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Liquor Guide The anatomy of liquor privatization: This overview of the new liquor sales and distribution system versus the previous state-run system will give you a clearer understanding of what I-1183 means for your business.
2012 Legislative Review Washingtonâ€™s restaurant industry fared well during the 2012 season of legislative activity. Find out why it took legislators so long to resolve the budget, what bills benefit restaurants and what issues remain on the table moving forward.
Mandatory tip pooling in jeopardy A recent decision by the U.S. Department of Labor will ignore the ruling in a case that favored tip pooling.
WA S H I N GTO N
Attention Restaurants: Please stop designing websites in Adobe Flash!
Letter from the GAC Co-Chairs
I-1183 changed the way you buy liquor, LiquorExchange.org makes it easier
Anthonyâ€™s founder honored by Junior Achievement
2012 ProStart Invitational yields winning teams and priceless lessons
Instill a Sales Building Mentality to Increase Sales
On the cover
The WRA worked diligently this session to protect and enhance your business outlook. This issue covers these successes on your behalf.
4/26/2012 12:22:03 PM
May 2012 | 5
EDITORIAL STAFF Anthony Anton, Publisher Lex Nepomuceno, Executive Editor Heather Donahoe, Managing Editor Shawn Sullivan, Contributing Editor Lisa Ellefson, Art Director WRA EXECUTIVE COMMITTEE Bret Stewart, Chair Center Twist Jim Rowe, Vice Chair Consolidated Restaurants Robert Bonina, Secretary/Treasurer Washington Athletic Club Steve Simmons, Past Chair S & S Hospitality, Inc. Nancy Swanger, WRAEF President WSU 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 Communications & Technology 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: Ken Wells Allied Relations Manager 425.457.1458 ken.wells@WRAhome.com Washington Restaurant Magazine is published monthly for Association members. We welcome your comments and suggestions. email: news@WRAhome.com, phone: 800.225.7166. Circulation: 6,310.
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Primary Source of Information | News Briefs Attention Restaurants: Please stop designing websites in Adobe Flash! By Lex Nepomuceno, Executive Editor What is “Adobe Flash” and why is it so important for restaurants to avoid? Flash is a multimedia platform used by a decreasing number of web developers to create media-rich websites. Unfortunately, it is also an obsolete and a resource-demanding technology that is not user friendly and could drive potential customers away. There was a time when Flash was cool and was used by a growing number of websites. Now, it is just something competent web developers scoff at and incompetent web developers use to prey on unwitting businesses, willing to overpay for something they don’t understand. Problems with Flash It doesn’t work on iOS devices, such as the iPad, iPhone and iPod Touch. Anti-Apple folks usually ridicule this point as only one segment of a large market. This is correct, but it is a very large segment and a segment that likes to spend money. Also, in March 2012, TechCrunch reported that iOS devices gained a lead over Android at 53 percent market share. Even on Flash-compatible devices such as Android, the technology is slow and clunky. Morgan Stanley projects mobile web usage to surpass desktop web usage in 2014, so why build a web presence on something that won’t even load up in a timely manner for more than half of all Internet users? Search engine problems Content such as menu items and descriptions, which search engines heavily rely upon for website indexing, is usually invisible to Google and Bing if a site is built on Flash. Sure, there are tricks and tools to get around this, but proper application of search engine optimization will depend heavily on the competence of the web developer. Many web users disable Flash as a method for filtering out advertising All of the major web browsers allow for add-ons and plugins that easily allow users to turn off seeing any Flash whatsoever. Oftentimes, these are the same types of websavvy people who would use the Internet to find a restaurant and browse through a menu. It is slow, unreliable and constantly requires updates before use How many times have you gone to a website, and it informed you that you needed to update to the latest version of Adobe Flash. Just once is too many times because odds are you went to another site instead; unless of course, that site was yours. There are many better alternatives and options for restaurant websites Flash is no longer a necessity for a media rich web experience. HTML 5 has quickly become the de facto platform for web video delivery as well as providing a seamless mobile web experience. jQuery and other development languages are providing many of the features and functionality previously reserved for Flash. The best thing about most Flash alternatives is that they load faster, are easier to develop and much more ubiquitous. They work on Android and iOS. And they work without constants nags to upgrade to the latest version of something. So the next time you set out to rebuild a website, or start one from scratch, just remember to say no to Flash.
WRA endorses Rob McKenna for governor
After meeting with both candidates, Jay Inslee and Rob McKenna, the Washington Restaurant Association board of directors unanimously endorsed Rob McKenna for governor. “As an industry, we want to be a part of Rob McKenna’s vision for Washington,” said Anthony Anton, WRA president and CEO. “Repeatedly, Rob has been a champion for the state’s hardworking restaurant operators. His plan for fiscal sustainability aligns with the core values of this industry, and we believe his approach to state leadership is exactly what Washington needs.” The WRA’s board of directors hosted a gubernatorial candidate interview in early April, providing McKenna and his opponent the opportunity to share their goals for Washington and respond to questions from restaurant industry leaders. Prior to the meeting, both candidates were provided with a profile of the industry and were briefed on issues of particular significance to the sector. Following the interview, WRA members voted to award the endorsement to McKenna.
Appeals court delays April 30 NLRB poster mandate In a major setback for the National Labor Relations Board, a federal appeals court this week officially put the brakes on a new poster mandate that the NLRB sought to impose on most U.S. businesses starting April 30. Despite a series of legal setbacks, the NLRB had appeared to be moving ahead with its planned April 30 enforcement date for the controversial new poster requirement. However, earlier this week, the D.C. Circuit Court of Appeals issued an emergency injunction that blocks the NLRB from enforcing the poster mandate until the court can hear a legal challenge brought by a group of business organizations. The timing of a hearing and decision is uncertain.For the rest of the story, go to http://wra.cc/ HVVmwY.
“I am proud to have the support the men and women of Washington Restaurant Association on my side in this campaign,” McKenna said. “The entrepreneurs and small business owners who make restaurants the largest private sector employers in the state understand my campaign focus on budget sustainability and job growth – because they live those principles every day. I look forward to working with these hospitality industry leaders throughout my race for governor and in my work to improve state government.”
