Raffi Yousefian, CPA’s Post

Few people understand the economics of restaurants. "If their RESY is booked for three weeks, and they're charging $36 for striped bass, they must be printing money!" "The owners must be greedy 1 %ers rolling in the dough!" "How dare they charge me a 20% service charge and take advantage of their workers while they're vacationing in Vail?" There seems to be a huge disconnect between those who insist on excessively and unfairly regulating how we run our restaurants and the operators who are simply trying to make people happier through food, community, and hospitality while making a living. Restaurateur, Heather Sperling, from Los Angeles laid out the cost breakdown of her upscale casual restaurant, Botanica, in this LA Times article. Spoiler alert, their pre-tax profit was 1.19%. Low profitability is nothing new for restaurants, but we all know it's gotten more difficult over the last three years due to rising costs, and having one or two locations doesn't cut it anymore. She explains all the benefits hospitality and restaurants can provide to the community, economy, and people's lives beyond eating what may feel like an indulgent meal. I appreciate this article (and I think you will too) because I feel that the public needs to understand the economics and struggles restaurateurs face so they can start passing legislation to help restaurants, not penalize them. Victimizing restaurateurs is not necessarily the strategy here, but a little bit of empathy wouldn't hurt! How many of these articles do we need to publish to change the narrative? #restaurants #restaurant #restaurantfinance #restaurantaccounting #restaurateurs https://lnkd.in/gudrg-8h?

Fantastic breakdown of where the dollars go. Well done Los Angeles Times & Heather Sperling / BOTANICA. Neighborhood gathering points, and independent businesses that invest in their workers, farmers, communities — love the story line here, the transparency & moving off the bummer angle of restaurant ownership I so often see. Would if this was a collection of features? Looking into some of our favorite restaurants and WHY they cost what they cost instead of focusing on WHAT they cost. This is an idea. 💡 https://lnkd.in/dEcfPisU

It's tough out there! If your business is struggling or still recalibrating since the pandemic, you're not alone. And it's particularly challenging in Denver for many reasons - reasons outlined in this 8/11 article in the Colorado Sun. Hear what restaurant owners have to say about the changing economy and Denver's unique challenges. https://lnkd.in/g4zxddPY #DenverColorado #CommercialRealEstate #DenverRestaurants #DenverFoodie

The number, magnitude, and essence of recent restaurant closures may seem scary. The industry is experiencing declining traffic, so consumers are more picky when they eat out. However, it's not that restaurants are closing unjustifiably or randomly; it's that poor management decisions are less forgiving in this market climate.   "The industry is clearly dealing with fewer visits. And when consumers visit restaurants less often, they stay away from those brands that aren’t doing what they should be doing." - Jonathan Maze, Restaurant Business Online Check out the article below for an interesting analysis of the "latest restaurant recession." #restaurants #restaurantfinance #accounting #finances #restaurantaccounting #restaurantcfo #restaurant #hospitality #economy #economicoutlook #recession #foodcosts #laborcosts #analysis https://lnkd.in/eEBM5c7x

Last month, California restaurants breathed a sigh of relief when they found out the "junk fee" ban wouldn't affect them. Senate Bill 478 outlaws hidden fees, so businesses have to build them into the advertised price. Initially, the ban applied to restaurant surcharges like service charges and automatic gratuities. A last-minute amendment allowed restaurants to keep using them, as long as they displayed the fees clearly. Surcharges on restaurant checks are on the rise, and their purposes range from staff wellness to rising food costs. But diners are fighting inflation too, and these fees have sparked debate - so much so that there are websites dedicated to listing restaurants that charge extra fees. Is a restaurant service charge the same as AirBnb's cleaning fee, or an airline's fuel surcharge? Stella Dennig, Co-Owner of Daytrip in Oakland, doesn't think so. Daytrip uses a 20% service charge that goes directly to employees, divided by the hours they work. They also offer health stipends, which isn't common in the industry. "Room to be able to have a service charge has been a huge step forward for restaurant workers...so reverting back to tipping would feel like a massive step backward," Dennig told us. "It definitely feels like a lose-lose scenario." The other option for restaurants is to fold the service charge into the menu price. We polled LinkedIn this week and half of voters said restaurants should include them in the price. But Dennig worries that the sticker shock would be too high compared to those that just charge tips. A slew of restaurants that tried to go "tipless" in the mid-2010s weren't able to make it work. The White House introduced a bid for a nationwide ban on "junk fees" in October 2023. The FTC conducted a hearing on their proposed rule in April, and the government could pass it this year. Since Biden introduced the bill, there’s no telling whether Republicans will approve it if they win the November election. Read more about the junk fee ban and how it will impact restaurants on the 7shifts blog.

