Article contributed by Kurt Kiess, CPA, MST, CBIZ Marks Paneth
Within the first month of 2022, businesses in the foodservice industry continued to navigate through the many adjustments that the Pandemic has brought them. These adjustments will become the foundation of each restaurant’s new normal as owners/managers and chefs meet their dining patron’s needs.
As a managing director of CBIZ Marks Paneth, I have been a part of the hospitality industry for years. I have worked with clients who have small and large restaurants, worked with those who operate with both inexpensive and pricey menu options, and understand how regardless of the business’s size or offerings they can succeed.
With that perspective in mind, the Pandemic has forced restaurants to focus on how they need to change how they operate. I have seen a lot of owners, whether they are new or have had a business for years, reduce the days they are open. This is because staffing is a major issue; the biggest shortage we have in the industry is employees. If dealing with shorter staff, it can be beneficial for businesses to adjust their hours with a focus on taking care of the great people that you do have rather than staff you haven’t been able to recruit. When working around the confines of an employee schedule, it’s important to note that those long hours or late shifts are a part of the nature of the industry. The industry grinds seven days a week and now you need to include a proper reboot of cleaning, and maintenance.
Our advice on how to focus your restaurant’s brand on meeting the demands of consumers is to understand who your customers are. That mix has probably changed over the past 2 1/2 years. The younger generation is not driven by dollars, and they instead care more about authentic connections. Money is not necessarily the sole motivating factor for this generation– it’s the overall dining experience. I am seeing more and more younger people spend money on food as a lifestyle, so restaurants need to continue to capitalize on this.
Additionally, understanding ways to make customers feel more comfortable is essential. Take the time to find a face covering elevated beyond that blue mask you might see in a hospital. Find a color and design that can be worn by the entire restaurant staff and that will create a comfort level for your customers as well.
In addressing the growth in takeout and delivery, businesses that do this well are communicating effectively with their customers. They pass the pricing information along to their customers, so they are aware of delivery fees. It is generally understood that if you are ordering from a third-party service, your total may be more than 20% of that in-dining experience. Takeout and delivery have been turned into an art form with great packaging driving many of our restaurant clients’ branding.
For many of our restaurant clients, the challenge of balancing takeout and delivery and in-restaurant dining runs much deeper. They need to come to terms with giving up what could be an unprofitable dream of traditional face to face hospitality for the mechanical but profitable production of a slimmed down menu sold to a customer they rarely see. Either way, careful consideration of how the customer is going to experience the flavors of your menu at home or in the restaurant with that special ambience is essential. It’s a tough conversation to look in the mirror and address.
Regardless of a takeout and delivery or an in-restaurant dining focus, the role of tipping needs to be addressed as we prepare for this “New Normal”. I see two different issues with it. The first from the restaurant owner’s standpoint is keeping the tip credit. The second issue is the idea of no longer tipping and increasing menus pricing to include the tip. The elimination of tipping was attempted by a few restaurants. At these restaurants, the top waiters left these restaurants when they could no longer make between $40 to $60 an hour out of the tip pool.
It’s always interesting when you see political change as we have in New York, and what the impact is going to be on our restaurant industry. Both the New York Governor Kathy Hochul and New York City’s new Mayor Eric Adams have made intentional strides in helping restaurant operators overcome the adjustments the pandemic has brought. The Governor has advocated for to-go cocktails to resurface and I personally see it as another way restaurants can profit and become a desirable place for those taking advantage of takeout options. The Mayor has additionally made it a priority to eliminate a lot of red tape that comes with opening a business. It can take years to open a restaurant and even to turn on the gas to operate its necessary cooking equipment. This gas issue is an on-going problem and prevalent throughout the city, but the Mayor’s efforts will help to alleviate this issue.
A major solution to the pandemic’s challenges on restaurants was outdoor dining. While legislation on the use of propane is still pending, Mayor Adams continues to support the use of propane heaters. Our advice is to do it when you can and when it is safe, preferably in warmer weather and with proper sanitation procedures.
Sure, there will be other challenges in the future. For many operators, they are doing better as the industry is on the verge of revival. In fact, many of my restaurant clients are better positioned today than they were 2 years ago with PPP, employee retention credits, and the restaurant grants. Many of those that failed couldn’t effectively take advantage of such government aid and some were already struggling to earn a profit pre-pandemic. By paying attention to your customer’s needs and asking for help from industry professionals, your restaurant’s “New Normal” will be paved with success.
Kurt Kiess, CPA, MST, is a Managing Director and Restaurant Group Leader at CBIZ Marks Paneth. He was recently recognized as one of the most powerful people in Long Island accounting by Long Island Business News. Mr. Kiess has more than 30 years of public accounting experience and provides attest and accounting services to clients in the restaurant, real estate, retail, insurance and manufacturing industries. He serves on CBIZ Marks Paneth’s executive committee, which sets policy and strategy for the firm. As the leader of CBIZ Marks Paneth’s Restaurant Group, he has been a resource to Long Island restaurants as they have navigated the impact of the COVID-19 pandemic, advising them on Paycheck Protection Program loans and forgiveness; landlord and tenant relations amid the crisis; employee retention credits; and the new Restaurant Revitalization Fund. He is also an active community member on Long Island.