Washington Hospitality Magazine January 2018 by Washington Hospitality Magazine

WA S H I N GTO N

January 2018

LEGISLATIVE

PREVIEW •

Our shifting

legislative landscape

•

It’s time to fund

promotion!

•

tourism The ROI of

getting involved

Washington Hospitality Association 510 Plum Street SE Olympia, WA 98501-1587

January 2018 │ 1

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Quality Assurance

The core objective of Sysco’s Quality Assurance department is ensuring the quality and safety of all Sysco brand products. Adhering to specifications which are higher in many cases than those provided by regulatory agencies, Sysco’s Quality Assurance department inspects products during production and at redistribution centers, and navigates the complicated world of food safety - all without taking shortcuts..

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EDITORIAL STAFF Publisher, Anthony Anton Executive Editor, Lex Nepomuceno Editor-in-Chief, Marianne Scholl Art Director, Lisa Ellefson Managing Editor, Paul Schlienz Contributing Editors: Andy Cook, David Faro, Jillian Henze, Morgan Huether, Nicole Vukonich and Sheryl Jackson

Inside

wahospitality.org

EXECUTIVE COMMITTEE Chair: Frank Welton, Hilton Worldwide Vice Chair: Chad Mackay, Fire & Vine Hospitality EXECUTIVE TEAM President and CEO, Anthony Anton Vice President, Teran Haase CFO: Darin Johnson Senior Director of Communications & Technology, Lex Nepomuceno Director of Local Government Affairs, John Lane Director of State Government Affairs, Julia Gorton Director of Internal Operations, Kylie Kincaid Director of Membership, Steven Sweeney Education Foundation, Naja Hogander Incubation Senior Manager, Ken Wells Benefit Programs and Events Senior Manager, Victoria Olson

Features 16

Preview: Washington’s 2018 Legislative Session

This Year’s Legislative Session by the Numbers

Hill Climb 2018: Your Participation Matters!

A Great Return: Tourism Works for Washington

Washington’s New Paid Sick Leave Law

510 Plum St. SE Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 wahospitality.org

Letters are welcomed, but must be signed to be considered for publication. Please include contact information for verification.

In Every Issue 6

From Your President and CEO

Reproduction of articles appearing in Washington Hospitality Magazine are authorized for personal use only, with credit given to Washington Hospitality Magazine and/or the Washington Hospitality Association.

News Briefs

Association News

Articles written by outside authors do not necessarily reflect the views or positions of the Washington Hospitality Association, its Boards of Directors, staff or members.

Cost Saving Programs

Local GA Update

Calendar/New Members

Ask the Expert

Products and services advertised in Washington Hospitality Magazine are not necessarily endorsed by the Washington Hospitality Association, and do not necessarily reflect the opinions of the Washington Hospitality Association, its Boards of Directors, staff or members. ADVERTISING INQUIRIES MAY BE DIRECTED TO:

Lex Nepomuceno

360.956.7279 lexn@wahospitality.org Washington Hospitality Magazine is published monthly for members. We welcome your comments and suggestions. email: news@wahospitality.org, phone: 800.225.7166. Circulation: 6,310.

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Hospitality The

industry that serves.

PEOPLE. People. Careers. communities. Careers.

Communities.

President and CEO

2018: Our Year for Tourism I love hospitality. We are welcoming and solution-oriented, constantly finding ways to improve the experience we deliver to guests. Just as you strive for creative solutions in your business, your team here at Washington Hospitality is constantly working on solutions to policy issues that fit the needs of our industry and work for Washingtonians. Over the past several years, we’ve had a string of successes delivering solutions, from Workers’ Comp reform to privatizing alcohol to, most recently, proactively finding a paid family leave solution. On the local level, short-term rental ordinances are now in place in Seattle and several other cities, and we’ve helped Issaquah pass a model to-go container ordinance. The time has come to find a solution for another major issue for our industry and our state: tourism. As I’m sure you know, Washington is the only state in the country that does not have a statewide tourism marketing program. This legislative session we have a great opportunity to change that, building on creative ideas and solutions to finally put in place what we need to showcase all our beautiful state has to offer. Being industry, I’m sure you’re also aware of the benefits of tourism. Now is the time to talk to your legislators about how it benefits your business. Now is the time to talk to your local press about what tourism brings to your town. And now is the time to raise awareness about how important tourism is for the state of Washington. How can you do all of this? Let me give you four easy ways: 1. Attend Hill Climb on January 29. A show of force and unity often leaves legislators with an impression about the importance of an issue, and this year being strong from the get go will give us the momentum we need to get through the committee hurdles and on to the finish line. Please make plans to join us on Jan. 29 in Olympia. 2. Become an ambassador for the industry. We can help you turn an existing connection to a legislator or a passion for engagement into an opportunity for particularly effective advocacy. 3. Be involved in grassroots. Sign up for our text alerts and contact your legislators when you receive a call to action. This way legislators will know that an entire industry—the largest group of private employers in the state— stands united on a solution. 4. Share ideas with your community. The Association can help you write an article for your local paper about what tourism means for your main street. Adding your voice to the conversation will help build public awareness of the importance of tourism for our state and our communities. All of this said, it’s going to move fast. This is a short session, and it comes in an important election year. The legislature will have 60 days to tackle some very specific issues, and this creates opportunities for industries that have a laser focus on a specific solution. With your help, we’ll demonstrate that focus and deliver lasting solutions again this session.

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HEALTHCARE

SOLUTIONS

We are confident that we have competitive rates to show you.

HEALTHCARE SOLUTIONS WA Hospitality Benefits Specialist Lesley Webb-Henry 877.246.0545 wahospitality.org/wise-buy/health-care-solutions