1183 rulemaking postponed until May 24
Since passage of initiative 1183, the Washington Restaurant Association has been actively engaged in the rulemaking process to implement the privatized system set up by voters. While most challenges have been cooperatively worked through with the WSLCB, we are still working through a very significant issue -the Board is seeking to limit retail-to-on premise retail sales to 24 liters per day. The WRA has voiced adamant opposition to this limitation. The postponement of the rule adoption will allow an additional public comment period – we urge restaurateurs to join the WRA in opposition to this limitation. Please contact Shannon Garland at Shannon.Garland@wrahome.com to join the effort.
WRA membership survey in progress – Your feedback is needed! The WRA is currently conducting its biennial membership survey, so you may have received a phone call from The Field Company asking that you take the time to answer some questions. If you’ve taken the survey, thanks! The information from the survey is vital to our planning efforts. If you haven’t taken the survey yet, or if you have a message in your voice mail in-box, please make the time. We know how busy you are, but we’re in the final stretch of the survey and really need to hear from as many members as possible. This is your opportunity to make your voice heard.
May 2012 | 7
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By our count, the Legislature spent 243 days in session from January 2011 to April 2012, including two regular sessions and four special sessions—a unprecedented amount of time. But like every one of us in business, these have been very difficult times. All levels of government are challenged by the recent upheaval in the economy, and it’s no surprise that navigating these changes has required considerable analysis and debate by elected officials. It also has required ongoing diligence and engagement by the WRA GA team and WRA Government Affairs Committee. Now that the 2012 regular and special sessions are completed, we are pleased to report that the WRA accomplished the goals adopted by the GAC last November. Notably: The $1.5 billion budget shortfall was balanced without adding new taxes or taxing authority on the hospitality industry. There were a number of attempts to do so during the course of the session. I-1183 continues to be implemented on schedule, despite legal challenges, legislative debate and administrative processes. The Department of Revenue received new authority to collect liquor taxes in a manner acceptable to liquor Jim Rowe, Government Affairs Committee licensees. The WRA team continues to work with the Liquor Control Board and Co-Chair, Consolidated Restaurants other stakeholders on difficult implementation issues. Efforts to allow local governments to impose new taxes on sales from restaurants, bars and taverns were thwarted. Legislation imposing restrictive packaging options was defeated. Gains made on unemployment insurance taxes and workers’ compensation reforms in 2011 were protected, despite attempts to undermine those gains. Member engagement key to success On behalf of the WRA’s Government Affairs Committee, we would like to thank WRA members for their advice, counsel and participation during the nearly unending sessions of the Legislature these last two years. The WRA’s GA team relies on the guidance of its members to formulate its positions and strategies on issues of importance to the industry. The WRA’s annual Hill Climb & Taste Our Best Legislative reception was again a huge success this year. More than 120 members navigated icy, snowy conditions to join the event in late January. Notably, members participated in more than 100 meetings with individual legislators. These meetings set the stage for the WRA’s ultimate success in defeating legislation that would have adversely impacted the thousands of small and large businesses we work to protect.
Phil Costello, Government Affairs Committee Co-Chair, Owner of Stop N Go Drive-in
Additionally, WRA members responded to two Action Alerts on critical issues facing the industry. The first Alert generated more than 150 responses to the Liquor Control Board, opposing their proposal to limit sales from retailers to on-premise licensees to one sale per day. Unfortunately, the outcome of this issue may not be resolved for some time. The second Alert resulted in more than 100 members voicing their opposition to new authority for local governments to tax restaurants, bars and taverns. The Alert succeeded, and the legislation failed to pass. As the co-chairs of the WRA GAC, we cannot express how important and vital member involvement is in your GA team’s ability to advocate on your behalf. Your participation in our Government Affairs Committee activity, your willingness to respond to Action Alerts, your participation in the WRA PAC and your interaction at Hill Climb are all part of a winning strategy. On behalf of all of us at WRA, THANK YOU. Sincerely, Phil Costello and Jim Rowe WRA GAC co-chairs May 2012 | 9
I-1183 implementation update
By Julia Clark
Previous System Includes bottle cost from: Spirits Broker Federal Taxes Delivery/Freight Cost of “doing business” for the state
On December 8, the Liquor Control Board adopted emergency rules to implement I-1183 that took effect immediately. The rules regarding central warehousing included significant impacts for restaurants. Initially, the WRA expressed concern over the language that required product to be separated by physical barriers, making co-operatives effectively impossible. Since that time, the WRA participated with other impacted stakeholders and the Board to develop language that will now allow restaurants to co-op.
(Just 2 years ago, licensees were paying the 51.9% markup when the legislature directed the LCB to increase its markup) In a private market, this could be referred to as “margin” as costs are included in the base price.
In mid-March, the Liquor Control Board adopted an interim policy containing the agreed-upon language. The policy became effective immediately and will allow for a group of licensees to collectively register an off-site warehouse, employ staff to manage inventory, negotiate quantity discounts and place orders, so long as the group of licensees has a system of inventorying product approved by the Board.
+13.7% Spirit Sale Tax +$2.44/Liter Tax
The interim policy is in effect until permanent rules are adopted. The draft proposal of the permanent rules contains language identical to the interim policy and could be approved by June 2, 2012.
— 15% Licensee Discount (subject to the Legislature)
Board adopts emergency rules limiting wine sales, effective immediately
Despite hearing objections from retailers and more than a hundred restaurant operators, it appears the Board intends to pursue this limitation. While final rulemaking will not be concluded until June 2, the Washington State Liquor Control Board adopted emergency rules on April 4, limiting retail-toon-premise retail sales, effective immediately. While retailers will not be permitted to sell spirits to restaurants until June 1, the Wine Retailer Reseller endorsement for grocery stores contained in the initiative became effective upon certification on Dec. 8, 2011. If restaurants have been purchasing from grocery stores holding this endorsement, they are now limited to 24 liters per day. The WRA will continue to express serious concern over the emergency rules, the lack of notice to licensees about such significant changes and the inconsistency of the rules with the intent of the voter-approved initiative. The emergency rules will be in effect for 120 days or until permanent rules are adopted. The Washington Restaurant Association has submitted comments on numerous occasions regarding our opposition to the daily limit of retail-to-on-premise retail sales, and will continue to work with the Board to seek a positive outcome with the permanent rules. Currently, the proposed rules are open to public comment, and a public hearing is scheduled for April 25. If the Board adopts the emergency rules, they will become effective 31 days later.
