The Unique Challenges of Owning a Restaurant
At one time or another, non-restaurant business owners have to deal with challenges such as bad Yelp reviews, inventory spoilage, tipping issues, staff no-shows and nasty weather driving away business. The restaurant owner, on the other hand, has to deal with some or sometimes all of these problems on a daily basis.
In this blog, we will address three of these unique challenges.
Social Media and Online Review Websites
With Yelp, TripAdvisor, OpenTable and other social media websites, everybody is a food critic. Companies engage business consultants to conduct expensive focus groups to tell them how their customers view them, yet sites like Yelp reviews offer free insight on an almost minute-by-minute basis. Restaurant owners should monitor and share their reviews with the staff, look for and identify patterns. Negative reviews should be responded to privately by introducing yourself and thanking the reviewer for their constructive feedback, followed with an apology. Positive reviews should receive a public thank you. Some business owners will turn negative reviews into humor. One bar owner posted a sign reading, “Come in and try the worst rum and coke that one guy on Yelp ever had in his life.”
Tips vs. Service Charges
Effective January 1, 2015, adding automatic gratuities to a customer’s bill will be classified as a service charge as opposed to a tip. This will impact the restaurant owner’s ability to take a tip credit on their tax return since only tips, and not service charges, are eligible for the credit. Service charges are considered wages for FICA purposes. Additionally, servers will have to wait for pay day to be compensated for service charges.
Inventory spoilage can wreak havoc on your bottom line. Restaurant owners need to look for trends by comparing current income and expenses with the same period in the previous year. Food and labor costs should typically fall between 60 -70% of gross sales. Strategize: should you reduce portion size, raise menu prices or cross-train your staff in order to reduce the number of employees during slower hours? Written plating instructions and costing sheets for each dish can also be valuable tools in reducing costs.
For questions, contact Bob Rifkin at [email protected] or call him at 312.670.7444. Visit orba.com to learn more about our Restaurant Group.