Primary Source of Information | News Briefs

ICE expected to target quick service restaurants In November 2017, a top Immigration and Customs Enforcement (ICE) official said that the agency is stepping up worksite enforcement of immigration laws. His comments were followed by news reports suggesting that ICE may be looking at quick-service restaurants as part of its crackdown on businesses that hire undocumented workers, focusing on both penalizing the business and deporting unauthorized employees. These types of enforcement operations have increased under President Donald Trump, who pledged to strictly enforce the country’s immigration laws to reduce illegal immigration into the United States. Look for information on reducing the risk of significant penalties related to I-9 compliance at wahospitality.org/I-9-compliance. NRA webinar addresses increasing risk of website accessibility lawsuit The Americans with Disabilities Act predates the internet, and there is no mention of websites in the ADA. Nevertheless, as of August 2017 there were more than 750 federal lawsuits challenging businesses over the inaccessibility of their websites under the ADA. Restaurants represented 186 of these cases and other hospitality businesses represent seven. The National Restaurant Association together with Columbia Lighthouse for the Blind have produced a webinar to help members understand this legal risk and take action to reduce the possibility of a lawsuit. The webinar is available to all Washington Hospitality members at www.restaurant.org/Events-Networking/ Webinars/Website-Accessibility-and-the-Americans-with-Disab. Feb. 3 Evening of Hope Gala Will Raise Money to Change Lives Each February since 1996, Seattle hoteliers and the Seattle Hotel Association have thrown a great party to raise a lot of money for important community causes. The 2018 Evening of Hope Gala, which takes place Feb. 3 at the Fairmont Olympic Hotel, will cap three years of raising money for Mary’s Place, an organization that empowers women, children and families to reclaim their lives by providing shelter, nourishment and hope in a safe community. The Evening of Hope funds have helped Mary’s Place increase the number of beds they provide each night, open new shelter locations, including three 24/7 Family Centers that offer employment, housing, and wellness resources, and three Popsicle Place facilities for families with children with critical conditions undergoing outpatient treatment at Seattle Children’s Hospital. Without this housing, these families would likely be sleeping in cars or tents while their children fight cancer or other critical health challenges. “The Seattle Hotel Association, and member hotels, take pride in serving and caring for our guests,” said Amanda Parsons, Seattle Hotel Association’s gala chair. “We wanted to work alongside an organization and program that emulates an unconditional service for others, as well. We truly value our partnership with Mary’s Place. The organization is working in the community every day to help our neighbors in need, with a deep passion and commitment to improving lives.” Hollywood glitz and glam is the theme for this year’s Evening of Hope, or “striking a pose and setting the stage for change.” Tickets are available for the cocktail reception only for $100 per person and include entrance to the social hour and silent auction from 5 to 7 p.m. VIP tickets cost $375 and include the entire evening’s festivities and the post-auction after party. Both ticket tiers are available at seattlehotelassociation.org or by calling 206.236.6167. 8 │ wahospitality.org

Primary Source of Information | News Briefs

Proposed Federal Tip Pool Rule Change Welcomed by Industry On Dec. 4, the U.S. Department of Labor announced a proposal to change the tip regulations under the Fair Labor Standards Act to allow workplaces the freedom to share tips among more employees. The proposal would help decrease wage disparities between tipped and nontipped workers – an option that is currently restricted by the controversial 2011 rule that bars certain employees from mandatory tip pools. The DOL proposal only applies to states like Washington where employers pay a full minimum wage and do not take a tip credit. The new rule would allow employees who do not traditionally receive direct tips—such as restaurant cooks and dish washers—to participate in mandatory tip pools. These “back of the house” employees contribute to the overall guest experience, and under the rule they would also be able to benefit when guests reward for that experience. The public comment period on the proposed rule change ends on Feb. 4. Although not yet adopted, the plan to move away from excluding certain employees from tip sharing is good news for hospitality. Increasing labor costs and other new mandated expenses present significant challenges to Washington restaurants, which operate on extremely narrow profit margins. Tip pools help alleviate disparities in compensation within a restaurant’s team. Allowing back-of-the-house employees to benefit when guests tip is also the right thing to do because back-of-the-house employees also contribute to the success of the guest’s experience. Washington restaurants have been innovating to be better able to balance compensation among all employees, including shifting to service charges or inclusive pricing. However, these changes are not something that restaurants of all types and sizes can undertake. The proposed rule change would provide employers with another option to benefit their entire teams. Contrary to some media reports, tips have always been the property of employees and the proposed rule would not allow employers in Washington state to retain tips. Case law and Washington’s new minimum wage law, under Initiative 1433, identifies tips and gratuities as the property of employees. Owners and managers are also legally prohibited from benefiting from tip pools.

History of Our Lawsuit Against the 2011 Tip Pool Rule The Washington Hospitality Association, and the Washington Restaurant Association before it, have joined other trade associations and the National Restaurant Association, in challenging the 2011 “Tip Pool” rule all the way to the U.S. Supreme Court.

Case: National Restaurant Association et al v. U.S. Department of Labor et al

Status: Petition submitted to U.S. Supreme Court, Jan. 19, 2017

Co-defendants: Washington Hospitality Association (and Washington Restaurant Association before it), Oregon Restaurant and Lodging Association and the Alaska Cabaret, Hotel, Restaurant and Retailers Association.

Issue: We are challenging the U.S. Department of Labor’s position that it can apply its 2011 federal tipcredit restrictions to employers who don't take a tip credit. Specifically, the DOL says it can prohibit these employers from setting up tip-pooling arrangements that include employees who are not customarily tipped, such as back-of-the-house staff. • • •

•

We won a decisive victory on this issue in a 2010 decision, Cumbie v. Woody Woo Inc., before the 9th Circuit Court of Appeals. We won again in federal district court in 2013, in the Oregon Restaurant and Lodging Association et al case. In February 2016, a split three-judge panel of the 9th Circuit reversed this to rule in favor of the DOL, ignoring the 9th Circuit’s own precedent in the Woody Woo case. The 9th Circuit denied our petition for a rehearing in September 2016; however, 10 judges issued a blistering dissent, citing Woody Woo and a split among circuit courts on the issue. These factors could open the door to U.S. Supreme Court consideration in 2017. The 9th Circuit’s ruling is on hold pending our petition to the Supreme Court.

To learn more or leave comments about the proposed rule, visit www.dol.gov/WHD/flsa/tipcreditnprm.htm. January 2018 │ 9

Association News It’s Hill Climb time! Make plans to join your fellow Washington Hospitality members and government affairs team on Jan. 29 at our Hill Climb and Taste Our Best legislative reception. These annual events are an opportunity to show the strength and importance of our industry, and the more hoteliers and restaurant operators participate, the better for our legislative impact. The GA team will set up appointments and provide you with easy-to-use talking points for conversations with lawmakers about our industry and our priorities. The day caps off with a reception that highlights socializing and great food and the state’s finest beers and wines. Learn more on page 11 or go to www.hillclimb2018. com to register. Change in RETRO rules makes individual safety performance more important than ever The Washington Hospitality’s RETRO program returned $12 million in premium refunds to participating members in 2017, building on its track record of refunds that over the last four years have averaged close to 27 percent. Year after year, RETRO not only delivers great refunds, it helps members increase worker safety and reduces the risk of injuries. This focus on safe workplaces, and on participants’ safety performance, is going to be more important than ever under a change in rules governing the program. Beginning in the 2018 plan year, the Department of Labor & Industries’ rules governing association retrospective rating programs like ours will focus on an individual participant’s safety performance to a greater degree than in the past. Under the old rules, groups could take a higher risk with aggregated claim costs from the experience of all participants in the RETRO program and then buffer the impact of individual claims on a participant’s refund potential. Now individual performance, which reflects, among other things, claim frequency, severity and time loss, will play a much greater role in determining refunds. With the rule changes, participants need to redouble efforts to maintain the safest possible workplace and to

have employees up to date in all safety training and best practices. Effective claims management is also increasingly important, and we partner with ERNwest to deliver exceptional claim management services. Time loss is the greatest single factor in increasing your workers’ comp costs, and getting help to reduce or eliminate it will increase your refund potential. Washington Hospitality’s RETRO team can help you with effective time loss mitigation strategies and facilitation, enhanced-safety-direct-interventions and claims management services to help you protect and even improve safety performance. They’ll connect you with resources such as the Stay at Work program, which will reimburse you directly for bringing back injured workers. You can also request an onsite mock safety inspection, which will identify risks before an accident occurs or an L&I safety inspector stops by. To take advantage of our RETRO team’s expertise and all the program has to offer, please contact Jessica Woods at 360.956.7279 or via email at jessicaw@ wahospitality.org.