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Liquor Control Board adopts language for co-ops
When the Board released its draft proposal for permanent rules implementing Initiative 1183, it included a daily limit for retail-to-on-premise retail sales. Immediately, the WRA expressed adamant opposition to this limitation.
= Total Cost
Your Options Under a New System Distributor Bottle Cost (Cost of Acquisition)
Retailer Bottle Cost (Cost of Acquisition)
Distiller Bottle Cost
Distributor Markup Markup
(Retailers can purchase directly from distillers)
Retail Markup (17% fee does not apply)*
+13.7% Spirit Sale Tax
+13.7% Spirit Sale Tax
+13.7% Spirit Sale Tax
* Subject to pending interpretation from the LCB. The WRA will continue to advocate for restaurants and ensure a competitive market place. Originally published in Understanding Liquor Privatization, March 2012
Originally published in Understanding Liquor Privatization, March 2012
May 2012 | 11
So, What’s Happening With the THREE-TIER System?
A Modified System Will Emerge Under I-1183
After Prohibition ended, Washington state established a “three-tier” system to regulate the sale and consumption of alcohol. The first tier is the manufacturer or supplierthe businesses that make the product. The product is
then transferred to the second tier-the distributor. The distributor then transfers the product to the third tier-the retailer, which represents restaurants, bars and retailers.
Initiative 1183 made some significant changes to the three-tier system. Instead of outright Prohibitions of activity between the tiers, I-1183 allows for a system more aligned
with today’s economic and market realities. While the tiers are kept distinct, there are some shared activities between them.
• Distillery • Winery • Brewery • Distillery • Winery • Brewery
• Gets the Product to Market
• Gets the Product to Market
• On Premise • Off Premise
Retailer • On Premise • Off Premise This model was created to prohibit “undue influence.” Under this model, “undue influence” between tiers was prevented by prohibiting financial interest between the tiers. Each tier had specific functions, and a licensee in one tier could not engage in the business of another tier.
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For example, this system prohibited restaurants from co-branding special label products, and banned suppliers from advertising their products in restaurants (including providing promotional materials for restaurant customers).
Originally published in Understanding Liquor Privatization, March 2012
A manufacturer can now act as its own distributor and sell directly to retailers.
A retailer, or group of retailers (including restaurants), can purchase product directly from the manufacturer, from a retailer or a distributor. They can also centrally warehouse the product that has been purchased, and distribute it to their own locations. Cooperative arrangements are permitted.
On-premise retailers (restaurants, bars, taverns) can purchase directly from a retail licensee (grocery store) in 24-liter increments.
The requirement for uniform pricing is repealed, allowing businesses to negotiate price and customer service options that meet their needs (including quantity discounts).
Originally published in Understanding Liquor Privatization, March 2012
May 2012 | 13
I-1183 changed the way you buy liquor, LiquorExchange.org makes it easier
By Heather Donahoe, managing editor
passage of I-1183 in Washington empowers restaurants, hotels and other establishments to purchase directly from manufacturers, a larger group of distributors and an array of local craft distilleries. It’s a time of transition, excitement and even uncertainty for many liquor licensees; but LiquorExchange.org, a new search tool powered by the Washington Restaurant Association, aims to simplify the adjustment phase. Under the previous system of liquor sales and distribution, all products came from Washington’s state-run liquor stores. Thanks to the newly privatized system, liquor licensees will enjoy the benefits of the competitive free market when purchasing their liquor supply. At the outset of this transition, the Washington Restaurant Association immediately recognized that liquor licensees at restaurants, bars and taverns would need a concise and easy-to-use resource for determining where to purchase their spirits and liquor stock.
Washington state,” said Lex Nepomuceno, WRA director of communications and technology. “Washingtonians have a proud history of supporting great quality, local products. It happened with micro-brews, and then we saw an exponential growth of local wineries throughout the state.”
From that realization, LiquorExchange.org was developed, giving WRA members the capability to search by brand, liquor type or keyword, and allowing them access to the best product and partner matches for their business. Washington state already has dynamic wine and microbrew communities, and new craft distilleries/distributors are popping up all over the region to serve the discerning tastes of consumers and businesses. LiquorExchange.org gives restaurants access to all of them in a comprehensive and easy-to-use format. “LiquorExchange.org is a great way for restaurants to obtain the best products and pricing for spirits in
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To that end, Nepomuceno noted that when Costco launches its “Kirkland” label liquor brands in the state, many customers and businesses may view it as a local brand and preferred option for well and mixed drinks. “Even local distributors will benefit because it puts their liquor portfolio on the same level as one of the big distributors,” Nepomuceno explained. “Why should restaurants pay more for a national, mass-produced vodka when they can get better quality at a lower price from a local company?”
SucceSS Through SuSTainabiliTy The conserve Sustainability education Program : delivering value and providing solutions SM
Conserve uses a variety of easy-to-implement methods developed with subject matter experts from industry and authorities in environmental sustainability to help improve your operation’s efficiency every day while boosting your bottom line.
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3 Personalized action plan 3 Money-saving techniques 3 Program awareness and promotion through the National Restaurant Association and media partners
As a member-only benefit, LiquorExchange.org features free registration for all WRA members. While non-members are listed at LiquorExchange.org, WRA allied members have the option of including a detailed in-depth list of all the brands and varieties of alcohol they carry, as well as information on specials and promotions they may be offering. WRA members also enjoy the competitive advantage of priority placement on the site. Additionally, sponsorship opportunities also are available at LiquorExchange.org, giving a company the benefit of coming up first within a given search. This emerging technology is poised to simplify and transform the way Washington state buys liquor. Visit www. LiquorExchange.org today, and see how it can help your business.
