November, the WRA spent considerable time gaining a better understanding of how manufacturers and distributors operate, how independent wineries, distillers and brewers are operating, and their preferred strategies for serving their end customers. Working with other interested retailers, grocers, wineries, brewers, distributors and, yes, Costco, Senate Bill 5933 was developed and introduced with bi-partisan support during the 2011 session. The bill, which was not acted upon, was subsequently filed as an Initiative to the People in May as I-1183. More than 360,000 Washington voters signed petitions in support of I-1183 and in July, it qualified to appear on the November ballot. Key features of I-1183
Privatizes the distribution and sale of liquor in
Washington state; thereby allowing the state to focus on its core function of enforcement and education. Limits stores eligible to sell liquor to those larger than
10,000 square feet, and with training and education programs for their employees. Creates competition which will benefit retailers, restaurants, wineries and consumers. Liquor licensees will have the option of securing supply from distributors, from retailers or from the manufacturer directly. Competition will result in efficiencies, improved service and increased choices for customers Strengthens regulations governing the sale of liquor by doubling the penalties retailers are subject to for selling to minors. Additionally, stores selling liquor must abide by increased training and education requirements for their employees, and must be able to demonstrate they can prevent sales to minors. Local governments retain their current ability to provide input before a license is issued, and I-1183 retains local zoning authorities. Generates $100s of millions in new revenue to support public services. I-1183 retains the current liquor tax system and saves taxpayers dollars be eliminating the state operated retail and distribution businesses. It also establishes a license fee on retailers and distributors that will generate an estimated $443 million in new revenue for state and local government over six years. This translates into $279 million in new revenue to the state, and $164 million for local governments.
proposal. Unfortunately, some of the advertising efforts from the opposition have been factually inaccurate. On the following pages, you’ll find that we’ve set these inaccuracies straight on some of the claims. You’ll also see how Washington state can learn from the lessons Maine learned when trying to attempt a similar feat. Still have questions? Please go to www.yeson1183.com, or contact any member of the WRA’s Government Affairs Team. And, please, educate yourself on the issues on the ballot, most importantly, exercise your right to vote.
I-1183 is a balanced, responsible approach to privatizing the distribution and sale of liquor in Washington state. WRA members will, for the first time, have multiple suppliers competing for their business. Washington citizens will benefit from the badly needed infusion of new revenue to state and local government coffers, and the regulations and protections built into I-1183 will enhance protections against sales to minors. As expected, the opposition campaign against I-1183 is trying their best to discourage votes in favor of this innovative October 2011 | 11
Dissecting truths about liquor pricing and taxes By Shawn Sullivan, staff writer Opponents of Initiative 1183 are making false claims about 1183 and taxes. The statement that Initiative 1183 includes a “brand new 27 percent tax,” is false. In fact, as opponents well know, all three branches of our state government have rejected this claim as “inaccurate and misleading.” The Thurston County Superior Court rejected a ballot title challenge filed by Initiative 1183 opponents seeking to describe the initiative as imposing a “new tax.” The hearing resulted in the court issuing an order adopting a ballot title that states, “The measure establishes licensing fees for sale and distribution of spirits based on the licensee’s sales revenues.” The Fiscal Impact Statement prepared by the Governor’s Office of Financial Management also concluded, “Liquor liter taxes and liquor sales taxes are amended by the initiative, but these changes are assumed not to increase, create or eliminate any tax.”
and 39 percent for licensees. The price for liquor is being set to fund state government, and is not based on market demand and supply like every other product used by restaurants. Without I-1183, pricing will continue to be set in the political arena, and not in the market. It’s important to understand the total charges paid by customers of state liquor stores. Its much greater than the commonly understood markup. Surcharges are added to the markup price of liquor to fund both the distribution center and the Liquor Control Board. When added together, the markup and surcharges can amount to 67.5 percent over the wholesale price of liquor (see Washington Research Council Special Report, August 9, 2011). Licensees pay a total of nearly 46 percent in surcharges and mark-ups. I-1183 eliminates the need for state infrastructure and funding from the cost of liquor. Private retailers and distributors will add new product. Consumers and businesses will pay prices set by competitive market forces, not the political process.
The Summary of Initiative 1183 prepared for the House of Representatives Office of Program Research states that “sales and liter tax rates are unchanged.” The text of the initiative itself states clearly that it “does not increase any tax, create any new tax, or eliminate any tax.”
Additionally, even though the Washington State Liquor Control Board (WSLCB) works very hard to improve the reliability of orders and customer service, most licensees have very few options on making orders, or for the delivery of product to their business.
Initiative 1183 eliminates the state’s existing markup on liquor (which can be as high as 67.5 percent) and instead requires private sector businesses who get licenses to sell liquor to pay a percentage of their revenues to the state as license fees. Retailers will pay 17 percent of their sales and distributors will pay 10 percent (which declines to 5 percent after two years). These license fees in total are actually lower than the markup the state currently imposes on liquor.
Under 1183, businesses will compete to supply restaurants, hotels, and other licensees. Competition breeds efficiency, improves customer service and gives consumers more options. Delivery options, special orders, surge demand needs and other critical needs will be filled by competing businesses.