AHLA training addresses sexual violence in the workplace The American Hotel & Lodging Association (AHLA) and the National Alliance to End Sexual Violence(NAESV) have partnered to develop an online training program as part of the hotel industry’s efforts to raise awareness about sexual violence in the workplace. The training provides information and resources to educate hotel employees on identifying and reporting sexual harassment and assault, as well as offering support to victims of sexual violence. The training is available from the American Hotel & Lodging Educational Institute, which developed the program with NAESV. The 30-minute online training program addresses the issue of sexual violence in the hospitality industry and offers tips to combat this issue. Case study scenarios reinforce concepts and allow users to test their knowledge, and downloadable resources ensure the training remains relevant on the job. More information about the training is available at ahlei.org/Programs/Sexual-ViolencePrevention-for-Hotel-Staff.

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Put your best

Fish forward. Food waste is bad enough. Contamination is worse! How do you stop a bad fish from reaching the table? You make sure that your line staff knows the rules, knows how to how to detect bad product, and absolutely knows how to rotate your walk-ins so that you are always putting your best ingredients on the plate. Do your people know how to do that? Let’s hope so. Safe service is good service. ServSafe is the best service. Train your staff today!

VISIT WRAEF.ORG for more info.

SERVSAFE MANAGER HOSPITALITY TRAINING SOLUTIONS January 2018 │ 11

Cost-Saving Programs

New Options in Heath Care Today’s national health care ecosystem is confusing for employers. Understanding compliance issues is like trying to untangle barbed wire, and predicting policy changes is like watching a tennis match between blindfolded opponents. Add to that all the options and it’s no wonder some employers stay up at night wondering how and what to offer their team?

Tela-Doc can be immediate confirmation of illness, allowing employees to avoid co-pays and the hassle involved with a traditional doctor’s clearance. All that aside, the comfort of visiting the doctor from home is huge. Not having to travel while sick? That’s what Tela-Doc is all about. And it is also the future of health care.

There’s plenty now to give you a piece of mind. The future of health care is increasingly digital and individualized services are available through new financial models. Computer and smartphone applications that connect patients to immediate diagnostic services through Tela-Doc is an example of the first. Direct Primary Care programs are an example of the latter. Both are available to Hospitality members. Tela-Doc It is not uncommon for obstacles to get in a way of a needed consultation with a doctor, and the time a visit to a doctor takes out of the day is one of the most common barriers to accessing health care. Now imagine quickly connecting with a physician through a smart-phone? Your employees can connect to a doctor through Tela-Doc, get an immediate evaluation that can even result in a prescription when needed. To a worker, especially someone already balancing childcare, to be able to visit with doctor, get an antibiotic and a doctor’s note all before their shift starts? Tela-Doc is a lifesaver.

Direct Primary Care Another change in the health care landscape has been a move to simplify the financial model used to support care. Direct Primary Care (DPC), sometimes described as “concierge care for the masses,” is an innovative alternative payment model that provides access to high functioning health care with a simple, flat, affordable membership fee. There are no fee-forservice payments and no third-party billing. With DPC programs, patients have extraordinary access to a provider of their choice, often for as little as $70 per month, and physicians are accountable first and foremost to their patients. The patient-primary care provider relationship has been delivering comprehensive patient care with superior health outcomes and empowering an authentic therapeutic relationship. The Washington Hospitality Association and Hospitality Industry Health Insurance Trust (H.I.H.I.T.) offers extremely competitive options built to service the hospitality industry. Standalone products can be packaged to fit your company’s unique needs and Direct Primary Care along with Tela-Doc are two we recommend exploring today. For more information contact Washington Hospitality Benefits Specialist Lesley Webb-Henry at 877.246.0545.

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At your

fingertips. Fingertips. Hospitality organizations lose lots of them. Slicers, dicers, and knives, oh my. When you can’t find your finger tips, let’s hope you can find First Aid, or at least someone who is trained by Washington Hospitality. Call us today to get your staff trained. Help your staff save their fingers.

VISIT WHAEF.ORG for more info.

First Aid/CPR/AED HOSPITALITY TRAINING SOLUTIONS

January 2018 │ 13

Government Affairs | Local GA Update

Seattle’s new mayor Former U.S. attorney Jenny Durkan was sworn in as mayor of Seattle when the November elections were certified on Nov. 28, 2017. She replaced interim Mayor Tim Burgess and became the city’s first woman mayor in 91 years. Mayor Durkan was the candidate of choice for Seattle’s hospitality industry and was endorsed by Seattle Hospitality for Progress, the political arm of the Seattle Restaurant Alliance and Seattle Hotel Association. On her first full day in office, she established the city’s first Small Business Advisory Council, which is tasked with ensuring small businesses have a role in informing policies and programs, including providing input on the impact of City decisions on small businesses, making policy recommendations, and helping increase access to tools and resources available to small businesses. Hospitality will be well represented on the advisory council with co-chairs Joe Fugere, owner of Tutta Bella; Taylor Hoang, Washington Hospitality board member and the executive director of the Ethnic Business Coalition; and Donna Moodie, owner of Marjorie Restaurant. Seattle defeats jobs tax, creates taskforce to evaluate new tax options In November, the City Council voted against including a tax on jobs in the 2018 budget, an important win for Seattle hospitality businesses. While the jobs tax was defeated, a majority of councilmembers did voice support for exploring this kind of tax as a way to raise additional revenue to address homelessness. The council approved funding to begin developing systems to collect a tax on employee hours, which would shorten the necessary implementation period should a jobs tax be passed in the future. The council also established a taskforce to identify at least $25 million in new taxes and evaluate an "employee hours tax." During her campaign, Mayor Durkan opposed the tax on jobs proposal which was intended to raise $25 million to expand the city’s response to homelessness. In her first week in office, she joined King County Executive Dow Constantine in announcing One Table, a group that will assess the region’s current response to homelessness, including root causes, and will work to scale up communitybased and government programs that are successful. The Seattle Restaurant Alliance and Seattle Hotel Association support this comprehensive regional approach 14 │ wahospitality.org

to the housing and homelessness crisis, and the local government affairs team in Seattle will closely monitor developments related to a jobs tax proposal or other new business taxes or mandates. Seattle’s New Sweetened Beverage Tax On Jan. 1, 2018, Seattle began imposing a 1.75 center per ounce tax on sweetened beverages and concentrates used to make sweetened beverages as syrups. Here are key aspects to note about this sweetened beverage tax (SBT): • •

•

The SBT is imposed on and collected at the distributor level. A foodservice operator will only be responsible for remitting the SBT if the operator purchases sweetened beverages or syrups outside of Seattle for resale within Seattle city limits. In this case, the operator is considered a self-distributor and must pay the tax. The tax on concentrates such as syrups is based on the finished product and is calculated using the manufacturer’s instructions. In the absence of manufacturer’s instructions, it will be presumed that one ounce of syrup yields one 12-ounce beverage. Distributors can, with documentation, recalculate rates for syrups that are used in non-standard ways and/or exempt products based on use. Foodservice operators will need to ask their distributors for their policies and practices in addressing non-standard uses.