The Wealthy Franchisee: 3 ways to maximize ROI amid soaring labor costs How restaurants can get the most out of their employees as minimum wages hit $20 and beyond. It’s a hefty investment necessary to run the show. But it is an investment — a cost for which there should be a return. To maximize your ROI, you must also maximize the quality of your management. Read more: https://lnkd.in/g22YBxcH #restaurant #foodservice #foodandbeverageindustry

The restaurant industry is known to be tough. The hours are long, there are staffing-related issues to manage, and the profit margins are often low … meaning, restaurants can be difficult to operate. This article from the Houston Chronicle offers a first-person perspective on the life of a restaurant owner seeking to run/maintain a profitable restaurant. I suspect you will find this article to be an interesting read if you are viewing this post. There are two outliers I will highlight for the restaurant/owner profiled in the article: (1) it is a smaller restaurant that does not have an on-site kitchen, so menu items are made at a nearby shop and transported there where the food is kept hot; and (2) the restaurant does not offer delivery via third-party delivery services like DoorDash due to the high costs. Many of the costs related to operating restaurants have increased substantially – food, labor, rent, insurance, taxes – while remaining outside of a restaurant owner’s control. Two weather events in Houston, the derecho (May) and Hurricane Beryl (July), resulted in almost $1 billion in revenue losses for restaurants, including product loss and property damage (Source: Texas Restaurant Association). Beryl left 2.2 million customers without power. Restaurant owners had to work around days of lost business while also replacing thousands of dollars of (lost) food inventory after the power came back online. Many restaurant owners are exploring new revenue streams, which can include catering, takeout, and merchandise sales. This practice began during the pandemic when restaurants were seeking creative ways to generate revenue to replace income lost from closed dining rooms. Layer on the fact that inflation-squeezed consumers have been eating at home more often. The beneficiaries of this trend have been grocery stores and food producers who have raised prices to offset rising inflation (Source: MarketWatch). At 1912 Ventures, several of our restaurant clients have pivoted their business models as a larger percentage of their customers have opted for takeout and delivery instead of traditional dine-in. In addition to traditional real estate restaurant searches for clients, this pivot has resulted in multiple client assignments related to commissaries and ghost kitchens. https://lnkd.in/gvmbdGEG #commercialrealestate #cre #restaurants #retailrealestate #houstonrealestate #payments

Submitted an essay for a small business story: Being immigrants, my family tried our best to live out the American Dream. My parents worked multiple jobs, rarely home, to keep food on the table. I did the same once I turned 15. In September 2020, I received an opportunity to run my own restaurant, which is one of the said American Dreams. Sagaponack, a Hamptons inspired seafood restaurant in the heart of the Flatiron District, brought me on as the operating partner. We had only three weeks to open, as it was vacant and non operational for several months. I didn’t have much of an idea, but I knew my mission was to serve high quality food at an approachable price. To achieve this, I needed a talented chef and team. I hired a Michelin-star chef, Joe, along with a few people I worked with previously. We worked tirelessly to deep clean, renovate, and create systems; there were handfuls of responsibilities, and not nearly enough hands. Opening under time restrictions, combined with the pandemic, felt unattainable. The plan was to operate with as few tables as possible, spacing them beyond COVID regulations. We marketed as a safer restaurant, and simultaneously made it manageable for an underprepared team. To stand out, we needed a unique menu. Chef Joe created Asian-inspired seafood dishes, with his own twists. Despite the anticipation and preparation, three weeks were not enough. The first day was chaos, followed by many catastrophic services. Although it was tough, we made improvements daily and eventually, operations became smoother. We overcame many difficulties, but there was one looming issue: we were struggling financially. To achieve better service, we overstaffed and became complacent. I naively believed this problem would fix itself with a strong team and ravishing reviews. Our funds were reaching a breaking point when coincidentally, Chef Joe put in his notice. I was devastated because I thought we needed him to survive. However, the show went on and I promoted our sous chef in his stead. It was a blessing in disguise, alleviating payroll tremendously. To resolve the financial burden, I needed to dig deeper. I started working 7 days a week: kitchen in the morning, floor at night, and admin duties whenever possible. Figuring out solutions and finding ways to cut costs without compromising quality was the silver lining of spending so much time at the restaurant. Growing up, dining out or eating together communally was rare. Providing our guests and community with the experience I lacked heavily in life was my fulfillment. Following the pandemic, approachable quality wasn’t just what I wanted, but it was something many sought after. We aim to strike a balance between the necessary costs and competitive prices from similar establishments. Although there are more affordable options, Sagaponack NYC has become the place where people can have high caliber food and hospitality with comfort.