Washington Restaurant Magazine October 2013

WA S H I N GTO N

RESTAURANT

October 2013

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Ballot Breakdown The issues and candidates we’re watching

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The industry’s best kept secret revealed

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Inside

www.warestaurant.org

Features

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Off-year elections not to be ignored: here’s why this one matters to WRA members

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Health care reform FAQs: Eligible employees and employee notification

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The industry’s best kept secret revealed The next generations’ pool of qualified restaurant employees restaurant employees won’t just magically appear. They’re being cultivated through the ProStart program. Find out how this important training program is helping to secure the future of your business.

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Other stories

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WA S H I N GTO N

RESTAURANT

October 2013

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Ballot Breakdown The issues and candidates we’re watching

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Lex on Tech: Innovation, technology and the minimum wage issue

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News Briefs

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A defining fight for our industry

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“Rules” of interior design for the 21st century restaurant

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Restaurant Industry 2020

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Calendar/New Members

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Marketplace

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Script Your Success

On the cover

In this month’s issue of Washington Restaurant Magazine, we’ll help you navigate this year’s election ballot.

Plus...

The industry’s best kept secret revealed

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EDITORIAL STAFF Anthony Anton, Publisher Lex Nepomuceno, Executive Editor Heather Donahoe, Managing Editor David Faro, Contributing Editor Sheryl Jackson, Research Editor Lisa Ellefson, Art Director WRA EXECUTIVE COMMITTEE Jim Rowe, Chair Consolidated Restaurants, Inc. Phil Costello, Vice Chair Stop n’ Go Family Drive In Mark Chriest, Secretary/Treasurer Oki Developments, Inc. Bret Stewart, Immediate Past Chair CenterTwist, Inc. Gary Sutter, WRAEF President Northern Quest Resort & Casino WRA EXECUTIVE TEAM Anthony Anton President and CEO Teran Petrina Vice President Bruce Beckett Director of Government Affairs Lex Nepomuceno Director of Communications & Technology Lyle Hildahl Director of Education Victoria Olson Director of Business Development Susan Howe Director of Internal Operations 510 Plum St. SE, Ste. 200 Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 www.warestaurant.org

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

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

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

Products and services advertised in Washington Restaurant Magazine are not necessarily endorsed by the WRA, and do not necessarily reflect the opinions of the WRA, its Board of Directors, staff or members.

ADVERTISING INQUIRIES MAY BE DIRECTED TO: Ken Wells Allied Relations Manager 425.457.1458 kenw@warestaurant.org Washington Restaurant Magazine is published monthly for Association members. We welcome your comments and suggestions. email: news@warestaurant.org, phone: 800.225.7166. Circulation: 6,310.

6 | |www.warestaurant.org warestaurant.org

Lex on Tech Innovation, technology and the minimum wage issue

By Lex Nepomuceno, Executive Editor When the electric light was invented, the oil industry responded by shifting away from kerosene and moving onto gasoline. History is laced with endless examples of the proverbial “turning lemons into lemonade,” especially when entrepreneurs are involved. Now it’s time for this axiom to work its way into the restaurant industry.

Instead of focusing on “survivor-ability,” those of us in the hospitality business need to focus on “inevitability.” Because Washington and several other states have their minimum wages linked to inflation and the CPI, wages will inevitably increase every year – maybe not to $15/hour right away, but $15/hour will eventually become reality. We also know that technology will grow faster than the rate of inflation in the foreseeable future. Moore’s Law states that technology essentially doubles every 18-24 months.

So what is an entrepreneur to do? Close shop? Move to another state? Scream “woe is me!” to the top of their lungs? Or maybe they should do what JD Rockefeller did when he saw the inevitability of the electric light – shift the oil business from lighting kerosene lamps, to harnessing gasoline to fuel machines and eventually motor vehicles.

In fact, there are already some great examples of this transition towards a less laborintensive restaurant. Dishwashers have been replaced with dishwashing machines; less oven-tending is required thanks to conveyor belt ovens; and the need for order-takers has been reduced because of point-of-sale systems.

Other industries are seeing labor replacement in unexpected areas. Foxconn, the Taiwanese manufacturer that produces the iPhone and other consumer electronics has been replacing its human assembly lines with robots. In fact, the company’s goal is to have one million robots replace human employees by 2015. Ironically, many of these robots will be manufactured in the U.S. by American workers. Why is Foxconn so committed to this? The company is responding to international pressures from labor and social justice groups demanding higher wages and benefits. Obviously, no one will pay $950 for an iPhone; so, instead of closing operations and laying off ALL of its employees, Foxconn responded with an “all-in” bet that will keep the company globally competitive.