For a complete fact sheet on the sweetened beverage tax, visit wahospitality.org/what-youneed-to-know-about-seattles-sweetenedbeverage-tax or call your AC.

Government Affairs | Local GA Update

The Drive to Regulate Short-term Rentals Seattle In December, the Seattle City Council completed its protracted effort to establish a regulatory and licensing framework for short-term rentals (STRs), delivering an important win for the Seattle Hotel Association. In total, the council passed three related ordinances: 1) a land use ordinance that makes necessary changes to the land use code; 2) a tax ordinance that establishes an $8 per night tax for a room and $14 per night tax for an entire unit, which Airbnb has called the highest STR tax in the country; and 3) a regulatory ordinance that establishes safety, insurance and licensing requirements. In addition to providing basic health and safety requirements, the regulatory ordinance includes limits on short-term rental operators that are important to our industry: •

•

New operators are restricted to listing their primary residence plus one additional unit. Existing operators will be limited to listing two units, except in a limited downtown corridor. After a year, existing operators can add their primary residence as a third unit. Existing operators may continue renting out the number of units they operate in downtown Seattle between Olive Way and Cherry Street, plus their primary residence and one additional unit.

identified to both the city and the renter, living within 15 miles of the rental when neither the owner nor an authorized agent are occupying the property. Additionally, there may be no more than two short-term rental agreements in effect for a single dwelling unit at any one time. When an owner continuously occupies a portion of the short-term rental as his or her primary residence, there are no limits with regard to frequency and total number of days per year for rentals. Short-term rental operators are required to have business license and pay licensing fees and lodging taxes. The ordinance requires that city staff provide an update on the regulations’ impact along with recommendations for improvement by July 15, 2018. Walla Walla On Nov. 1, the Walla Walla City Council voted to ban nonowner-occupied short-term rentals, but grandfathered in units already in place as of Nov. 9, 2017. This follows a vote in August that established regulations for owner-occupied short-term rentals. An owner must occupy a shortterm rental for 275 days a year or more for that rental to be classified as “owner-occupied.” Permissible short-term rentals will need to follow the health and safety regulations as well as licensing and tax requirements established in August.

Existing operators are defined as those who can demonstrate that they, prior to Sept. 30, 2017, have been operating legally which includes holding a business license and paying appropriate taxes. The new laws go into effect in 2019.

The decision to ban short-term rentals came after two-years of debate.

Kirkland The Kirkland City Council passed STR legislation in November 2017 in response to numerous complaints about excessive noise, trespassing and litter around short-term rental units in the city’s neighborhoods.

Spokane: Passed in 2015, the Spokane STR ordinance requires operators to have a permit and business license, comply with building and fire codes, and pay lodging taxes.

Under the new ordinance, which applies to single-family residences, the owner or authorized agent must occupy the unit as a primary residence at least 245 days per year. Operators are also required to have a property manager,

Other cities with STR ordinances

Port Townsend: Port Townsend’s STR ordinance, which was approved in May 2017, requires the owner to be available during rental activity and a common entry for both guests and owner. Kitchens are prohibited, but microwaves and mini-fridges are permitted. January 2018 │ 15

PREVIEW:

By Nicole Vukonich On Jan. 8, Washington’s 147 lawmakers, representing 49 legislative districts across the state, will convene in Olympia for a short, 60-day legislative session. For the first time in five years, Democrats will have control of Washington’s governor’s office and both the House of Representatives and the Senate. With the success of Democratic candidate Manka Dhingra in a special election in the 45th Legislative District, Democrats now have a one-seat majority in the Senate. This change comes after five sessions with the Majority Coalition Caucus in control of the Senate. In the House of Representatives, Democrats maintain their two-seat majority. With these slim majorities, we expect to see vigorous debates on policy issues in each chamber. This new landscape may also elevate some of the more moderate members of each caucus, allowing them to play a larger role and drive policy during the session. Caucus leadership on both sides of the aisle will remain largely unchanged for the 2018 legislative session. Sen. Sharon Nelson, D-Maury Island, continues to lead Senate Democrats now back in the majority, while Sen. Mark Schoesler, R-Ritzville continues to lead Senate Republicans. In the House of Representatives, Rep. Frank Chopp,

D-Seattle remains Speaker of the House, while Rep. Dan Kristiansen, R-Snohomish, leads House Republicans. Going into the 2018 legislative session, lawmakers are expected to address a couple of significant bills that went unresolved during 2017’s record-making 193-day legislative session. They’ll need to pass a capital construction budget which failed to make it to the governor’s desk last year. To achieve this, lawmakers will also need to find a solution to the “Hirst decision,” a State Supreme Court case dealing with rural water rights that became intertwined with the capital budget. For the first time in more than six years, the legislature will not be focused on meeting the State Supreme Court’s McCleary decision ordering significant increases in spending on K-12 education. In 2017, agreement was reached on a funding solution, and although the court retains jurisdiction of the case and continues to levy daily sanctions against the state, the implementation of the new salary allocation model in Sept. 2018 is expected to fully satisfy the McCleary requirements. This year’s legislative session will likely see minor tweaks to K-12 funding in the supplemental budget, but education will not dominate the conversation. In 2018, your Washington Hospitality Association State

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Government Affairs Team will be focused on passing legislation creating a robust, statewide tourism marketing program. Additionally, the state government affairs team will focus on the 2018 legislative priorities adopted by the association’s Government Affairs Committee. These priorities encompass a range of industry-wide issues categorized under eight main topics. These topics are: tourism, employment, regulatory and business operations, taxation, workforce development and safety, the environment, health and nutrition, and helping communities thrive. Given it is a short legislative session in a supplemental budget year with a new Democratic majority in the Senate, we expect to see many “political message” bills that could impact our industry. We recognize that with a Democratic governor and slim Democratic majorities in both chambers of the legislature, our team may play more of a defensive role in protecting our industry than we have in recent legislative sessions. Rest assured, your state government affairs team is prepared to meet the demands of the coming legislative session.

