New Overtime Rules Are Coming Faster Than You Think

New Overtime Rules Are Coming Faster Than You Think

by | Mar 30, 2016 | Business Toolkit, Management

Restaurants could be forced to change the way they pay managers in just a few months as the federal government moves forward on new rules that dramatically expand who is eligible for overtime.

Earlier this week, the U.S. Department of Labor sent its final set of overtime rules to the Office of Management and Budget, a mandatory step that precedes publication of those final rules.

“The OMB has 30 to 90 days to review the rules, after which they will be published,” said Elizabeth Washko, an attorney in Nashville, Tenn., with the Ogletree Deakins labor and employment firm. After that, employers will have 60 to 90 days to comply.

Add it all up and restaurants have three to six months to figure this out.

However, it will most likely be closer to the three-month mark. According to Washko, “they’re pushing to have that done earlier than expected.”

The rules do not require an act of Congress, but there is an incentive for the Labor Department to get the rules out sooner rather than later – the prospect that the November election could usher in a new administration that stops the change.

The final rules are not yet known. But, as proposed, they would dramatically increase the weekly pay threshold for those who can be classified as exempt, from $455 per week to $970 per week, or from $23,660 per year to $50,440.

That would make the lowest paid 40 percent of the workforce eligible for excess pay if they work more than 40 hours a week.

The rules could have a significant impact on employers’ costs and management strategies. The National Retail Federation has estimated that it would cost retail and restaurant businesses $745 million to comply with the new regulations.

“I think it’s going to cost money in the long run for most restaurants,” Washko said. “Some restaurant companies will handle it more effectively and mitigate costs.”

In a note this week, Piper Jaffray analyzed several restaurant and retail companies and listed their average pay for store managers, based on numbers from Glassdoor. The analysis listed several chains that pay their unit managers less than $50,000 a year, on average.

Those chains or their franchisees, which include Dunkin’ Donuts, Burger King and Noodles & Company, could be required to hike pay for managers for them to qualify as exempt from overtime rules.

On the flip side, companies like Del Frisco’s Restaurant Group Inc. and Ruth’s Hospitality Group Inc. that operate upscale concepts would be less affected because their managers are paid higher wages and would be exempt under the rules.

Washko said that companies could reclassify unit managers as non-exempt and then pay them overtime wages. The problem with that is that unit managers work a lot of overtime.

“Exempt managers work hard, and they work hard for good reason, because of incentives, bonuses and things to make the restaurant more successful.”

“They’re either going to have to bump them up to the new minimum or reclassify them as non-exempt, which may result in overtime,” she said.

The National Retail Federation expects that the new rules will affect 2.2 million retail and restaurant workers, and that 32 percent of those would actually be converted to hourly.

But 21 percent of the affected workers would have their base wages lowered to reflect the number of hours they work, so even though those employees will get overtime, they won’t be paid more.

Washko believes that such a move could impact a restaurant’s morale. “It feels like a demotion,” she said. “You’re having to clock in and out and watch your hours. It could affect morale.”

Another potential concern is that the final rule could say something about the type of work that managers do.

Washko said the final rule could include a “duties test” that would govern how much basic labor managers are doing. The idea, potentially, is that managers must spend most of their time managing and not cooking food or serving customers.

“It’s hard to know anything concrete until we know the final rule,” she said.

Still, in the meantime, operators can prepare for the rules by getting a sense of what managers do, their job descriptions and what they do during a typical day. She also said restaurants should collect data for exempt managers and figure out how many hours they work in a typical week.

This article originally appeared on Nation’s Restaurant News.

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How To Avoid Burnout For Hospitality Managers

How To Avoid Burnout For Hospitality Managers

by | Mar 25, 2016 | Management

Hospitality management is one of the most rewarding fields in the industry, with the potential for strong earning power, industry accolades and public recognition for a job well-done. With all of its benefits, however, the field is definitely not all sunshine and rainbows. The challenges of a busy work environment, long (and odd) hours, and dealing with customers nonstop could easily lead to a career rut. But it doesn’t have to. Here’s the 411 on staying focused and engaged in your hospitality management position. 

Make learning a career-long endeavor

One of the best aspects of being in hospitality management is that there is always more to learn. Why’s this an advantage over other careers? Because, as a manager, it’s actually part of your job to learn as much as possible. Not only will it advance your career, it will also keep you stimulated at work. Plus, staff will appreciate you all the more!