The potential for restaurants to take advantage of automation and ward off labor demands is virtually unlimited. Wait staff demands can be reduced with iPad ordering systems located at each table, or smart tables. So, instead of one server for every 4-5 tables, it can be one server for every 6-8 tables while maintaining the same level of service. Many elements of food prep can be automated. Folding pizza boxes can be done by robots more efficiently, as well as other “busy work” assigned by managers to keep their staff productive before the big dinner rush.

In hospitality, the key will be to balance automation with the “human touch” customers expect. Fortunately, so much of the labor in restaurants happen behind the scenes. Consequently, innovative solutions to maximize a workforce will need to be explored, such as shared kitchens and automated inventory tracking via radiofrequency identification (RFID), near field communication (NFC) or other wireless means.

If labor advocacy groups get what they want -- $15/hour minimum wage, mandatory paid sick leave, etc. – restaurants will need to do what other industries have done throughout history: adapt to survive and even prosper. Fortunately, we live in a time when technology is moving at faster rate than the economy, and it is time for restaurants to take advantage. 

Primary Source of Information | News Briefs L&I proposes 2.7 percent average rise in workers’ comp rates in 2014 The Department of Labor & Industries (L&I) has proposed an average 2.7 percent rate increase for 2014 workers’ compensation premiums, an increase of less than 2 cents per hour worked. Over the past two years, workers’ compensation surveys have shown an increase in rates nationally. This will be L&I’s first rate increase in three years.

producing national winners, including two of last year’s honorees, Monique Trudnowski of Adriatic Grill (Faces of Diversity Award) and Chad Mackay of El Gaucho Hospitality.

Nominate a restaurant today!

Proposed rates for the hospitality sector: Restaurants/taverns: 2% Catering: 1% Bakeries: 3% Movie/Theaters: 4% Hotel/Motel: 3% Bowling: 3% Clubs: -1% Golf Course: 1%

Court denies NLRB petition in employer posting rule Business groups won another victory in the legal battle to stop the National Labor Relations Board (NLRB) from requiring businesses to display a poster advising employees of their rights under the National Labor Relations Act. The full U.S. Court of Appeals for the District of Columbia denied a petition yesterday by the NLRB for a hearing on a three-judge panel’s May decision to strike an NLRB regulation that would have required businesses to display the poster. The latest rejection by the full DC Court of Appeals follows a similar ruling by the full U.S. Court of Appeals for the Fourth Circuit last month.

Washington’s most recent wage inflation number is 3.4 percent. However, according to L&I, because Washington’s rates are based on hours worked and not payroll like other states, the state needs to raise rates to get the revenue that other states get automatically.

Consumers’ pent-up demand for restaurants remains high Restaurant sales posted a modest gain in August, according to preliminary figures from the U.S. Census Bureau. Eating and drinking place sales totaled $45.9 billion in August on a seasonally-adjusted basis, up 0.3 percent from July’s sales volume of $45.7 billion. However, despite the gain, sales remained roughly $200 million below the record high of $46.1 billion registered in April.

Overall, restaurant sales are trending above 2012 levels, with Census data showing a 4.3 percent gain on a year-to-date basis through August. Moreover, based on new NRA survey data, there appears to be room for even stronger sales growth in the months ahead.

In a national survey of 1,000 adults conducted September 12-15 for the NRA by ORC International, consumers were asked if they are using restaurants as often as they would like. The answer was an emphatic no, with 47 percent of adults reporting they are not eating on the premises of restaurants as frequently as they would like. For the full article, go to http://wra.cc/wra1013a.

Are you a model restaurant within your community? You could be a Restaurant Neighbor Award winner It’s that time of the year again– the National Restaurant Association is accepting nominations for the Annual Restaurant Neighbor Award, which is designed to recognize and raise awareness of the restaurant industry’s contributions in local communities. Application/nomination forms are accepted online at Restaurant. org/Community until November. The NRA will also accept nominations through its social media channels, including Facebook and Twitter. The annual Restaurant Neighbor Award is presented to restaurants that exemplify the industry’s community support and philanthropic spirit. Four national winners will each receive a $5,000 contribution to their charitable projects. The national winners will be presented the awards in Washington, D.C., in April 2013, and be recognized on the NRA’s website. Washington state has a long history of

The NLRB announced the poster requirement in August 2011 despite widespread concerns by the business community. It would have forced nearly all private-sector employers to post a new federal workplace notice that detailed employees’ rights to organize and have unions represent them as to wages, hours, and other conditions of employment with their employer under the National Labor Relations Act. For the full article, go to http://wra.cc/nlrb090513.

WRA’s Heather Donahoe is featured on QVC WRA Public Relations Manager and co-host of DineNW radio Heather Donahoe was featured last month on the QVC network’s “In the kitchen with David.” She is promoting her new book “The Southern Food Truck Cookbook,” which officially launched on September 9. Heather’s WRA family is very proud of her!

Check out the video: http://wra.cc/ donahoe090413.