According to the state Office of Financial Management, these cost savings and reasonable license fees paid by private businesses as a percentage of their sales will result in more than $400 million in additional revenues for state and local public services in the first six years alone. At a time when our state continues to face huge budget deficits, these additional revenues will provide vitally needed funding for schools, health care and public safety. Washington consumers and restaurants will benefit from a competitive market place and from better product selection and customer service. Taxpayers will benefit from reducing government costs and increased revenues for public services without additional taxes. What do we know about prices? Over the last two bienniums, Washington’s legislature has increased liquor prices to help balance the state budget. This has led to the current commonly understood 51.9 percent markup for consumers 12 | www.WRAhome.com
The Washington Research Council, in their Special Report on I-1183 (August 9, 2011), states, “Most liquor will be sold by large grocery and retail stores that sell many other products besides liquor. Such establishments benefit from economies of scale not available to the current state stores and can survive on lower markups than the state stores require. Competition among such stores is likely to result in lower prices in many markets” The WRC report also points out that I-1183 allows for quantity discount pricing for liquor and wine, allows delivery to warehouses and other off site facilities for businesses to deliver to their own premises – all features that encourage competition and customer service. Initiative 1183 will eliminate the state’s monopoly on the promotion, sale and distribution of liquor, and will allow the state to focus on its core mission of education and enforcement. It brings about competition, which breeds efficiency, customer service and customer choice. Under I-1183, pricing to fund state government infrastructure and services will be replaced by market-based pricing through competition.
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What can we learn from Maine about liquor privatization By Shawn Sullivan, staff writer
In November, voters will have a chance to decide on I-1183, which would eliminate the state’s monopoly on the sale and distribution of liquor, strengthen regulations governing the sale of liquor and generate hundreds of millions of new dollars for state and local government services. In the midst of this debate; however, is a confusing process, mandated by the Legislature to examine the option of a new, private, monopoly controlling the distribution of liquor to state stores. Although I-1183 would circumvent this process, one needs to look at Maine as the shining example of how we might end up if 1183 does not pass. In 2004, Maine’s legislature approved a contract to distribute spirits with Maine Beverage CO. The state received $125 million in cash, and Maine Beverage took control of the state’s alcohol distribution. So far, the move has cost the state $100 million in lost revenues.
governments”, the Washington State Liquor Control Board (LCB) is authorized to contract out the warehousing and distribution function to a private monopoly for at least a decade. It is important to note that since Maine awarded the contract, it missed out on an estimated $280 million in revenue. WRA is concerned that the distributor will simply increase costs for moving product to the state’s stores, leading to increased costs for customers. “Like every other state, Washington will continue to face difficult budget challenges in the near future; I-1183 will provide a much needed boost in revenues to support state and local government services” WRA Director of Government Affairs, Bruce Becket said. “While it won’t be enough to balance the projected shortfall of the state’s 2012 budget, it will help.”
Maine also decided that the legislature would set the prices and limit distribution to one central distribution facility in Augusta. However, Augusta is not centrally located and current regulations force distilleries to ship everything to the Augusta facility. Some vendors like Cold River Vodka, which is fewer than two miles away from Bow Street Market in Freeport, must first ship its bottles to Augusta, and then back to Freeport.
The model proposed by SB 5942 will simply transfer money from the consumers to a new private distributor; it will not result in long-term benefits to either the consumer or state and local governments. Initiative 1183 would avoid the Maine debacle proposed by the Legislature by privatizing the distribution and sale of liquor in Washington state, provide hundreds of millions of dollars in additional revenues to state and local governments, and increase consumer choice and convenience.
Last year, the Washington Legislature passed SB 5942, which directs the Office of Financial Management to issue a Request for Proposal to solicit bids for the distribution and warehousing of liquor essentially adopting the same approach as Maine. If the state receives bids that provide a “positive financial benefit to state and local
“[Privatizing alcohol is] also a better deal than the one the Legislature is considering to privatize just the warehouse side of the system,” Seattle Times Columnist Danny Westneat recently wrote. “There was never much reason for the state to be in liquor but the money. Now it can make more of that by getting out.”
October 2011 | 13
Tips laws: Keeping your restaurant
compliant with the IRS By Heather Donahoe, managing editor
Navigating the maze of laws pertaining to tips can be tricky without a broad understanding of what is required and how to comply with IRS and state Department of Labor & Industries regulations. Tip reporting is not a matter that can be left to your employee. The onus is on the restaurant owner to ensure that tips are reported accurately and in complete compliance with the law. It is truly one of the most important tasks a restaurant owner has. Increasingly, the IRS is beefing up measures to identify and claim any misreported or underreported taxes in all sectors. This overview of tip laws, which has been assembled with the help of the IRS and L&I, is designed to ensure that you are clear on all employee and employer tip reporting requirements. 1.
Tips are any gratuitous payment made by a customer to one who serves the customer. They include cash tips, credit/debit card tips or tips by check.
If an owner retains any portion of owner-imposed service charges (such as mandatory tip amounts for large parties), the owner must notify customers on an itemized receipt and in the menu about the percentage of the charge that will be paid directly to the employee serving the customer. The portion of the service charge paid to the employee may be characterized as wages when distributed, rather than tips, but must be in addition to the employee’s hourly wages. Customers must pay sales tax on service charges, and employees need not record receipt of service charges as a tip.
Tips are taxable income. All tips must be reported as wages on an employee’s tax returns and are subject to employment taxes and withholding
An employer may deduct credit or debit card processing fees from tips paid by a customer to an employee by credit or debit card before remitting the tips to the employee. Only the tips actually received
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by the employee (i.e., after processing fees have been deducted) are taxable income to the employee. 5.
Employers are required to keep records of charge receipts, tips reported by employees, gross receipts, charged tips and allocated tips.
Employees also are required to keep a record of their tips. IRS Form 4070A may be used to record tips each month. If employees do not keep a daily record of tips, they must keep other reliable proof, including copies of bills and credit card charge slips showing tips. If an employee participates in a tip pool and tips out to others, that employee should report only the tips he or she retains. Similarly, if an employee receives tipped-out amounts from a tip pool, that employee must record receipt of those amounts as tips.
If an employee does not keep records of his or her tips, the IRS may use other methods to determine income.
Tips must be reported to the employer if they exceed $20 while working for any one employer in a calendar month. IRS Form 4070 may be used to report tips to an employer.