LEGISLATIVE PRIORITIES TOURISM: Create a robust, state-supported tourism program Passing a bill to support a statewide tourism marketing program is the Association’s top legislative priority this session. Substitute House Bill 1123 and Substitute Senate Bill 5251 were companion bills introduced last session to create a sustainable long-term funding mechanism and industry-led program for statewide tourism promotion. Currently, Washington is the only state in the country without a statewide tourism program. Tourism is a guaranteed return on investment for our industry and our state. An investment in tourism brings new money to Washington. Without investments in tourism our state is losing market share and visitors to neighboring states. For example, Montana invests $19 million into statewide tourism and their traveler spending grew 70 percent faster than in Washington. Tourism is essential to the success of our industry and will also help the overall economic health of our state. Learn more on page 23. EMPLOYMENT: Find reasonable solutions to employee needs that allow the hospitality industry to continue to operate and serve the community, people and careers. 2018 will usher in many large changes to our industry including another increase

in the minimum wage and the implementation of the paid sick and safe leave law approved by voters in 2016. Issues affecting employment are hot topics, and discussions or legislative proposals concerning restrictive scheduling, tip pooling, wage equity, service charges, teen and training wages, and health insurance reform are likely to surface during the upcoming legislative session. REGULATORY RULES & BUSINESS OPERATIONS: Create and maintain efficiencies in the regulatory process for hospitality businesses to thrive. Last session, the Washington Hospitality Association accomplished several wins for our members, including legislation that allows operators to purchase liquor with credit cards and removed the limit on the number of liters of alcohol that may be purchased directly from a retailer. Your state government affairs team will work to continue this momentum in the next session. TAXATION: Ensure the hospitality businesses are taxed fairly, find opportunities to reduce tax obligation to stimulate economic growth. Each year, we see new revenue proposals during session. Whether the proposals are packaged as new taxes, changes to workers’ compensation or unemployment insurance, updates to the local taxing authority or taxes on ingredients, we will make sure the new tax proposals do not hinder or harm our industry or our ability to do business. Last year, your government affairs team defended against a statewide 20 percent B&O tax increase proposal, as well as capital gains, street utility and sweetened beverage taxes. With Democrats controlling the governor’s office and both chambers of the legislature we will likely play a defensive role against new taxes during the upcoming session. WORKFORCE DEVELOPMENT & SAFETY: Find public/private partnerships to train and develop programs to strengthen our workforce. Training and developing a strong workforce is essential to the long-term success of our industry. We need talented employees who are prepared to enter the workforce. The Washington Hospitality Association’s Education Foundation is already paving the way forward. We will continue to find more ways to create public/private partnerships at the state level to support the foundation’s ongoing educational efforts. Safety within the industry is also an important component to keeping a strong workforce. Our RETRO program is a safety incentive program allowing businesses the opportunity to earn a partial refund of workers’ compensation premiums by January 2018 │ 17

reducing workplace injuries and lowering associated claims. Each year this program returns millions of dollars back to businesses in our industry. ENVIRONMENT: Ensure new environmental and sustainability requirements allow the hospitality industry and businesses to reasonably comply. Increasingly, new environmental regulations impact more businesses within our industry like local bans on straws and packaging requirements. We want to make sure that businesses in our industry may reasonably comply with new environmental and sustainability requirements without major disruption to current practices. HEALTH & NUTRITION: Ensure public safety requirements are applied consistently across hospitality sector businesses, are based on science, and allow for consumer choice.

18 │ wahospitality.org

Maintaining quality, consistent health and nutrition requirements helps all businesses in our industry. This means ensuring changes to our state’s food code, home kitchen requirements and standards, and ingredient regulations are based on science and are not overburdensome to our members. HELPING COMMUNITIES THRIVE: Support reasonable solutions that build strong communities and help the industry thrive. We all have a stake in the shared success of our communities. The Government Affairs Committee recommended we include our voice in discussions about the homelessness crisis, the opioid epidemic, creating affordable housing, and support of increased mental health and chemical dependency options. These issues may seem somewhat removed from the business side of our industry, however, helping communities thrive means addressing the public safety and public health priorities of our communities.

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THIS YEAR’S LEGISLATIVE SESSION BY THE NUMBERS Short sessions, in even years, are 60 days, with the goal of

Jan. 8, 2018 = Start of Washington State’s 66th Legislative Session

Washington has

adjusting the biennial budget.

147 state lawmakers from 49 legislative districts.

Long sessions, in odd years, are 105 days and have the goal of

SENATE

This will be a

passing a biennial budget.

60-day “short session”

•

49 total members

with the primary goal of making

•

MAJORITY: 25 Democrats

adjustments to the two-year

Governor Jay Inslee,

•

MINORITY: Senate

D, was elected to his

spending plan adopted in 2017.

Republican Caucus with 23 Republicans + 1 Democrat

second, four-year term in November 2016.

2017-2019

state operating budget:

+ 1 Democrat

$47.3 billion

The last time Democrats occupied

HOUSE OF REPRESENTATIVES

the Governor’s Office and held majorities in the House of Representatives

Whenever the legislature convenes, lawmakers are free to raise any issue and pass new

•

98 total members

•

MAJORITY: 50 Democrats

•

MINORITY: 48 Republicans

legislation unrelated to the budget.

and the Senate: 2012

Fun Fact: Washington is one of only 19 states with a biennial budget.

SENATE LEADERSHIP

HOUSE OF REPRESENTATIVES LEADERSHIP

Senate Majority Leader: Sen. Sharon Nelson, D-Maury Island

Speaker of the House: Rep. Frank Chopp, D-Seattle

Senate Minority Leader: Sen. Mark Schoesler, R-Ritzville

House Minority Leader: Rep. Dan Kristiansen, R-Snohomish

Senate Ways & Means Committee Chair: Sen. Christine Rolfes, D-Kitsap County

House Appropriations Committee Chair: Rep. Timm Ormsby, D-Spokane

Senate Labor & Commerce Committee Chair: Sen. Karen Keiser, D-Des Moines

House Labor & Workplace Standards Committee Chair: Rep. Mike Sells, D-Everett

20 │ wahospitality.org

Hill Climb 2018:

Your Participation Matters! Members play a critical role in educating law-makers about our industry’s priorities and challenges Washington Hospitality works year-round to help you deliver great experiences and meet the many challenges of running a hospitality business. Every January, we partner with members to make sure Washington lawmakers understand what they do during session impacts your ability to serve guests, provide jobs and help your community thrive. Hill Climb and Taste Our Best play a central role in our education and advocacy efforts. These annual events, which take place this year on Jan. 29, bring hoteliers, restaurant operators and legislators together for one-on-one conversations about the challenges hospitality faces and the opportunities we provide. When legislators hear from constituents who operate businesses in their districts, they listen, and this year we need them to listen better than ever.

In the 2018 session, with one-party control in both houses, Hill Climb and Taste Our Best will be more important than ever!