Join today and start fixing. conserve.restaurant.org ©2011 National Restaurant Association. All rights reserved. The National Restaurant Association logo is a registered trademark of the National Restaurant Association. The Conserve Sustainability Education Program logo is a service mark of the National Restaurant Association.
May 2012 | 15
Washington restaurant industry virtually unscathed in 2012 legislative session By Bruce Beckett, Julia Clark and Josh McDonald WRA government affairs
The 2011-2012 Washington State Legislature spent more time in session during their two-year cycle than any similar timeframe in recent memory. In 2011, the Legislature convened for its regular, 105-day session, followed by a 30-day special session to finalize the two-year spending plan. Lawmakers were called into special session during December 2011 to make further adjustments to the budget. Following that special session, many believed that lawmakers could indeed complete work on balancing the remaining $1.5 billion budget shortfall before the end of the regular, 60-day session. The decision points were well understood, the economic forecasts were more reliable and the economy appeared to be showing signs of improvement.
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Instead, lawmakers failed to complete work on the budget during their 60-day regular session and were called back to a 30-day special session, where they finally completed work following an “all nighter” that required the Gov. Gregoire to actually convene a second special session that lasted a mere eight hours. So, what derailed resolution of the budget in a timely manner?
The governor, House Democrats and many Senate
Democrats were preparing to write a budget predicated on raising $500 million in new revenue by sending a half-cent increase in the state sales tax out for voter approval. In March, however, the Economic Forecast Council predicted that state revenues would exceed earlier estimates by about $90 million, and that caseload costs would be about $330 million under what was projected. The forecasts took the steam out of putting forward a major tax hike to the voters, disappointing stakeholders and legislators interested in growing the tax base. The House passed a budget that called for delaying $330 million to school districts by one day, effectively kicking the major portion of the budget shortfall to the next biennium. A number of government reforms that would assist the state in achieving a balanced, sustainable budget over time were introduced with bi-partisan support in the Senate, but were initially met with strong resistance in the House (more detail below). On March 2, just days before the close of the regular session, a coalition of Republicans and three Democrats gained control of the budget process in the Senate. The coalition passed a balanced spending package to the House, along with a number of longer term reforms. Despite attempts to meet the House more than halfway on their differences, the new Senate coalition and House were unable to bridge their differences until the waning hours of the first special session.
From left, Anthony Anton, WRA president and CEO; Travis Rosenthal, owner of Tango in Seattle; Dan Sutton of Cottage Inn in Wenatchee; Karissa Bresheare, owner of the Gourmet Latte coffee stands throughout Western Washington. It’s rare for a majority party to lose control of the budget process; it has not happened in more than 30 years. Fortunately, that the Senate coalition remained firm in its resolve to enact a more sustainable spending plan that does not rely on accounting nuances or major tax increases. What finally happened? The $1.5 billion shortfall in the 2011-2013 budget was balanced by:
New forecast estimates that lower long-term caseload
costs by $330 million and increase state revenues by $90 million over the biennium. Transferring revenues between state and local governments in a timelier manner, saving the state considerable revenue. Reforming state pension benefits to align more closely with private sector benefits. These measures apply to new state employees, and lower the annual pension obligations. Lowering health care costs for school employees by
taking advantage of state health care purchasing power versus individual, costly programs as negotiated district by district. Requiring the state budget to be balanced against four year cost and revenue projections instead of the current two year projection. This should help alleviate what are commonly called “bow wave” costs typically associated with initiating new programs in state government. So, how did the WRA fare? In short, very well. The WRA entered the 2012 session predicting that: Legislators would focus, appropriately, on resolving the fiscal issues, and that substantial policy legislation would largely be avoided. I-1183 would be targeted for amendment both legislatively and administratively. Both predictions proved true.
May 2012 | 17
Tax and fiscal issues HB 2762 (oppose), elimination of corporate tax breaks: Many legislators continue to call for elimination of “corporate tax breaks” in order to increase revenue to fund state services. Among the hundreds of tax breaks included in these lists is the ability for restaurants to claim a B&O tax credit for pop syrup taxes. HB 2762 would have eliminated all so-called “corporate tax breaks” in 2015, including the B&O credit for pop syrup taxes. The entire business community joined together to defeat the bill. HB 2801 (oppose), local government financing: HB 2801 was a complicated bill addressing local government financing obligations, taxing authority and spending requirements. Included in the bill was new authorization for local governments, both cities and counties, to impose a new 0.5 percent tax on restaurant, bar and tavern sales. The WRA triggered an Action Alert, which generated hundreds of calls and emails to lawmakers from members opposing the bill. Although technically alive in the special sessions, it appears that efforts to impose new taxing authority on WRA members have been defeated. HB 2758 (support), liquor tax remittance: One outcome of I-1183 is that state liquor stores will no longer collect state liquor taxes; however, the Department of Revenue had not been granted authority to collect state liquor taxes from retailers, distributors or certificate-of-approval holders. The WRA worked with the Department to develop HB 2758 so that retailers, distributors and certificate-of-approval holders are responsible for remitting state liquor taxes. Liquor licensees, however, should be very careful that their records clearly show the tax is being collected by their vendors. Labor issues In 2011, the Legislature passed major reforms to unemployment insurance taxes and workers’ compensation claims management processes. Accordingly, early in the session, lawmakers on both sides of the aisle agreed to not pursue additional changes to those policies during the 2012 session. The agreement was adhered to even though hearings were held on some controversial workers’ compensation legislation early in the regular session. There was, however, lots of activity on a number of other important issues: ESHB 1832 (oppose), addressing the rights of employees at SeaTac Airport: This bill, which passed the House in 2011, 18 | www.WRAhome.com
bill failed to pass the Senate.