At a minimum, tips are required to be reported to the employer by the tenth day of the month following the month is which the tips are earned, or earlier if the employer requires. If the tenth day of the month is a weekend or legal holiday, employees should give their reports to their employers the following day.
10. Employees are subject to a 50 percent penalty of the employee’s share of FICA (social security and Medicare) tax for not reporting tips to the employer, unless the employee can show reasonable cause for not reporting tips. 11. If an employee does not report his or her tips to the employer, he or she must report the tips as taxable income on Federal Income Tax Return Form 1040 (not Form 1040A or 1040EZ) and file Form 4137 to pay the employee share of the FICA tax on the tips. 12. If tips are reported to the employer, the employer must withhold for FICA and Federal Income Tax, and pay FICA and FUTA tax. The withholdings for FICA and FUTA tax stop when per-employee maximums are reached. 13. The employer must file Form 8027 with the IRS if the employer operates a “large food and
beverage establishment.” A large food and beverage establishment is one where:
Food and beverage is provided on the premises for consumption; and
Tipping is a customary practice; and More than 10 employees who work more than
80 hours were normally employed on a typical business day during the preceding calendar year.
14. If the employer is required to file Form 8027, it may have to allocate tips. It must allocate tips if the total tips reported by all employees are less than 8 percent of the employer’s gross receipts (unless the employer has requested a lower rate from the IRS, and the IRS grants the request). Under this scenario, the employer must allocate among all employees who receive tips the difference between 8 percent of the employer’s gross receipts and the amount of tips reported by all employees. The allocation may be based on each employee’s share of gross receipts, hours worked, or on a written agreement between the employer and the employees. These methods are discussed in more detail in the instructions for IRS Form 8027. The employer should show the amount allocated for each employee in Box 8, “Allocated Tips,” on the employee’s Form W-2. The employer should not withhold income, Social Security or Medicare taxes on allocated tips.
Educating employees on tip reporting. What does “educating” mean? Well, it doesn’t mean having weekly seminars on the history of tips (unless you want to do this). You simply must emphasize four things to your employees: Employees are obligated to report 100 percent of their tips. Employees must keep records to substantiate their tipped earnings. Fully reporting tips can benefit the employee (Social Security, loan applications). The distinctions in reporting charge tips and cash tips. How must you emphasize these things? That’s your call. The IRS has been good about letting restaurants pick their own venue for employee education. Some members have simply stamped a stern message on the tipped employees paycheck envelope saying: “THE IRS REQUIRES YOU TO REPORT ALL OF YOUR TIPS.” Others have shown the National Restaurant Association’s video regarding tips. Some have even had specific quarterly meetings reminding them of their reporting obligation. Whether elaborate or simple, the IRS just wants you to stress the four points listed above. The WRA recommends that if you do sign TRAC, you may continued on page 18 October 2011 | 15
Tips as wages and tip pooling:
Can we, can’t we and where is it all heading? By Bruce Beckett, WRA director of government affairs
Federal law requires that all employees be paid at least the federal minimum wage. However, many states, including Washington, have adopted their own unique minimum wage laws that provide for different minimum wage levels and escalation clauses. The recognition of tips as wages (aka “tip credit”) allows employers to credit some portion of the tip income received by employees against the minimum wage requirements in that state. Washington state is not one that permits tip crediting.
Washington’s unique situation Washington voters adopted the current minimum wage law in 1998, establishing:
Washington’s minimum wage at the highest level in the United States. Washington’s minimum wage automatically increases every year in accordance with the rate of change to the consumer price index for urban areas (the CPI-W index). If the index declines, the minimum wage is held at its current level. Because the CPI-W index looks only at prices within urban areas, it is considered the most generous index to attach changes in minimum wage. Washington is one of only seven states that do not allow employers to count some portion of tips as wages against received by employees against their minimum wage thresholds. In 1989, Washington’s Department of Labor and Industries ruled that tips cannot be treated as wages;
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accordingly, Washington is the only state that does not recognize tips as wages, due to an administrative ruling, rather than state law.
Challenges for operators Washington’s unwillingness so far to recognize tips as wages, combined with the state’s unique minimum wage law, creates three challenges for Washington restaurants:
Washington’s minimum wage is the highest in the
nation and grows at the highest rate in the nation. The inability to credit some portion of tips against this everincreasing minimum wage obligation creates financial hardship for operators. More importantly, however, is the growing disparity in the earnings between tipped employees and nontipped employees. Because tips are viewed as the property of the individual who earned the tips, and no portion can be counted against the minimum wage requirements, the ability of operators to compensate their non-tipped employees at higher levels is severely impeded. Washington restaurants remit payroll taxes on tips, even though tips are not recognized as wages. In effect, they are incurring the financial burden on both ends of the ledger.