Please join us for a day on “the hill.” Our government affairs team will do all the ground work, setting up appointments with your legislators, providing a briefing and arming you with easy-to-use talking points for your meetings. Hill Climb is also a day for getting to know your fellow Hospitality members, and in the evening at the Taste Our Best legislative reception you’ll get a chance to socialize

with industry colleagues and legislators over great food and some of the state’s finest wine and beer. Hill Climb and Taste Our Best are effective and fun. Your participation is key to our legislative success. We need your help in educating lawmakers about our industry and how their decisions will help or hurt your business and your employees. Register today!

2018 HILL CLIMB & TASTE OUR BEST

January 29, 2018 Register today! www.hillclimb2018.com

MORE IMPORTANT WAYS TO SUPPORT OUR LEGISLATIVE EFFORTS Become an Ambassador Member ambassadors receive training on how to build an ongoing relationship with their elected officials. These relationships strengthen the Association’s ability to effectively advocate for policy decisions that will work for restaurants, hotels and other hospitality businesses, our employees and the communities we serve. Contact Katie Doyle at katied@wahospitality.org for details. Join the Government Affairs Committee During session, the Government Affairs Committee holds weekly calls to discuss legislative developments and strategies. Participating is a great way to follow legislative issues and to give guidance to our GA team. Contact Katie Doyle at katied@wahospitality.org to register. Get Text Alerts Sign up for our text messaging system to get our call to action alerts. Simply text “SERVE” to 52886 and when you get a text during session it’ll be just as easy to contact your legislators. Opt in for our Legislative Newsletter During the legislative session, we provide members with weekly updates on what’s happening at the State Capitol. To subscribe to the 2018 list, email Nicole Vukonich at nicolev@wahospitality.org January 2018 │ 21

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A Great Return:

Tourism Works for Washington If tourism legislation being considered this session is successful, Washington will no longer be the only state in the nation without a statewide tourism marketing program. The bipartisansponsored legislation seeks to create an industry-led Tourism Marketing Authority and a funding mechanism without additional taxes.

•

• SHB 1123 and SSB 5251 would support a statewide tourism marketing program and provide: •

•

A funding mechanism for a tourism marketing account that will deliver up to $5 million per biennium from the state and require a 2:1 match by industry contributions. Oversight of the program by a board of tourism industry representatives and a legislator from each of the four political caucuses. A marketing plan and campaign that focuses on bringing more tourists to Washington and out to rural tourism-dependent counties and those adversely impacted by natural disasters.

Why It’s So Important: • Tourism is a guaranteed return on investment. It creates jobs, fuels the economy and generates significant tax revenue. For example, Oregon invests $19 million in statewide tourism efforts and receives $237 in new visitor spending for every $1 spent. • An investment in tourism brings new money to Washington. Currently, we are losing market share and visitors to neighboring states. Montana invests $19 million into statewide tourism and their traveler spending grew 70 percent

•

faster than in Washington. SHB 1123/SSB 5251 expands tourism benefits to communities that are rural, economically distressed or adversely impacted by natural disasters. Forty percent of tourism dollars are spent outside the state’s major cities and suburbs. Washington is the only state in the U.S. that does not invest in statewide tourism promotion. We are missing out on significant economic opportunity! Washington’s travel-generated tax revenue growth is 26 percent slower than the national rate. With so many changes and regulations that make it challenging to do business in Washington, increasing tourism is a great solution to ensure the hospitality industry, our local communities and the state stay economically healthy. Tourism also benefits Washington residents! Without travel and tourism tax revenue by out-ofstate visitors, state residents pay $400 more in taxes each year to maintain the current level of public services.

Washington Tourism at a Glance

Visitors to Washington spend nearly $21.4

billion each year.

Tourism generates nearly

$2 billion in state and local tax revenue.

Four out of five tourismrelated companies are

small businesses.

40 percent of tourism dollars are spent outside the state’s

major cities and suburbs.

January 2018 │ 23

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Your State Government Affairs Team Julia Gorton, Director of State Government Affairs, has been with the Association for more than a decade. Her most recent accomplishment has been leading the effort on the state’s paid family and medical leave act. She has also lead the charge on a range of critical issues, including protecting our RETRO program and defending members’ interests on liquor privatization and pricing. juliag@wahospitality.org

Morgan Hickel, State Government Affairs Manager, transitioned in January 2017 from serving as the Association’s Seattle local government affairs manager to our state government affairs manager. In her state role, she has taken lead on statewide tourism promotion and lodging-related issues. She also sits on the Washington State Task Force Against the Trafficking of Persons. morganh@wahospitality.org

Samantha Louderback, State Government Affairs Manager, joined our team in 2015 to work on expanding the Association’s engagement at the local level in TacomaPierce County and the South Sound region. In her state role, she leads the Association’s efforts with the state Department of Health, workforce development and safety, and RETRO. samanthal@wahospitality.org

Zachary Lindahl, State Government Affairs Manager, joined the state GA team in 2017 and is the lead on issues relating to alcohol, marijuana, and music licensing. Previously, Zach worked closely with members in the Spokane area on issues such as paid sick leave, human trafficking and tourism promotion. zacharyl@wahospitality.org

Katie Doyle, Grassroots Manager, spent six years in the restaurant industry before starting at the Association in 2014 as the executive assistant to the CEO and COO. She became grassroots manager in February 2017 and has spent her time working with ambassadors, expanding our grassroots advocacy program and strengthening the relationship between area coordinators and the GA team. katied@wahospitality.org

Nicole Vukonich, State Communications Manager, is the newest member of your State GA team. In this role, Nicole assists the government affairs team with all their public relations needs and acts as liaison with the media. She brings experience working in the Washington State Senate as a communications specialist and broadcast coordinator and as the communications coordinator for Gov. Chris Gregoire. nicolev@wahospitality.org January 2018 │ 25

Gryffin Consulting delivers long-lasting solutions to complex problems. We help our clients stay updated and compliant with business regulations and best practices. The constant flux and change of labor standards only creates more opportunities for small unintended missteps that can become huge pitfalls. Gryffin Consulting specializes in Paid Family Sick and Safe Leave (I-1433)  Implementation following best practices  Full leadership compliance training  Proper utilization of technology solutions

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Wendy Gillihan, MaCC, PHR, SHRM-CP Founder and Principal Consultant Wendy’s experience in accounting and HR have made her an innovative thinker who produces tangible solutions for her clients. Wendy sits on the board of trustees for the Seattle Metropolitan Chamber of Commerce as a representative for the local business community. Wendy has previously served as an instructor with the SBA, on the Seattle Women’s Commission (chair) and the Labor Standards Advisory Commission (chair), advising the Mayor and City Council on issues of economic opportunity for our region.

Joshua Rouse, JD Associate Consultant Joshua’s areas of expertise include risk mitigation, compliance evaluation, business process enhancement, and conﬂict resolution. Joshua holds a Bachelor of Arts in Government from the University of Texas at Austin, a Doctor of Jurisprudence from South Texas College of Law Houston, and is a certiﬁed mediator (Texas).