There are a few ways to go about this. The first is with experience, so spend time alongside those working in areas beyond your own. Shadow them, ask questions and get to know their day-to-day responsibilities, the challenges they most often face and the roles they play in the business as a whole.

The second is with good old-fashioned studying. After all, there are some things that are best learned in a classroom setting. The most up-to-date standards and practices, trends in guest expectations, marketing innovations and business strategies are just a few of them. While you most likely don’t have the time to actually go to a traditional school, you can easily access areas of interest with online courses or free classes.

Pro-tip: It can be hard to get the ball rolling on continuing education, so choose an area that you’re actually interested in and think you’ll enjoying learning more about.

Enlist the help of a mentor

This tip is as relevant to the industry veteran as it is to the newbie because there is always someone who has more experience, more expertise or is just outright better (in a good way). So, take advantage of their know-how by developing a mentor-mentee relationship.

Whether it is official or casual, reach out to someone whom you respect and admire, and make checking in with them a regular habit.

This person can be a great source of knowledge and advice, especially when you hit a rough patch because they likely had a similar experience. Another benefit of cultivating this type of relationship is the possibility of a recommendation, formal or not, from a verified source that has industry clout.

Be the best you can be

Yes, it’s a slogan for the army, but it’s also a great piece of advice to keep in mind while on the job. Why? Because it means you’re working towards a goal. This equates to purpose, focus and motivation. Basically, it keeps work interesting.

This requires more action on your part than you think.

Yes, do the very best at every task and go above and beyond to take on new unassigned responsibilities. But also, engage with the industry at large outside of working hours as well as during them. Attend conferences and networking events, read trade publications and engage in industry-specific social media groups. Not only will you excel in your career, you’ll also meet great people along the way.

Keep lines of communication with other staff wide open

A surefire way to that career rut is by being in conflict with coworkers. The best way to keep this from happening is by communicating openly and honestly with both owners and more senior managers as well as colleagues and employees that are in more junior positions.

Keeping everyone on the same page by sharing as much work-related information as possible will go a long way toward preventing problems that miscommunication can cause. Give clear instructions and directions, ask for clarifications and explanations from other staff when necessary and address concerns and problems promptly.

Whatever you do, do not avoid the difficult conversations because this tactic will always make things worse in the end.

Make good hiring decisions

Taking the time to hire the right people for every position is especially important in the hospitality industry where the job performance of every person is evident not only to co-workers and management but also to guests and reviewers as well.

While taking shortcuts may seem to save time initially, the consequences of failing to hire competent, qualified, honest employees will be the time wasted cleaning up the metaphorical messes that they make.

Take the time to complete a thorough interview process, find the funds to pay the salaries that qualified candidates command and do not hesitate to fire employees who have proven themselves to be incapable, untrustworthy or unreliable. This will pay off in the end and save you plenty of those headaches that inevitably lead down the road that you’re trying to avoid.

The hospitality management field is ripe with long-term opportunity for those professional men and women who are not only willing to put in the effort to excel but also the effort to remain engaged. By following the tips above, any manager can get started down the path to continued job satisfaction and success.

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What’s Killing the Food Truck Fad?

What’s Killing the Food Truck Fad?

by | Feb 15, 2016 | IndiNews

The food truck fad has had a significant impact on the food & beverage industry, creating a new approach to serving food and granting many the opportunity become small business owners. However, as popularity grows, food truck owners are starting to feel the pressure.

One of the main challenges encountered by food trucks nationwide is coming from backlash within the community.

With the harsh sentiment that pop-up businesses, such as food trucks, enjoy an unfair advantage and negatively impact trade, business owners with established reputations and a stake in the community are making their complaints heard.

The American Dream seems to be in question.

While city politicians like to stand behind that dream, they are also responsible for protecting local commerce, leading to ever-changing legislation, some of which helps food truck owners succeed and some of which dooms their business to failure. These regulatory changes are ongoing, from the Pacific to the Atlantic, potentially opening doors in Seattle while closing others in Texas.

For one former food truck vendor who plied his trade in the middle of the country, the continual changes proved to be too much. His 2014 experience that welcomed the new year with a mad rush of investment ended at Christmas with disaster and debt, a common story heard all across the country.