Outlook It’s highly unlikely that Washington will adopt any changes to allow for tip credits in the foreseeable future. Organized labor, which fought very hard for the passage of Washington’s minimum wage laws, opposes any changes to the law that would impact any workers wages. Against this backdrop, the WRA’s Government Affairs team continues to emphasize educating legislators and administration officials on the challenges and inequities that result from tips not being counted as wages
One possible area of help The WRA worked with the Oregon Restaurant Association to get clarity on if, and under what circumstances, a business could implement a mandatory tip pool in their business. In March, 2011, the 9th Circuit Court of Appeals upheld lower court decisions (in Cumbie v. Woody Woo,
Inc.) that employers could implement a mandatory tip pooling arrangement if the following conditions exist:
Where tips are not counted as wages The employer pays tipped employees at least the
federal minimum wage or any higher applicable state minimum wage. The court also confirmed that employees who are not “customarily and regularly tipped employees”, such as cooks and dishwashers, can be included in the tip pool, provided: The employer pays at least the applicable state or federal minimum wage, and The employer does not claim a tip credit against the minimum wage Because employers in Washington are not allowed to credit tips against wages, and the state’s minimum wage exceeds the federal minimum wage, the 9th Circuit Court ruling appeared to create an opportunity for employers to implement tip pooling arrangements. Tip pooling arrangements could assist employers in their effort to compensate employees in their business. Fewer than two months after the 9th Circuit decision, the U.S. Department of Labor (DOL) adopted a rule that, if upheld, undermines the ability of businesses in Washington to implement tip pooling. Under previous regulations, and well-understood doctrine, the employee owns the tips where the employer takes a tip credit to meet its minimum wage requirement. The 9th Circuit Court decision further clarified that those employers who do not take count tips as wages and pay employees at a level that satisfies minimum wage requirements, can implement a tip pool. Under these circumstances, the employee does not “own” the tip. The DOL does not have the authority to change federal law, as interpreted by the 9th Circuit Court of Appeals. Accordingly, the National Restaurant Association is seeking formal clarification from the DOL that they will not enforce or implement any of these new regulations to extent that the regulations contradict the 9th Circuit Court decision. The 9th Circuit decision only applies to states that are within the 9th Circuit (largely the western United States), and not to the rest of the country.
October 2011 | 17
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want to see if the IRS is available to do the first educational meeting. This will set the appropriate tone of the seriousness of tip reporting.
Set up tip reporting procedures Like it or not, signing the TRAC agreement is going to mean more paperwork. When asking yourself the question, “sign, or don’t sign?” you should follow with the question: “Is doing the additional paperwork worth the savings of not paying past-due FICA on unreported tips?” Here are the specific things that you must do to comply. 1. Employer provides reports to directly tipped employees, at least once a month, showing: Gross sales that are subject to tips. Charge receipts with charged tips. Total charged tips reported. Total reported tips.
EmTRAC Agreements The IRS developed the EmTRAC Agreement program in response to employers in the food and beverage industry who expressed an interest in designing their own TRAC programs. EmTRAC Agreements are available to employers in the food and beverage industry whose employees receive both cash and charged tips. The EmTRAC program retains many of the provisions in the TRAC agreement including: The employer must establish an educational program that trains employees that the law requires them to report all their cash and charged tips to their employer.
2. Employees complete the above report by filling in their cash tips received and tipouts. You need to compile this information for your 8027 form at the end of the year, anyway. Keep these reports for at least four years. 3. Establish a procedure for indirectly tipped employees to report their tips.
Comply with all tax obligations Hopefully you are already in compliance on your tax responsibilities, and this obligation will not mean any additional headache for you. But just in case, the federal tax forms you should be sure to complete are: 1) Form 941, Employer’s Quarterly Federal Tax Return 2) Form W-2, Wage and Tax Statement 3) Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. Restaurants enrolled in TRAC must mail a copy of their 8027 form to their local IRS district. EMPLOYERS will: Educate employees about tips reporting Set up tip reporting procedures Comply with all tax obligations IRS will: Guarantee not to initiate a tip audit while a restaurant is under TRAC and in compliance. 18 | www.WRAhome.com
Education must be furnished for newly hired
employees and quarterly for existing employees.
The employer must establish tip reporting procedures under which a written or electronic statement is prepared and processed on a regular basis (no less than monthly), reflecting all tips for services attributable to each employee.
The EmTRAC program provides an employer with considerable latitude in designing its educational program and tip reporting procedures, which the employer may combine.
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PROTECT YOUR BUSINESS Last year’s legislative session was one of the most challenging in the state’s history.
Now we’re going round two. It’s time to speak up.
Save the Date Hill Climb 2012 Jan. 23, Olympia
October 2011 | 19
9/28/2011 12:23:24 PM
The truth about online coupon sites By Shawn Sullivan, staff writer In November of 2008, Groupon launched a new website offering deep discounts on entertainment. Since then, several other sites including Living Social and GroupPrice. com emerged to present members with coupons for restaurants, spas, events, museums and numerous other products and services. Joining one of these sites is extremely beneficial for consumers, but may be costly for the businesses supplying a discount. Before offering discounts through these sites, restaurateurs should know the facts. How do these daily deal websites work? First, they reach out to a local restaurant and ask them to sell $20 gift cards for $10 (this is the only part of the process where negotiating is part of the process). After singing a contract, Groupon posts the coupon online. It is important to note Groupon also takes 50 percent of the revenue, so restaurants only collect $5 for every $20 consumer voucher. Here is where it gets tricky. While Groupon generally restricts users to one coupon per person, it does not limit the number of users who can purchase the voucher. Using the example above, if 100 people download and use the $20 gift card, the restaurant will only collect $500. What are the benefits of advertising through a group discount website? “Unlike advertising in newspapers, it is hard to track ROI,” Marie Griffin, Communications Director for Living Social, said. “By using Living Social, you know how many customers come through your doors.” There are a few things to consider before offering deep discounts through these social websites. First and foremost, restaurants need to consider cost. The minimum discount these sites accept is 50 percent off retail price. However, that discount does not include the 30 to 50 percent the social website will deduct as its fee. By offering group discounts, restaurants may lose $0.75 for every dollar in sales. “What our offer was a $20 restaurant gift certificate for food that people could buy for $10.” said Randy Marsh, Owner of the Vancouver Skippers Seafood and Chowder. “It is good for the consumer because they are getting a $20 certificate for $10, but the problem for me is
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PASS IT ON
that we sold 300 certificates. That is $6,000 worth of food that I have to honor, and I only get $1,500.” Another consideration before signing up with an online discount site is the required record keeping. Groupon records the name and email address of every person who purchases a voucher. “They email you a big list of the three hundred names of people who have purchased the certificate, and your cashier has to scan through the paperwork and find their name and cross them off so they can’t print more certificates,” Marsh said. While using a site such as Living Social is expensive, reaching out to new customers via newspapers or television can be just as costly. Currently, an average, quarter-page ad for one day in The Seattle Times costs $4,969.80, and one 60-second commercial on KiroTV costs approximately $6,000 (both prices exclude the cost of production). With banks increasing their restrictions on loans, some restaurants use Living Social for a short-term cash infusion. “Using Living Social is gives businesses an almost instantaneous influx of cash,” Griffin said. “We have had a great number of different merchants who have used us for that.” Unlike Groupon, Living Social offers businesses the ability to receive payment up front. Instead of waiting the requisite three weeks after the voucher sale concludes, operators agree to a specific number of coupons and receive compensation before they go on sale. There are advantages to using Living Social as a short-term loan, especially if the vouchers are redeemed over a longer period of time. Of course, this type of loan has some risk. In one potential scenario, hundreds of customers could use the coupon at the same time, so it important to consider your options before proceeding. Using sites such as Living Social and Groupon have significant advantages and disadvantages. Careful consideration is important, and aggressive negotiation is recommended to get the best deal. These social websites can be useful tools to reach new demographics and increase name identification, but excessive discounts can be costly for your business.