Washington’s New Paid Sick Leave Law By Marianne Scholl

On Jan. 1, 2018, Washington’s new paid sick leave requirements went into effect. Paid sick leave was part of voterapproved Initiative I-1433, which will also increase the state minimum wage to $13.50 by 2020. All non-exempt employees, as defined under the Washington Minimum Wage Act, are entitled to accrue paid sick leave. These employees include all full-time, part-time, seasonal, temporary, on call/substitute workers and minors. There is no minimum number of required employees or an exception for small businesses. Here are key aspects to note about the new state paid sick leave law: ACCRUAL REQUIREMENTS • All eligible employees must accrue, at minimum, one hour of paid sick leave for every 40 hours worked. Note, this is not 40 hours in a week or pay period, it is every 40 hours worked. • Paid sick leave must be paid to employees at their normal hourly compensation. • Employees are entitled to use accrued paid sick leave beginning on the 90th calendar day after the start of their employment. For existing employees as of Jan. 1, 2018, they may be eligible to use paid sick leave once they accrue the time – i.e., after the first 40 hours worked – assuming they have been an employee for 90 days. • There is no cap on usage or accrual. • Unused paid sick leave of 40 hours or less must be carried over to the following year. • Employers are allowed to provide employees with more generous carry over and accrual policies.

USAGE Employees may use paid sick leave to care for themselves or their family members, when the employees’ workplace or their child's school or place of care has been closed by a public official for any health-related reason; and for absences that qualify for leave under the state's Domestic Violence Leave Act. Employers may allow employees to use paid sick leave for additional purposes. MAKING UP WORK Additional work hours or shift trades with another employee are permissible in lieu of using available paid sick leave for missed work if mutually agreed upon by employer and the employee(s). INDETERMINATE LENGTH OF SHIFT For employees who are scheduled to work a shift of indeterminate length (e.g., a shift that is defined by business needs rather than a specific number of hours), the rate of pay may be calculated by multiplying the employee’s normal hourly compensation by the total hours worked by a replacement employee in the same shift, or similarly situated employees who worked that same or similar shift. FINDING A REPLACEMENT An employer may not require, as a condition of an employee using paid sick leave, that the employee search for or find a replacement worker to cover the hours during which the employee is using paid sick leave. NOTIFICATION REQUIREMENTS At the beginning of employment after Jan. 1, 2018, or by March 1, 2018, for existing employees, employers must notify each employee in writing

of their right to paid sick leave, the rate of accrual, the employer’s policy on frontloading leave and permissible uses, that retaliation is prohibited, details on verification if required for absences over three days, and if notice is required for use of leave. At least monthly, employers must provide an accounting of accrued sick leave, used sick leave and available sick leave through regular payroll or otherwise. LOCAL PAID SICK LEAVE REQUIREMENTS Seattle, SeaTac and Tacoma have local paid sick leave laws, and these laws trump the state law when they are more generous to the employee. Spokane’s s paid sick leave ordinance sunset on Jan. 1, 2018. Seattle’s sick leave ordinance, for example, applies to both hourly and overtime exempt employees (with a few limited exceptions) and requires large employers to provide one hour for every 30 hours worked. The city’s Office of Labor Standards has proposed legislation to adopt I-1433 requirements when more generous. The Council was expected to pass the updates in late December 2017. Visit seattle.gov/laborstandards/ ordinances for details. Tacoma’s paid sick leave law also applies to overtime-exempt employees. Learn more about Tacoma’s requirements at www.cityoftacoma. org. SeaTac’s requirements, which apply only to certain hospitality and transportation employers, do not include a waiting period and have an annual cash out requirement. More information is available at www. ci.seatac.wa.us/our-city/employmentstandards-ordinance. January 2018 │ 27

INDUSTRY CALENDAR January/February TRAINING Jan. 22

ServSafe® Manager, Kent

Feb. 6

ServSafe® Manager, Seattle

Feb. 20

ServSafe® Manager, Kent

Feb. 26

ServSafe® Manager, Everett

MEETINGS Jan. 9

Board Development Committee meeting

Jan. 9

Executive Committee Monthly Meeting

Jan. 10

Seattle Restaurant Alliance Membership Meeting

Jan. 11

Seattle Hotel Association Board Meeting

Jan. 16

Spokane Hotel Motel Association Meeting

Jan. 16

Finance Committee Meeting

Jan. 16

Spokane Chapter Board Meeting

Jan. 17

Seattle Restaurant Alliance Board Meeting

Jan. 30

Hospitality Board of Director’s Meeting

Jan. 31

MSC Board Meeting

Feb. 6

Executive Committee Monthly Meeting

Feb. 7

Education Foundation Board Meeting

Feb. 8

Seattle Hotel Association Board Meeting

Feb. 13

H.I.H.I.T. Meeting

Feb. 14

Retro Trustee Meeting

Feb. 14

Seattle Restaurant Alliance Board Meeting

Feb. 14

MSC Sub Committee Meeting

Feb. 20

Spokane Hotel Motel Association Meeting

Feb. 20

Spokane Chapter Board Meeting

UPCOMING EVENTS Jan. 29

Hill Climb & Taste Our Best

Mar. 10

ProStart® Invitational

NEW MEMBERS Anton’s Cafe, Puyallup Arrowleaf Bistro, Winthrop Bellingham Cider Company LLC, Bellingham Big Rock Roadhouse, Mount Vernon Blue Eyed Charlotte Inc., Bellingham Blue Glass, Seattle Bottlehouse, Seattle Burger King, Spokane Valley Burger Ranch, Tacoma Club Silverstone, Tacoma Coulee Cruisers, Soap Lake Cristol’s Coffee Creations, Tacoma Cure, Seattle Days Inn & Suites Spokane Airport, Airway Heights Garden Bar, Tacoma Globe Bar & Kitchen / Blind Buck, Spokane Gyro Shack, Lakewood Hampton Inn Leavenworth, Leavenworth Harbor05 LLC, Gig Harbor Heritage Restaurant & Bar, Woodinville Heron’s Key F&B, Gig Harbor Howey’s LLC, Yakima Hubbs Pizza & Pasta, Arlington Hyatt Regency Lake Washington, Renton Jawbone Flats Café, Clarkston Jazzbones, Tacoma Just Peachy Frozen Yogurt Inc., Lynden Kickin’ Boot Whiskey Kitchen, Seattle Kickin’ A, Ferndale Kulshan Brewery Company, Bellingham