but failed to pass the Senate, was resurrected and brought to the House floor for a vote before the first cut-off. The bill would require vendors at SeaTac Airport, including many restaurants, to adhere to specific labor policies. The Port of Seattle, who operates Sea-Tac Airport, is in the process of amending their leasing policies in anticipation of new lease renewals beginning in 2015. HB 1832 would severely limit the ability of local, independent restaurants to offer their products to the traveling public. WRA formed an effective coalition including the Port, Alaska Airlines and airport vendors. The effort paid off when the House ultimately failed to bring the bill up for a vote. Labor and leasing policies for the airport will continue to be debated by the Port Commission over the next year. Minimum Wage, Tip Credit, and Training Wage Bills (support): Rep. Cary Condotta (R-Wenatchee) introduced a number of bills to modify Washington’s minimum wage law, allow for some tips to be credited as wages and provide for a training wage program. The WRA worked closely with Rep. Condotta to develop these ideas and set the stage for further discussion of these critical issues. The bills included: HB 2496, which would change the current index that the minimum wage is adjusted against to the Consumer Price Index (CPI). HB 2497, which would allow for a modest level of tips to be credited against wages to the level of the federal minimum wage. HB 2498, which would freeze the minimum wage when the unemployment rate exceeds 7.5 percent. HB 1258, which would allow for a training wage for a specified period of time. The WRA is grateful to Rep. Mike Sells (D-Everett), the Chair of the House Labor Committee, who agreed to hold a hearing on this collection of bills. WRA members Karissa Bresheare (Gourmet Latte, Western Washington), Dan Sutton (Cottage Inn, Wenatchee) and Travis Rosenthal (Tango, Seattle) traveled to Olympia to testify in committee. Although none of the bills passed out of committee, the WRA appreciates Chairman Sells’ willingness to hold the hearing and, hopefully, initiate dialogue on these important issues. SB 6229, HB 2508 (oppose), statewide mandatory paid sick leave: Following Seattle’s decision to require employers to provide paid sick leave days for employees, legislation was introduced in the both the House and Senate to expand the policy statewide. The WRA opposed both bills in committee, and educated lawmakers on the adverse impact of the policy on Seattle restaurants. Neither bill passed out
SB 6196 (support), concerning identification of wineries, breweries and microbreweries on private labels. Because of tied house restrictions, if a restaurant chose to offer a private label wine or beer to their customers, they were prevented from advertising or co-branding which manufacturer had produced it. SB 6196, which was sponsored by Sen. Nick Harper (D-Everett), would have allowed for restaurants and manufacturers to co-brand private labels. SB 6196 moved out of committee in the Senate and was rolled into SB 6477—which included a few changes to licensing and spirit sampling and tasting—and moved over to the House for consideration. On March 2, which was the last day for bills to move out of the opposite house of origin, the bill was scheduled for action. However, the Senate moved into the 9th order, and all action in the House was immediately halted. The bill was not passed before the cut-off date, and therefore failed to reach the governor’s desk. Sustainability The WRA’s Government Affairs (GA) team, from left: Josh McDonald, state and local GA; Bruce Beckett, director of GA; Julia Clark, GA manager of committee, but the WRA expects renewal of this issue in upcoming sessions. Liquor Issues This session, most liquor stakeholders were focused on the implementation efforts of 1183 with the Liquor Control Board, and very little activity was seen in legislation. However, the WRA did engage on behalf of the industry on two liquor related bills that failed to pass. HB 2179 (support), regarding liquor license objections. Last year, a business in Mount Vernon experienced a local government objection to their request for a liquor license. News reports alleged the objection, purportedly made by the mayor, was based on the ethnicity of the business owner. Ultimately, the situation was resolved, but in an effort to ensure this would not happen again, Rep. Jeff Morris (D-Mount Vernon) introduced a bill that removed authority from the mayor and delegated the authority to a city or town council. The WRA was grateful that Rep. Morris introduced the legislation on behalf of the industry, and worked with him to ensure the change would not impact the time it took to acquire a liquor license. Unfortunately, the cities objected to the change, and the
Ideas around packaging and sustainability that began in previous sessions reemerged during the 2012 session and continued to revolve around themes borrowed from successful local community efforts to reduce the waste stream and the amount of non-recyclable or noncompostable products used on a daily basis. As we have in previous sessions, the WRA engaged in every discussion as a constructive participant to help think through what ideas might be plausible, and which ones might not be, given our state’s current lack of commercial recycling and composting infrastructure. No legislation was passed this session, but we fully anticipate continuing to have this conversation in 2013 and beyond. Outside of discussions around packaging, the only other idea that gained some attention in the arena of sustainability were several bills taking different approaches to ban retailers from providing single-use plastic bags to their customers. This type of legislation originates from other countries, states and successful local efforts in six communities throughout Washington state to institute such a ban. Your GA team has engaged early in all conversations at both the local and state level, and we are grateful that every piece of legislation thus far recognizes our industry’s serious food safety concerns by exempting prepared foods and beverages from the ban. As with packaging issues, we fully anticipate this type of legislation coming back in 2013 and will once again fully engage in the debate.
May 2012 | 19
WRA has it’s
The Washington Restaurant Association has launched a new, exciting way for members to reach potential customers! Join us on our new radio show, DineNW, where we talk about Washington’s restaurant industry, and give listeners a taste of Northwest cuisine.
Mandatory tip pooling in jeopardy By Shawn Sullivan, contributing editor
A recent decision by the U.S. Department of Labor (DOL) may jeopardize tip pooling in Washington. In 2010, the 9th U.S. Circuit Court of Appeals, which covers Washington, issued a ruling in a case titled Cumbie v. Woody Woo in favor of tip pooling, stating emphatically that the federal government could not limit tip pools where an employer does not take a tip credit. The Court of Appeals also ruled that the Department of Labor could not override an employer’s mandatory tip pool policy that includes non-tipped employees, when the employer pays its employees at least full minimum wage, and does not take a tip credit.
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On February 29, 2012, the DOL issued a formal memo (“Bulletin”) to its Regional Administrators and District Directors, advising them to enforce the 2011 revised federal regulations on tip pooling “uniformly across the country, including in states covered by the Ninth Circuit.”