New WRA radio show is first of its kind in the industry By Shawn Sullivan, staff writer On October 5, The Washington Restaurant Association launched DineNW, a weekly radio program airing on Tacoma-based KLAY 1180 AM. Hosts Shawn Sullivan and Heather Donahoe spent the first a half-hour discussing the role the WRA plays in state government and the economy. They also conducted two 15-minute interviews with WRA member restaurants Indochine and Farelli’s Wood Fire Pizza.
reason for our success,” Indochine owner Russel Brunton said. “We are so thankful for them and for the opportunity to be a part of the local community dining experience.”
The WRA serves as the voice of Washington’s restaurant industry. Producing a restaurant industry-themed radio show helps communicate that message to listeners while giving them a taste of local cuisine. Members now have an inexpensive way to advertise their business, and the WRA has a public forum to discuss the importance of the restaurant industry’s success
Within one week after the WRA announced DineNW, the show sold out sponsorships for the entire month of October, and the first two weeks of November. Member discounts on sponsorships will remain while the show is on the air, and non-member restaurants must join the WRA before they can appear on the show.
DineNW provides consumers an inside look into the restaurant industry from an owner/ operator perspective, which differs from existing foodrelated shows. In fact, out of the 50 statewide restaurant associations, the WRA is the first in the nation to launch a show on a privately owned radio station. To help with a successful launch, WRA President Anthony Anton appeared on DineNW’s inaugural show and gave listeners an overview of the organization and the importance of success in the restaurant industry. WRA member restaurants Indochine and Farelli’s also joined the program to highlight their menus and to invite listeners to join them for dinner. Indochine talked about their unique combination of Thai, Indian, Chinese, Japanese and Vietnamese flavors, while Farelli’s discussed their unique wood fire cooking process for pizzas and calzones. “We are happy to be a participant and supporter of programs like the WRA’s radio show as its purpose is to help us connect with our neighbors who are the ultimate
Each week, DineNW will feature two member restaurants. WRA member restaurants can have their restaurant featured on DineNW through discounted sponsorships— the current discount is 90 percent off normal station rates.
Restaurateurs interested in featuring their restaurant on the show should contact Shawn Sullivan at firstname.lastname@example.org. To hear how sponsoring DineNW can help your business, the WRA encourages members to visit www.dinenw.com and download an audio file of the show. Allied members also have an opportunity to advertise on the show. The program operates with limited commercial interruption—only three minutes of commercial time during the entire hour. This means listeners are far less likely to change the station. DineNW charges a nominal fee for these spots to cover the cost of production. The WRA designed the show to promote its members, restaurant and allied members alike. Also by design, discounts for both sponsorships and advertising will remain intact for the first year. DineNW airs live from noon until 1:00 p.m. every Wednesday on KLAY Radio, 1180 AM, with coverage from Olympia to Seattle and from Shelton to Auburn. The show streams online during the broadcast at www.klay1180.com, so you can listen from anywhere in the world. After each show concludes, WRA posts a copy on www.dinenw.com for members to share with customers.
October 2011 | 21
WRA partners with Spot Check for Allergy Safe Certified training By Heather Donahoe, managing editor Each year, more than 45 million Americans suffer from food allergyand sensitivity-related illnesses. Plenty of your customers are included in that figure, and if you’re not prepared to meet their unique needs, don’t count on them risking their health to dine in your restaurant. Unfortunately, this demand is being addressed by very few restaurants. According to the FDA, U.S. restaurants demonstrate only a 48 percent proficiency rate of preparedness for serving food allergy sufferers. That’s why the WRA Education Foundation is taking the first step to help Washington state restaurant operators make sure their staffs are educated on how to serve those guests with special food allergy needs. The WRA EF will be partnering with Spot Check Allergy Safe Certification to offer this important training resource to all members. “What we have found is a significant gap in education,” said Lynn Bolgen, president of Spot Check. “The most difficult part is that people don’t know they have this gap in the first place.” They think if they use the same best practices for general food safety, they’ll be fine in the allergy department. Unfortunately, that just doesn’t work.” Spot Check Allergy Safe Certification provides training for front and back of the house personnel in regionally scheduled classes. A “train the trainer” option also is available, allowing restaurateurs to designate one employee to be trained for educating their restaurant staff. This first-of-its-kind curriculum helps employees internalize the information needed to implement the protocols, policies and procedures for safely serving customers with special food allergy-related needs. Many restaurateurs are under the impression that modifying their kitchen to suit the condition of food allergy sufferers 22 | www.WRAhome.com
involves a full-scale remodel, duplicate equipment purchases and other expensive redundancies. The Spot Check curriculum trains restaurants on how to adapt their kitchens as is, with minimal expense and disturbance to existing food prep areas. The Allergy Safe Certification training is designed not only to educate restaurant professionals on eliminating the risk they pose to food allergy sufferers, but the curriculum also is structured to help workers understand the allergy and sensitivity issues many customers struggle daily to manage. “Industry-wide there are a lot of misconceptions about people who have allergies,” Bolgen explained. “Some people think they’re just picky eaters or unreasonably particular. They think allergies aren’t real and too often assume that their requests are just preferences. Dispelling that myth is incredibly important in training restaurant workers who fully grasp the importance of running a business that is safe for customers with food allergies and sensitivities.” Notably, Bolgen felt strongly about making sure that Spot Check’s Allergy Safe Certification is easily accessible to all restaurants. She said she set the cost for training as low as she possibly could. “We want to get this out to as many people as possible,” she said. “We as an industry can take the lead on an issue that is growing in importance. We need to acknowledge that we’re aware of the problem and then make the changes necessary to correct the problem. From the regulatory standpoint, either we act on it, or it will act on us. This is an opportunity to circumvent the issue and give back to the public.” For more information about upcoming Spot Check Allergy Safe Certification classes, contact Kristina McLeod at 877.695.9733, ext. 135.