NEW ALLIED MEMBERS Foodwit Becki Holmes 7411 SW Capitol Hwy Portland, OR 97219-2432 becki@foodwit.com 206.457.9598 www.foodwit.com Foodwit offers complete contemporary regulatory solutions for the restaurant and hospitality industries including food safety and menu labeling compliance solutions. Staffed with food scientists and nutrition experts, our approach is to simplify compliance. Gordon Thomas Honeywell LLP Tacoma Shelly Andrew 1201 Pacific Ave, Suite 2100 Tacoma, WA 98402-4314 sandrew@gth-law.com 253.620.6500 www.gth-law.com Full service business law firm advising clients on employment, business and regulatory matters for all aspects of restaurant and hospitality business. Your initial one hour consultation is complimentary. Minuteman Press Lacey Mark Merklin 4404 Martin Way E, Ste 2 Olympia, WA 98516-5365 mmerklin@minutemanpress.com 360.491.8195 http://Lacey WA.MinutemanPress.com

28 │ wahospitality.org

La Ca Bar, Tacoma La Quinta Inn, Everett Lewis River Inn, Woodland Little Garden Café, Spokane Mango Thai Cuisine & Bar, Seatac Manolin, Seattle Mondo Restaurant, Marblemount Montvale Event Center, Spokane New Luck Toy, Seattle New Mexicans, The, Everett Northlake Tavern & Pizza House, Seattle Peninsula Taproom, Sequim Picazo’s Taco Zone, Puyallup Seabrook Management Company, Pacific Beach Shamus’s Sandwich Shop Inc., Spokane Soi, Seattle State and Central, Olympia Streamline Tavern, The, Seattle Supreme Pizza Bar, Seattle The Amarillo Restaurant and Tavern, Monroe The Dugout, Bremerton The Orion, Bellingham Tony’s Bar, Custer Tony’s Pizza & Italian Restaurant, Bremerton Trophy Cupcakes & Party, Seattle Vinifera Wine Bar & Bistro, Auburn Well 80 Brewhouse, Olympia Wenatchee Valley Brew Pub, Wenatchee Yellow Leaf, The, Seattle

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NEW ALLIED MEMBERS Cont. Polar Bear Mechanical is a full service mechanical repair and installation company specializing in HVAC, refrigeration, and hot side. We primarily work with food service businesses and take pride in finding solutions for all types of equipment. Our licensed service technician are available 24/7. We offer service work from Bellingham to Olympia and install jobs anywhere in the state. QWaitlist Brian Johnson 3200 Stuck River Dr Auburn, WA 98092-8341 brian@qwaitlist.com 206.565.0565 www.qwaitlist.com Q is Seattle based app company run by people that have worked in restaurants for many years. Q Host Restaurant App is a free app for restaurants that solves problems with wait listing. It replaces paper wait lists, buzzers, and marker pen maps with a app on an iPad. Q also enables guests to find restaurants on the Q system in their phone, and get on wait lists when there is a wait time. Q brings in more customers, reduces phone calls, and fixes the front desk chaos making happier guests and employees. Give it a try. Like the employees at Q say “What are you waiting for?”

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Ask the Expert

Prevent Losses in Slower Times of the Year By Rick Braa, CHAE

We’re a highly seasonal restaurant, and offseason sales are hard to generate each year. With the lull in business I’m losing money because my labor cost is so high. How do I keep from laying my kitchen people off or substantially decreasing their hours? During the offseason, it’s a challenge to keep prime cost (cost of goods sold percentage plus fully loaded labor cost) close to 60 percent. With lower sales, labor as a percentage of sales grows due to fixed costs primarily from management and kitchen labor. In the kitchen, labor tends to be stair-stepped and body-based. The front-of-the-house is more adjustable to guest flow. With floor supervision, it’s much easier to phase front-ofthe-house labor, as a supervisor can easily fill a position in a crunch. Since work in the kitchen is technical in nature, phasing kitchen personnel is more difficult since it takes the supervisor off the floor and away from the serving needs of the guest and managing the crew. This results in leaving more bodies in the kitchen with higher hourly wages than those in the front- of-the-house. In addition, kitchen labor has become increasingly difficult to staff, so keeping your kitchen team is a priority. On the local level, short-term rental ordinances are now in place in Seattle and several other cities, and we’ve helped Issaquah pass a model to-go container ordinance. Since there are only two components to prime cost, and labor in the offseason is going to increase as a percentage of sales, the equation to push is cost of goods sold. This is the time to work diligently and experiment with your menu. Explore the following opportunities: Develop or find blind items. These items are special, unique and rare. Comparison in the market is difficult as they are not mainstream. In the kitchen, these can be items that take longer to prepare than what would otherwise be possible in the busier season yet have a better cost of goods. Examples include slow roasted meats, new pastas and more complicated recipes. The key is to manage productivity of kitchen staff while working on items that can reduce food cost. On the beverage side, barrel-aged cocktails, boozy shakes, inexpensive but delicious wines and fun, high margin non-alcoholic drinks are the opportunity. These 30 │ wahospitality.org

The offseason can be challenging. It is also the season for experimentation and optimization.

drinks may take more effort to develop and launch, but the margin can be terrific. Optimize products on the menu. Use the money you have to spend on labor to get more out of it. Ensure every item can be cross utilized in other dishes and eliminate solo items or develop other recipes in which they can be used. Eliminate all pre-cut items including grated cheese. Measure yield and quality on each item and make sure the product is meeting specification. For example, meats can be more or less fatty. As the business grows, the vendor may use less quality product as they experience turnover at the sales rep level. Increase the check average by simultaneously increasing food and/or beverage spend and perceived value. Break out the food spend and the beverage spend for the guest check average. If the average spend on food is $15, for example, then develop programs to increase that spend toward $20. Since labor is relatively sunk in the offseason, use the kitchen to prepare more dishes per guest if necessary. This time of year bundling is a good idea. For as many complaints as there are about programs such as Seattle Restaurant Week, the overwhelming data shows that the amount spent on food by the guest during promotions like these increases. McDonald’s increased their average customer transaction when they bundled meals because they captured a burger, fries and a drink rather than two of the three. The result was higher value perception from the customer and higher sales for the company. For beverages, run contests to increase the overall number of beverage items served. This is the time of year every guest should experience the highest level of beverage service, not the lowest. The offseason can be challenging. It is also the season for experimentation and optimization. Be sure to focus labor dollars on running an exceptional restaurant which includes a dynamic menu, premium product and high value perception. For more information on improving profitability and driving performance, contact AMP Services at rbraa@ampservices.com. Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.

H.I.H.I.T. Open enrollment is right around the corner, and H.I.H.I.T. is cost saving built for hospitality organizations.

8779781839 Features of H.I.H.I.T. include: 50% Participation 50% Contribution Classing Out Dual Option Stand Alone Products Easy enrollment and group set ups Smart Phone App for TelaDoc PPO (Preferred Provider Organization)

HSA (Heath Savings Account) EAP (Employee Assistance Program) Direct Primary Care (DPC) Life Insurance Disability Insurance Cobra Administration Owners covered for on the job injuries

Call to find out more about H.I.H.I.T. and other standalone benefit programs like “TelaDoc” at $2.55/month/person.

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