Therefore, the DOL has decided to ignore the Woody Woo decision, and to enforce federal tip pooling laws in states such as Washington, even though Washington does not have a tip credit.
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In addition, last week the WRA received a phone call from the DOL’s Regional Community Outreach Officer, to advise us of the Bulletin and of their intent to enforce the 2011 revised regulations here in Washington. The officer explained that he is contacting and advising employee advocacy groups as well as employer associations of this development. In light of these developments, we urge you to take steps to protect yourself against potential government enforcement actions or employee complaints regarding tip pooling practices. You are likely to have many questions on this. You are welcome to call our offices or our consultant network (or an attorney who is knowledgeable in this area) to determine the best policy path that your company should take concerning this issue. In the meantime, the WRA, Oregon Restaurant Association and National Restaurant Association are exploring proactive measures to take on your behalf, to gain further clarity and guidance on this issue, and to reach a resolution on this issue that is favorable to the industry. For now, we wanted to let you know of this development as soon as possible. We will continue to provide you with information as we learn more. In the meantime, again, please do not hesitate to contact the WRA if you have any questions or concerns regarding this matter.
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We have included the first page of text in the DOL’s memo below. Please take a moment to review the text and let us know what you think. To read the memo in its entirety, please visit www.wrahome.com. We welcome your comments. Feel free to post them on our Facebook page, www.facebook.com/warestaurants.
“The purpose of this memorandum is to advise staff that the Department of Labor’s (“Department”) new regulations addressing ownership of employee tips under section 3(m) of the Fair Labor Standards Act (“FLSA” or “Act”), 29 U.S.C. 203(m), should be enforced uniformly across the country, including in states covered by the Ninth Circuit. See 76 Fed. Reg. 18832, 18856 (Apr. 5,2011).1 The Wage and Hour Division will enforce nationwide the 2011 final rule explaining that a tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit, and that the employer is prohibited from using an employee’s tips, whether or not it has taken a tip credit, except as a credit against its minimum wage obligations to the employee, or in furtherance of a valid tip pool. The Wage and Hour Division will enforce the policy as articulated by this guidance prospectively in those states under the jurisdiction of the Ninth Circuit. “The new tip credit regulations, which became effective on May 5,2011, incorporate Wage and Hour’s longstanding position that the 1974 amendments to the FLSA established that tips are the property of the employee, and that an employer can use its employees’ tips only in the limited ways prescribed by section 3(m) even when the employer has not taken a tip credit against its minimum wage obligations. See 29 C.F.R. 531.52. Prior to the publication of the 2011 tip regulations, the U.S. Court of Appeals for the Ninth Circuit issued a decision, Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010), which held that section 3(m)’s limitations on an employer’s use of its employees’ tips do not apply when the employer does not take a tip credit. “As this Bulletin explains, because that decision was issued before the Department promulgated its new tip credit regulations, it does not preclude Wage and Hour from enforcing these regulations in those states covered by the Ninth Circuit.” -Department of Labor
May 2012 | 21
Anthony’s founder honored by Junior Achievement
2012 ProStart Invitational yields winning teams and priceless lessons By Lyle Hildahl, director of the Education Foundation
Lyle Hildahl, WRA Education Foundation director
By Heather Donahoe, managing editor Earlier this spring, one of Washington’s most accomplished restaurant industry leaders, Budd Gould, was inducted into the Junior Achievement Puget Sound Hall of Fame. As founder and president of the successful 27-restaurant Anthony’s chain, Gould received the honor in March, alongside three fellow laureates. Since 1975, only 100 other honorees have been included in this elite group of local innovators and community leaders. When Gould began in the restaurant business 43 years ago, he had absolutely no experience in the industry. After honing several concepts, Gould landed on the idea of a fresh seafood restaurant that took advantage of the region’s natural bounty. It was an instant success that remains exceedingly popular throughout the Northwest.
laureates in this program? It is a terrific honor to receive recognition as a Puget Sound Business Laureate. I am especially proud to be the first restaurateur to be chosen to join this exemplary group of local business men and women. Junior Achievement is a fabulous organization, which encourages young people to succeed in life. I was very proud to have three of my teenage grandchildren present at the dinner. As you know, the restaurant industry can be tough. What advice would you offer to an operator who is still trying to achieve a solid footing in the business? Keep trying, don’t give up and embrace change. Treat your crew members like family and your guests as VIPs. What is the most important or difficult lesson you’ve learned during your career? You must understand what you are capable of achieving. Be honest with yourself and channel your passions in productive ways.
After being selected for the Junior Achievement honor, Gould told a Puget Sound Business Journal writer that he Budd Gould with Anthony Anton, Washington Restaurant is particularly pleased with Association’s president and CEO. Photo courtesy of Jay Dotson having established a solid Photography. team, many of whom have been with the company for How can a restaurateur decades. “You have to have excellent seafood, no question, but respond to failed plans/ideas in a way that ultimately benefits you have to have a team approach to keep it going,” Gould their business? said. “I think I’m most proud of building a team. We have 200 Not all of our ideas and concepts meet with success. people that have been with us for 25 years or more.” Sometimes it is a mystery why certain concepts or ideas succeed or fail. Build upon your successes and be willing to Junior Achievement is an organization that gives young alter your course with new ideas when others are not working. people the tools they need to take control of their economic futures. The organization facilitates programs in K-12 Who or what has been your most valuable resource as an classrooms, fostering work-readiness, entrepreneurship and entrepreneur? financial literacy skills. Junior Achievement laureates, such as That is easy. The most valuable resource you have available is Gould, are selected on the basis of their embodiment of those the management team that you surround yourself with in your same values. company. We caught up with Gould to discuss the importance of the honor and to discover the guiding principles that have helped him achieve success in business. Congratulations on being inducted into the Junior Achievement Puget Sound Hall of Fame, Budd. How does it feel to join the company of so many other distinguished 22 | www.WRAhome.com
Why has Anthony’s been so successful? I believe we have great people in leadership roles from our department heads, to our chefs, to our restaurant general managers. Our leaders share our common goals, have developed our company culture and truly enjoy working with each other. I believe we all understand our mission and have learned the ability to adapt to the changing landscape.