BPA’s EnergySmart Grocer Program is serving up the savings Staff reports
Saving energy is a smart business move, especially for restaurants, where high energy consumption often results in utility bills that are far from friendly. The EnergySmart Grocer Program, a collaboration between the Bonneville Power Administration and Northwest utilities, recognizes this hardship and provides solutions proven to reduce energy use and cut operating costs. “I’m very happy with the results of our EnergySmart Grocer project,” says John Erickson, owner of Centennial Steakhouse & Saloon in Springfield, Oregon and a member of the Oregon Restaurant Association.
“Like most restaurant owners, I’m really busy, but the EnergySmart Grocer people did all the work. They told me what I could do in the front and back of the house to save energy, and were very thorough about it. They came back to make sure the retrofits were working properly, and with reimbursements, there was almost no cost for me at all.” EnergySmart Grocer helped Centennial Steakhouse install energy-efficient lighting and more efficient motors for walk-in refrigerators, freezers and display cases. These energy efficiency upgrades have allowed Centennial Steakhouse to cut $783 from its energy bill annually, and working with Springfield PUD these projects qualified continued on next page
Call 405.818.0914 to take advantage of this offer. Or visit WRAhome.com/wise-buy for more information!
Receive 100 free promotional marketing cards, a $150 value Turn gift cards into powerful marketing tools that increase revenue and promote your restaurant. Sign up with Heartland Payment systems as a new gift marketing client and receive 100 free promotional marketing cards, a $150 value!* Call 405.818.0914 to get started today. Offer good through October 31, 2011. *Must sign up with Heartland as a new gift marketing client and place an initial card order of at least 500 gift cards.
Washington Restaurant Association Cost-Saving Programs Career Center Affiniscape Check Management Heartland Payment Systems Credit Card Processing Heartland Payment Systems Email Marketing Solutions Fishbowl
Employee Background Check Airfactz Screening and Reporting Services Food Worker Certification WRA Education Foundation Health Care Hospitality Industry Health Insurance Trust (H.I.H.I.T.) Strata
Mandatory Alcohol Server Training WRA Education Foundation
Payroll Processing Heartland Payment Systems
Mobile Apps Talus Mobile
Retro Program WRA Retro Program
Music Licensing BMI SESAC
ServSafe® WRA Education Foundation Unemployment Cost Control TALX
October 2011 | 23
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September Chef’s Club
Check out these member exclusive deals!
for $1,008 in energy efficiency rebates nearly eliminating upfront cost. By working with local utilities like Springfield PUD and with support from the Bonneville Power Administration, EnergySmart Grocer is able to offer cash incentives that help offset the costs of energy-efficient upgrades so participating restaurants can start cooking up some serious savings. Our energy experts work closely with each restaurant to provide cost-effective solutions tailored to their specific needs. Those offerings range from refrigeration and lighting retrofits, to cutting-edge highefficiency cooking equipment upgrades. Low to no-cost upgrades Auto-closers Strip curtains/Vinyl doors Walk-in refrigeration gaskets Walk-in refrigeration motors Hot rebates on electric cooking equipment Commercial combination ovens Commercial convection ovens Commercial dish washers Commercial fryers Commercial ice makers Electric steamers Hot food holding cabinets Pre-rinse spray valves
Color Graphics Apparel & Ad Specialist Free digitizing of your logo, an $85 value. Call today for a catalog. 2540 Crites St SW Tumwater, WA 98512-6104 360.352.3970
Express Cold Storage Free storage for first month - up to 2 pallets per customer. 4606 4th Ave S Seattle, WA 98134-2330 206.623.2655
Comcast Cable Free installation and free activation for new business class customers. Discounts on internet service. 410 Valley Ave NW Ste 9 Puyallup, WA 98371-3317 253.405.7970
Fikes Puget Sound 25% off any new service or product. Free installation offer on all dispenser products. PO Box 941 Kent, WA 98035-0941 253.854.2439
CPR4U Health and Safety LLC 10% discount off the published rates. 2937 Broadway Everett, WA 98201-3639 425.252.3239
Fortun’s Finishing Touch Sauces One free case when you purchase 4, first time orders only. 5800 125th Ln NE Kirkland, WA 98033-8764 888.988.1045
Custom Gaskets NW 5% discount on initial orders PO Box 111734 Tacoma, WA 98411-1734 253.389.8884
General Biodiesel, Inc. Free waste vegetable oil pick up as well as offer to pay restaurants for waste oil (per gallon minus water basis). 6523 California Ave SW #296 Seattle, WA 98136-1833 206.932.1600
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Deborah Ward Interiors First consultation free. 2007 Northwood Ave. N.E. Tacoma, WA 98422-4082 253.927.1224
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Certain restrictions apply contingent on the participating utility. Please contact the EnergySmart Grocer Program or visit www.energysmartonline.org to verify participating utilities, and for complete program and incentive information.