Eddie Lawrence, a former food truck owner, believed with every fiber of his being that Americans would rush to try his very British, unsalted version of fried Atlantic cod with a heaping pile of hand-cut fries.

His venue near the center of Bentonville, Arkansas seemed like a shoo-in. However, red flags flew early on when Bentonville’s mayor Bob McCaslin learned too late that Lawrence had received his business permit from City Planning. Summoned to City Hall, Lawrence tells us McCaslin was none too happy.

“He went on about how he wouldn’t have approved it and I wasn’t going to get renewed next year, neither.”

And sure enough, as the weeks progressed, the city dispensed regulatory updates that hindered business for Eddie and a half dozen other local vendors, a few of which were long-established in the close-knit community of businesses around Bentonville Square.

While legislative changes did make things more difficult, it may not have been the main cause of Eddie’s business failure, as well as that of almost every other Bentonville food truck.

Compared to local legislation, standard business regulations have a much greater impact on the entire concept of the pop-up business.

One problem Eddie remembers was an unexpected introduction into sales and employee taxation requirements. As new vendors came into the area, he found they were as much in the dark as he was, and made a point to give them a heads-up on the tax situation. In the end, he says his quarterly unemployment insurance payment did him in.

Beyond the government and the law, there seems to be another consistent factor causing these food trucks to end up out of business. Many of these small businesses are run by just a few who may not have much experience running a company.

In the end, the lack of know-how seems to be the nail in the coffin.

Currently, the cost of food trucks has plummeted as an increasing number of barely used trucks and trailers find their way into consignment lots. Eddie Lawrence was lucky, since he built out his own trailer. He reports a loss of about half of the build cost by the time he finally managed to sell it almost a year after closing, and counted himself lucky at that.

Calculating Actual & Theoretical Food Costs

Calculating Actual & Theoretical Food Costs

by | Jan 15, 2016 | Business Toolkit, Management

Controlling food costs is integral to running a profitable restaurant. At its heart lies the challenge of balancing the (rather) static cost of the item displayed on the menu with the daily variations in cost for its ingredients. To ensure this, restaurant operators and managers must think of food cost as a performance metric; by comparing actual food costs to theoretical costs over time, restaurants can maintain profitability.

Food Costs As A Performance Metric

To gauge how well a restaurant is managing its food costs, you must first understand what a restaurant’s Theoretical Food Costs are, based on current inventory costs of all ingredients for the meals sold, and assuming perfect portions, no breakage and no shrinkage. Once the restaurant’s Theoretical Food Cost is known, you can then compare it to their Actual Food Cost, which is simply the actual cost of all the food that the restaurant used for a given period.

The difference between the two is the true measure of efficiency in food cost control; it’s called the Actual vs. Theoretical Variance and reducing it to its lowest possible point is the goal.

How To Calculate Theoretical Food Costs

Theoretical Food Cost is what your food cost should be in an ideal world with perfect portions and no breakage, waste, or shrinkage reported as a percentage of Total Food Sales. To calculate it, you need the following information:

  • Food Cost for each menu item, calculated with a very accurate tally of the quantity and cost of each ingredient that goes into each menu item, including any ‘paper costs’ such as napkins, wrappers, and bags.
  • Units Sold for the period for each item, which should be easily exportable from your Point of Sale system.
  • Total Food Sales for the period, in dollars.

Theoretical Food Cost (%) =

[ ( item A Food Cost × item A Units Sold ) + ( item B Food Cost × item B Units Sold ) + ..] / Total Food Sales × 100

Because each restaurant has so many items sold and so many ingredients for each item, this is a very difficult calculation to do manually. If your sales data is synced with your inventory system, this is likely a report that can be run with no manual intervention. Ideally it is run every time you calculate your Actual Food Cost.

How To Calculate Actual Food Costs

Actual Food Cost, also reported as a percentage of total sales, is a measure of how much your food cost truly is. It’s a straight-forward calculation, but it relies on taking careful and regular inventory counts. The formula for Actual Food Cost requires the following information:

  • Beginning inventory, or the total cost of inventory at the beginning of the period. It’s important to note that if the cost of something has changed, it’s best practice to use the most recent unit cost.
  • New inventory purchased, or the total cost of inventory purchased throughout the period.
  • Ending inventory, or the total cost of inventory left unused at the end of the period.
  • Total Food Sales for the period, in dollars.