Amazing, over the top, incredible, stupendous. Words cannot describe the commitment of time, energy and resources the Washington restaurant industry provided for the 2012 Boyd Coffee ProStart Invitational. Restaurant managers, chefs and owners from restaurants, hotels, suppliers, service providers and friends of the industry stepped up and served. I want to share an experience with you that speaks volumes of the service these industry professional and volunteers provide every day as a way of doing business. Jennie Hanna, the owner of Olympia’s Occasions Catering, which provided the meals for the 2012 Invitational, was assisting her team on breakfast preparation. I interrupted her for a moment to ask her a question. “Jennie, is there any chance…” and before I could complete my question, her response was “YES.” She didn’t even wait to hear the complete question. Jennie’s philosophy is, “No is not an option when it comes to taking care of your customer. The only option is, ‘Yes, how may I serve you.’” I think about all the instances during the Boyd Coffee ProStart Invitational when our industry volunteers worked passionately, and always with a smile, to help make this experience for the kids the best it could be—a learning experience they will never forget. There are way too many examples to list, and I would probably miss a few in recognizing how awesome each and every one of you are as leaders and role models. A great leader is often measured on how engaged they are in social responsibility. It’s a mindset and skill set that we try to teach our young ProStart students all the time. Every student saw and experienced first-hand what social responsibility means. Volunteers, thank you for those lessons. Thank you for your leadership. Thank you for caring so much that you would take a weekend away from family and business to teach this everimportant leadership skill to our future leaders. Thank you from the bottom of my heart. The Washington Restaurant Association Education Foundation would like to congratulate the winners at this year’s Boyd Coffee ProStart Invitational.
Culinary Competition rd place: Puyallup High
3 2 1
nd place: Bonney Lake High
st place: Oak Harbor High
Restaurant Management Competition rd place: Lewis & Clark High
3 2 1
nd place: Oak Harbor High
st place: Stadium High (Tacoma)
of the Year: Eric Hellner, Bonney Lake High School, Seattle
of the Year: Becky Wilson, Lincoln High School, Tacoma
of the Year: Tyler Kimbrell, Ferris High School, Spokane
May 2012 | 23
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Visit www.WRAhome.com/calendar for a full list of events.
Training | Meetings | Events | May & June Events
Spokane Chapter Meeting
Retro Investment Meeting
Retro Trust Meeting
MSC Sub-Committee Meeting
Seattle Restaurant Alliance Meeting
Spokane Chapter Meeting
MSC Board Meeting
Spokane Chapter Golf Tournament
New Allied Members Select Information Services, LLC Michael Howe 25 W Nora, Ste 102 Spokane, WA 99205-4800 509.327.7373 x 202 firstname.lastname@example.org www.selectinfoservices.com
Gourmet Display Teresa Miles 6004 S 190th St # 102 Kent, WA 98032-2130 206.767.4711 email@example.com http://www.gourmetdisplay.com/
We are a leading provider of customer service evaluations and sales training. We work with the client to set a level of customer service that can be accomplished 100% of the time. Consistency is the key to becoming known for your customer service. We also work with clients in examining if their staff maximize the sales potential with each customer.
Gourmet Display is a local manufacturer of quality catering & buffet displayware
Smith Fire Systems Management, LLC Bill Davidson 1106 54th Ave E Tacoma, WA 98424-2733 253.255.2000 firstname.lastname@example.org www.smithfire.com Smith Fire provide’s the installation, testing and maintenance of hood suppression systems, fire alarms systems, fire sprinkler systems, back flow preventers, fire extinguishers, and monitoring of fire/security systems. WOW Distributing Inc. Aaron Winsor 4424 Chenault Beach Rd Suite B Mukilteo, WA 98275-5050 425.315.8815 email@example.com www.wowdistributing.com Pull tabs, energy drinks, bingo, roaring lion, merchandise, warehouse wired, gambling, prizes, promotional tickets, beverages. 20% discount off first pulltab order for new customers. Essential Benefits Gordon Kushnick 4010 NE 88th St Seattle, WA 98115-3741 206.465.5019 firstname.lastname@example.org Essential Benefits provides out-of-the-box solutions to the health insurance puzzle. By focusing on individual health insurance products and supplemental benefits, employers can both provide affordable benefits to their employees and significantly limit their HR responsibilities. FloHawks Plumbing and Septic Steve Redford PO Box 73399 Puyallup, WA 98373-0399 253.606.1115 email@example.com www.flohawks.com Flohawks plumbing, septic, grease trap, maintenance and jetting.
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NuSource Capital Kim Drussel 3350 W Americana Terrace Ste 340 Boise, ID 83706-2547 800.569.1182 firstname.lastname@example.org www.nusourcecapital.com Provides working capital to business owners to support and grow their businesses. Will waive origination fees and closing costs to all members of the WRA. Oregon Hood Cleaning Robert Bambrick 2645 NE 49th Ct Lincoln City, OR 97367-5098 877.493.1163 email@example.com www.oregonhoodcleaning.com R3 Reliable Distribution Resource Xavier Noblat 4051 Oakesdale Ave SW Ste A Renton, WA 98057-4834 425.251.1156 firstname.lastname@example.org www.morganscott.com Largest redistributor in the country of food service disposable packaging. Cleaning. Coffee. Gloves.Hats & Caps. paper and plastic. Redmond Ridge Liquor & Wine Charles Ferrel 22310 NE Marketplace Dr #108 Redmond, WA 98053-2038 425.868.5300 email@example.com redmondridgeliquor.com Supplies spirits products in the greater Seattle area to offpremise and on-premise customers. Law Office of Stephen M Katz Stephen M Katz 2101 4th Ave Ste 1900 Seattle, WA 98121-2315 206.525.5500 firstname.lastname@example.org www.stevekatzlawoffice.com Legal advice in all stages of a restaurant life. Discount of 20% off regular hourly rate for legal services for WRA members.