24 | www.WRAhome.com
Eden Advanced Pest Technologies 5% discount on initial setup. 1818 W Francis Ave Spokane, WA 99205-6834 509.327.3700
Global Security & Communication, Inc. Fire and burglar alarm systems and CCTV systems, 5% off. 3212 Main St. Vancouver, WA 98663-2753 360.693.1900 Granny Lala’s Inc. 25% off first order of $100 or more PO Box 818 Spanaway, WA 98387-0818 253.961.4928
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Visit www.WRAhome.com/calendar for a full list of events.
Training | Meetings | Events | August & September Events
Oct. 7 & 8 Nov. 8 Nov. 12
Executive Committee Meeting
Executive Committee Meeting
Oct. 5 Oct. 11 Oct. 12
Seattle Chapter Meeting Spokane Chapter Meeting MSC Sub-Committee Meeting
Seattle Chapter Meeting
Retro Investment Workgroup
Retro Trustee Meeting
Finance Committee Meeting
Spokane Chapter Meeting
WRA Board of Director’s Meeting
MSC Sub-Committee Meeting
EF Board of Director’s Meeting
Government Affairs Committee Meeting
ProStart Fall Institute, Seattle ProStart Fall Institute, Spokane Spokane Cork & Keg Event
Training Oct. 4 Oct. 10 Oct. 17 Oct. 17 Nov. 1 Nov. 15 Nov. 17
ServSafe®, Seattle ServSafe®, Kent ServSafe®, Everett ServSafe®, Post Falls, ID ServSafe®, Seattle ServSafe®, Kent ServSafe®, Tacoma
New Members Al Forno Ferruzza, Olympia Bing’s Bar & Grill, Seattle Brother’s Burgers, Camas C & D’s Tekoa Bar & Grill, Tekoa Cappy Rick’s Black Pearl Schooner Bar, Hoquiam Chip’s Casino, Lakewood Cicada Restaurant & Lounge, Olympia Clark Bartell, Kirkland Dewey’s Burger & Bar, Spokane Hale’s Alehouse Silverdale, Silverdale Ixtapa Restaurant, Snohomish Mac’s Tavern & Cardroom, Aberdeen Ooba Tooba LLC, Redmond Palace Casino, Lakewood Pop Culture, Vancouver WAK Corp., Spokane Wienerschnitzel, Vancouver Workk LLC, Spokane
New Allied Members C & S Evergreen Pharmacy Cathy Devine 12911 120th Ave Ste E20 Kirkland, WA 98034-3057 425.821.8888 email@example.com Gravity Payments Dan Price 1434 Elliot Ave W Ste C Seattle, WA 98119-3112 866.701.4700 firstname.lastname@example.org Gravity Payments is a full service payment processor that focuses on small to mid sized businesses and completes 26 | www.WRAhome.com
credit card, gift card, and other credit payment methods by transferring the payment from the consumer to the business. Gravity Payments is dedicated to providing lower rates than its competitors and providing complete transparency to their clients with full disclosure of Gravity’s business practices, while maintaining a strong allegiance with merchants and employees alike. Living Social Harry Jigamian 1008 Western Ave, Ste 205 Seattle, WA 98104-1092 email@example.com 206.399.2876 LivingSocial offers daily deals on handpicked experiences that can be shared with friends. Our mission is to add surprise to every calendar. So we dig deep, pursuing both the things that define a place and the undiscovered jewels. We design total experiences that bring an adventurous, loyal new following to local businesses. Innovation and imagination have made LivingSocial the fastest-growing company in the social-buying category. Port Gardner Bay Winery Linnea Covington 2802 Rockefeller Ave. Everett, WA 98201-3525 425.339.0293 firstname.lastname@example.org Distributor of Wine, Wine Making Classes
Rain City CPA Jordan Heitzman 4000 Aurora Ave N #214 Seattle, WA 98103-7853 206.402.5266 Jordan@raincitycpa.com Unleashed Online Marketing Chris Reilly 1106 N. Washington St., Ste. D Spokane, WA 99201-2205 509.368.7337 email@example.com www.unleashed-online.com Unleashed Online Marketing is a Spokane, WA based firm offering cutting-edge marketing services for restaurants, event venues, and other small businesses across Washington and nationwide since 2009. They excel at running Search, Social Media, and E-mail campaigns that reach a local audience. Their diverse base of over 200 clients appreciate the exceptional results from their campaigns, as well as their knowledgeable, innovative and approachable staff. Veteran’s Fire Protection Rod Jussila PO Box 98141 Lakewood, WA 98496-8141 253.872.8387 Rodjussila@aol.com www.veteransfireprotection.com Fire Protection Specialists, Fire Suppression Systems, Fire Extinguishers, Backflow, Prevention Devices, Emergency Lightening & Kitchen Hoods Bundled Service Packages
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Marketplace SELLING OR BUYING?
Thinking about selling or buying an existing restaurant, or adding a new location? Call Allan Boden, Sunbelt restaurant specialist at 206.229.4717, or email firstname.lastname@example.org. Sunbelt has been serving clients since 1982 with offices nationwide. http://seattle1.sunbeltnetwork.com
CONSULTING AND BUY/SELL SERVICES 25 Year CPA and former restaurant owner can help you increase your bottom line, improve efficiency, plan an exit strategy and provide selling or buying services. Affiliated with business brokerage/intermediary firm of William E. Pearsall, P.S. Excellent references. Certified QuickBooks ProAdvisor. Call Jean Klein (206)795-4443. www. smallrestaurantspecialist.com CONSULTATION, PLANNING, AND CONCEPT DEVELOPMENT
Thinking about opening up a new restaurant, moving into an existing, or re-modeling? DYNAMIK will provide a complimentary initial consultation to review your project. Email Melanie@dynamikspace.com to determine a plan for your concept, design, schedule, and construction.