Actual Food Cost (%) =

 [ ( Beginning Inventory + New Inventory Purchased ) – Ending Inventory ] / Total Food Sales × 100

How To Calculate Actual vs. Theoretical Variance

This is the measure of efficiency in controlling food costs; the result tells you how closely the restaurant’s Actual Food Cost was to their Theoretical Food Cost.

Actual vs. Theoretical Variance =

Actual Food Cost – Theoretical Food Cost

Although Theoretical and Actual Food Costs will never match, meaning your variance will never be 0, what you are looking for are trends when the divergence is increasing or when there are sudden changes. These changes are a signal to investigate the cause of the discrepancy.

The most common cause of increased variance (and higher than desired food costs) is inaccurate inventory. To reduce error, follow inventory management best practices. Another possibility is that you are wasting a lot of food. This may be due to inefficient portioning, spoilage, employee theft or error. The other, much more concerning, possibility is that the cost of what you are selling is out of line with what you are charging. Most often, this is because prices on the menu have not been updated to reflect increasing food costs.

Management Hacks: Business Operations

Management Hacks: Business Operations

by | Jan 13, 2016 | Business Toolkit, Management

As a manager, in a restaurant or otherwise, it is your responsibility to ensure that business is running smoothly. This ranges from how staff is performing to business outcomes. It can be a heavy load. However, there are still many easy and inexpensive things you can do to make sure your establishment is running the way it should and to prevent problems before they occur.

Get involved

No one thinks of the phrase “absentee boss” in a positive context. Being in the establishment is a good start, but you need to get out of your office and on the floor and in the kitchen.

Be seen.

Even if the general manager and/or owner are not, you can be. In fact, putting in the effort to be available to your staff and customers will help you in the end. Employees will respect you all the more, making your job that much easier.

Drop in unexpectedly

When I was working in the industry, my manager would pop in and out all the time. She would tell us that she had an appointment the next morning and was coming in late, then show up early and say that the appointment was rescheduled. After I moved on, she let me in on her little secret and explained that it was her way of keeping everyone on top of their game. And it worked.

The first few times you do this though, it may catch a few off guard. Give them some slack the first few times, but if they don’t shape up, you’ll know and can then do something about it.

Stop by after hours

You know those restaurant ‘spy’ shows where they go undercover to find out who’s behind the business’s shortages? Well, one of the recurring things on those programs is that abuses are happening after hours; bartenders are throwing parties, chefs are using your place for a pop-up restaurant, etc. Well, even though those shows are overdramatized, they’re not off the ball.

To ensure this is not happening at your business, especially if you’ve noticed something suspicious, go in when the place is closed, and do it often. For many restaurants, a drive by will suffice. No lights on and no parked cars are both good signs when the place is supposed to be closed. A similar tactic is to check with your alarm company to see when the alarm was turned on and turned off.

Hire an experienced person for the role of mystery shopper

Again, those ‘spy’ tv shows are on to something here.Using a mystery shopper can help uncover that which you would not discover otherwise. This can be anything from poor service and inconsistencies in food/beverages to comps, and more.

It’s best if your mystery shopper is experienced in restaurant and hospitality operations and someone you’re familiar with, but you’re employees are not.

Also, having your mystery shopper visit regularly will allow him or her to form relationships with your staff, increasing access to what’s going on behind the scenes.

Do an accurate inventory, and do it often

Whether you’re responsible for both food and beverages, or just one or the other, don’t just do an inventory on one time of item or before placing weekly orders. If possible, aim to do a thorough inventory 2-3 times per week. While inventory should always be done when the business is closed, don’t do it on the same days every week.

This is a lot to take on, but there are tools that can help. It’ll be worth it in the end; you’ll not only be protecting the business from unnecessary spending but also ensuring that business operations are running as they should.

Rotate staff between units and shifts

The more comfortable staff is with each other the more likely they will get together to do things that should not be done. This is a tough tightrope to walk.

You need to have people together enough that they work smoothly with each other, but not consistent enough to become overly friendly.

The side benefit of this is that everyone starts knowing how to work with everyone else, which is a plus if you have to switch around people for special events, staffing shortages, etc.

The bottom line is that there are several small steps that you can take to tighten up business operations and ensure that everything is being run as it should be.

Need some tools? Check out Management Hacks: Business Toolkit →