New Restaurants 8th Street Ale House,Hoquiam AAAC, Inc.,Auburn ACME Bowling, Billiards, & Events,Tukwila Agave Cocina,Issaquah Agave Cocina,Redmond Archer Ale House,Bellingham Around the Corner Café,Milton Jeckyl & Hyde Deli & Alehouse,Bellingham Casa Mia, Hoquiam Coterie Room,Seattle Diego’s III, Bellingham Dublin Down Irish Pub, Vancouver Eaglemont Golf Club, Mount Vernon Fireplace Bar, Everett Flat Iron Grill, Issaquah Four Season Buffet, Burlington Fraser’s Gourmet Hideaway, Oak Harbor Galway Bay Irish Pub, Ocean Shores Golden Tent Mong BBQ, Vancouver Hideaway Casino & Restaurant, Shoreline InnerSea Discoveries, Seattle Izzy’s Pizza, Vancouver Izzy’s Pizza Buffet, Kelso Kit Carson Restaurant, Chehalis Kitty Hawk Café, Burlington Lee’s Drive Inn, Bellingham Mackinaws Inc., Chehalis Mambo Italian Café, Bellingham Original Taco House, Vancouver Osteria La Spiga, Seattle Burger King, Issaquah Pick Quick, Seattle Pioneer Tavern, Long Beach Riviera Lakeshore Restaurant, Anderson Island Rocking M BBQ, Golf Range & Lounge, Everett Rocky’s Pizza, Battle Ground Russell Lowell Catering, Inc., Mill Creek Schooner EXACT Brewing, Seattle Skillet Diner, Seattle Sorrento Ristorante, Olympia Spiros Pizza & Pasta, Port Orchard Sportsman Bar & Grill, Ridgefield Stumbling Goats Bistro, Seattle Pat Good, Everett The New Mexicans, Everett Tony’s Coffee and Espresso, Bellingham Topper’s Restaurant, Longview Uli’s Famous Sausage, Inc., Seattle Uli’s Sausage Biergarten, Seattle Westside Tavern, Olympia Wildfin American Grill, Issaquah
Marketplace CONSULTING AND BUY/SELL SERVICES
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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 email@example.com. Sunbelt has been serving clients since 1982 with offices nationwide. http://seattle1.sunbeltnetwork.com
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
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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.
OWNERS GET PAID Who makes W.O.T.C. credits easy to capture? In 2012 will W.O.T.C. be ‘money left on the table’ or profits in your pocket? Contact Mike Lancey, MBA, EA, CHAE at (866) 547-8277, firstname.lastname@example.org. Mckenzie Chase Management serving Northwest clients since 1982. http://www.MckenzieChase.com
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By Rick Braa, CHAE
Q: Our quarterly sales are short of budget and prior year. We’re doing a good job inside the four walls, but what can be done to stimulate sales beyond doing a good job?
Flat sales have been an issue since the Great Recession for many restaurants. Dining habits have changed, and as long as there is uncertainty in the economy, sales will be in limbo. Though flat sales have been the norm, many operators have enjoyed success in building sales during the last few years. Those that have increased sales keep a focus on the top line to drive the bottom line. One of the best action steps you can take is to build a sales mentality with the entire staff. Sales building is everyone’s responsibility—not just that of the owner and management team. Here are some ideas to consider and implement: 1. Go to the entire staff and congratulate them on their new job—building sales. Hold an all-staff meeting to rally the team around sales building, and show them why it’s important and how they benefit. When I was a server long ago, my average wage was $27/hour. On an annualized basis I would have made $54,000 per year waiting tables had I worked full time. What was expected of me? Do a good job serving the guest and complete my side work. Not much has changed. Here I was making the equivalent of more than $50,000 per year on a full time, annualized basis, and the expectations for me to build sales were nil. Make sales building everyone’s responsibility. Expect each staff member to represent the business wherever they go, and invite people to come to the restaurant. 2. Meet with the leadership team weekly, and discuss sales building ideas and techniques. One good idea per week is 52 good ideas in one year. Imagine if even half worked? Set aside time to discuss the four ways to build sales—increase check average, increase frequency, increase party size and acquire new guests. Charge each person to read, think and see what’s happening in other restaurants, and bring at least one idea per week to the team. Make sales building conversations an expectation and a standard of every leadership team meeting. 3. Use social media actively. Recently, one restaurant company was having trouble making the bills. The owner sent a letter to the community stating, “Unless there is a miracle the restaurant is going to close.” 30 | www.WRAhome.com
The letter was posted to Facebook and the community rallied, the restaurant received an enormous outpouring of support, especially through social media, and sales tripled overnight. Sales increases were substantial enough for a long enough period of time that the restaurant was saved. That’s powerful. The lesson learned is to get serious about using social media to tell stories and build relationships, increase traffic, create brand awareness and guest loyalty. Make your messages interesting, intriguing and stir the emotion of those receiving your message. Mix up your messaging, and give people a reason to be involved. Simply listing what’s on special today doesn’t instill loyalty; emotion does. 4. Get out in the community. Let the community know the restaurant is active, what’s going on within the restaurant and why dining there is a great idea. In working with some of the best brands and restaurants in the United States, it’s surprising how many potential consumers still don’t know about their restaurants. This is a chronic problem due to the constant churn of local residents, and the only solution is to beat the streets, meet with those who touch many in the community, get involved with area charities and schools and be socially active. Work the community as though your very life and wellbeing depends on it, because it does. Sales building takes dedicated time, effort and focus. The load is too heavy for one person or small team to carry. Empower the entire team with sales building messages, hold leaders accountable for increasing sales, market smartly through social media and be active in the community; and you’ll see struggling sales become a thing of the past. For more information on building a powerful company, improving performance, driving sales and moving your business forward, contact BRAA Associates at email@example.com. Rick Braa is the founder of BRAA Associates, a consulting firm specializing in helping companies grow.
Boyd Coffee ProStart Invitational
Instill a Sales Building Mentality to Increase Sales
Ask the Expert | Restaurant Profit Coach
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The WRA worked diligently this session to protect and enhance your business outlook. This issue covers these successes on your behalf.