Why Roast your own Coffee? So you can: Serve high quality coffee Save money Build your reputation Contact Sonofresco to learn how easy it is to start roasting your own fresh coffee today!
The Sonofresco Roaster is: sonofresco Fully automated & simple to use (866) 271-7666 Made in Washington - and we email@example.com sell excellent green beans too! www.sonofresco.com
PRE-EMPLOYMENT BACKGROUND SPECIAL: WRA SPECIAL! $15 (Basic criminal, Social Security Verification, 7 year address history) (425)271-0312 WWW.POINTHRNORTHWEST.COM DOUG@NWLPC.COM
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ChefTec TT (2012) is the latest upgrade recently released by Culinary Software Services. This award winning software now provides even more features and functionality production management and nutritional analysis are just two of the areas that have been enhanced. Find out more at www.ChefTec.com!
Join the revolution … and discover how you can improve your restaurant.
The National Restaurant Association, Council of State Restaurant Associations, 40 state restaurant associations — including the Washington Restaurant Association — and Heartland Payment Systems® have joined forces to upgrade the crucial business services of every restaurateur. Full Course Business SolutionsSM — an exclusively endorsed suite of payments products and services — does just that, helping you reduce expenses, enhance operations and increase profitability. Our offering will grow as the industry — and your needs — evolve.
Full Course Business Solutions Card Processing • Gift Marketing • Payroll Services • Check Management To learn more about how this movement can help revolutionize your restaurant, visit GoFullCourse.com and call 866.941.1HPS (1477) x150. © Copyright 2010 National Restaurant Association. All rights reserved. © 2010 Heartland Payment Systems, Inc.
Ask the Expert | Restaurant Profit Coach Layering: The key to boosting your lunch sales By Rick Braa, CHAE
Q: Our restaurant has reasonable lunch sales but some online reviewers complain that we’re expensive. What is the best way of changing the guests’ perception to improve lunch traffic?
Your decision to address your guests’ input is wise. Be encouraged the guest took the time to complain; now you can make necessary changes. What the consumer is expressing is a lack of consistency between pricing and the value perceived by the guest. Rarely will one complain about price if the value matches what the guest believes the product is worth. Take the power of a brand. In a supermarket you’ll find one product next to another with identical ingredients often made by the same company. One is a “private label” the other is a trusted consumer products brand. Consumers have gotten wiser but most still choose a brand over a private label more often because the perceived value is higher though the product is exactly the same. What can be borrowed from retailers is the secret of differentiation in the mind of the consumer. We buy brands because we trust them and they provide a positive assurance to meet our need or want. In the restaurant equation, we buy because we want to “feel” a certain way: satisfied, treated, spoiled, full, etc. while having our needs met. Your menu is a direct line of generating that emotion and delivering a message of value. Remember, value has more to do with perception than price, and the best way to improve the price/value perception is to layer the pricing on your menu. Layering the pricing on a menu has dramatic results. In this example of successful layering at a Seattle restaurant, lunch sales are increased by double digits and have been since addressing the price/value perception issue when the economy crashed. The idea is to layer pricing from bottom to top and provide different price choices. This allows the consumer the choice of a quick, tasty, inexpensive lunch or lingering over a beer and some baby back ribs. When executed correctly, price choice is in the hands of the guest. This allows the guest to choose to spend less or more, while broadening the appeal to more consumers. Usually when parties dine together, the person with the least amount of money leads the decision. Providing
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consumers a place where each person can choose to spend more or less is the goal. The approach taken in this restaurant was to allow the consumer to assign value to the menu. The restaurant is in downtown Seattle, so be sure to adjust pricing appropriately to your market. Lunch entrée prices range from $8.95 for sushi to $18.95 for a steak salad. The menu below illustrates a section of specials that have been bundled. Key number one: provide extra value with an additional offering, not discounting—Notice, the Specials section provides smaller portion sizes but more choice for the guest. Chosen separately at full portion and price, the most expensive combination is $18.90, making the special nearly $10.00 cheaper in the mind of the consumer. Key number two: play to the strengths of the restaurant— variety— There are 36 combinations in all. This allows the consumer options at a price point that can be used more than once per week. Key number three: make production fast—Speed kills competition and lack of speed kills business. Key number four: improve the rest of the menu—While the menu was repositioned to provide lower price points, the food quality of the rest of the menu was improved to deliver extra “crave” by dialing up flavor profiles, choosing new and interesting ingredients and improving presentation. Additionally, a new non-alcoholic drink menu was implemented to drive incremental sales. The irony is that while the pricing was reduced to fit the consumer’s new budget, check average actually increased and so did lunch visit frequency. With price layering, the guest makes the choice to spend what he/she finds reasonable, and that will quiet the critics. Rick Braa has been working in and with the restaurant industry for more than 30 years. He’s committed to giving you the financial advice you need. Call the WRA Consulting Network at 800.225.7166 to get your FREE consultation with Rick.
ASCeNTIA WINE ESTATES Wine s of Dis t inct ion & Qua lit y
Celebrating 50 Years in Columbia Valley
Liquid Goodness Since 1982
Premier Idaho Wines from the Snake River Valley
A Tradition of Quality & Innovation Since 1880
Cabernet At Its Peak
The Last Word In Zinfandel
www.ascentiawineestates.com ÂŠ2011 Ascentia Wine Estates
Published on Oct 10, 2011
Have a question about tips in your restaurant? In this issue, you’ll find details on topics ranging from tip reporting, tips as wages and ho...