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Industry Outlook | WRA President & CEO

A defining fight for our industry It is an interesting time in the development and professionalism of our industry.

For the past 20 years, the restaurant industry has grown into the state’s largest private sector employer, currently employing nearing 210,000 team members. Inside the industry we have taken great pride in our mix of gateway jobs for youth and those in need of second chances, as well as safety net jobs for those have been laid off or are in need of secondary income and career opportunity. And let’s not forget that more than 90% of our owners and management started as entry level hourly wage workers.

Yet to the outside world our employment has been often misunderstood as “hamburger flippers”, dead-enders or other less than flattering stereotypes.

The reaction to this public perception from most restaurant owners may have ranged from depression to a resigned “What are ya gonna do? The reality for most restaurant owners is that the day to day pressures to stay alive for another year, coupled with the clear conscience that comes with providing these types of jobs, made public perception of industry jobs a little more than a passing thought during their morning coffee.

Until this year, it has been easy to think, “Who cares if the public respects the jobs I provide, as long as they are enjoying the service and meals we provide and stay customers? Does it really matter if customers Randy and Mary understand that their $5 dollar tips at lunch add up to provide for $60,000 annual incomes? Are customers really more likely to return if they know that 30% of my staff is going to school and this is a temporary support job?”

2013 is dictating a change to that way of thinking.

The opposition, led by restaurant industry labor advocacy groups, such as Service Employees International Union (SEIU), Restaurant Opportunity Centers United (ROC) and Fast Food Forward are changing the game. Rather than taking labor conversations inside the restaurant to the workers or to Olympia/policy makers, they are going directly to the public. Skipping the need for education,

Anthony Anton, president and CEO

industry knowledge or compromise—this approach gives this new coalition of activists two ways to succeed in changing workforce landscapes—either by publicly attacking/shaming restaurants one by one into adopting their agenda via traditional media, social media and public protests, or by going directly to the city, county and state initiative processes.

Now all of a sudden the customers impression of our workforce means everything. Without strong counter education about what defines “common sense” (tiny margins, tips, technology, price points, teens and opportunity), emotional reactions such as “Yeah, why shouldn’t everyone make $20 an hour” or “Everyone should have three weeks paid vacation,” or “No one should work part-time,” could carry the day in city elections from Seattle to Spokane.

All a union coalition needs is $1 million (which they have lots of) for an initiative, and a plan, and they have the ability to dictate your labor policy without common sense or compromise.

This is exactly what they have done in the little town of SeaTac. Unions have successfully spent what it took to get Prop 1 on the Ballot – which for the affected businesses would establish: A minimum wage of $15 an hour Mandatory paid sick leave Elimination of tip sharing A qualified displaced worker list from which employers are required to hire based on seniority Restrictions to the ability to offer part time work This blue collar town of 12,000 voters is going to be the first, but not last, public referendum on the value of hospitality industry jobs. It is also our wake-up call that it’s time to communicate the importance of our jobs and the value of our workforce to the public. If the court of public opinion is the new judge, jury and executioner of our jobs, then they should at least have the facts. If you are interested in helping get this message out please contact your area coordinator. Together, we can share our story. 

October 2013 | 9

“Rules” of interior design for the 21st century restaurant

By Arnold Shain, Restaurant Group Inc. founder and WRA consultant

Over the years, after working with a number of architects and designers, I’ve come up with a list of “rules” that I tend to observe when assisting a client with this endeavor of design.

Create an interior that will please customers, not the

restaurant owners. It could be your existing clientele and/or new people. Who is the target market for your offerings is a good question to ask.

We eat with our eyes but that doesn’t just count for the food we eat.

Lighting. It’s one of the most impactful elements of a great design.

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Natural materials and juxtaposition them with sleeker, non-natural materials like tiles or hard surfaces.

Graphics and large scale graphics continues to be a trend and a very impactful one.

Green materials and materials from sustained sources.

The difficulty today remains the cost balance of using those materials. This can be an expensive endeavor, but it can be a great marking opportunity for restaurants that want to be known for doing the right thing.

Partner with a firm that you feel comfortable with, a company that shares your vision. It’s particularly helpful to look at design firms that have experience in not only restaurants but in similar concepts to yours.

Make sure you understand the market and don’t underestimate the sophistication of the market. “To today’s customer it’s irrelevant where in a country a restaurant is. They enjoy and expect higher levels of design.”

Restaurateurs should have a keen eye and send the message they know what they want. It is incumbent

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for the owner and key management to have a “vision” of what they want by visiting other restaurants in their market and outside of their market. Do your research prior to laying pencil to paper. Draft the ideas on paper. Get pictures of what you think makes sense and what doesn’t as well.

You can count on cost overruns, trust me. Have an approval plan for any cost overruns and be sure to allocate at least 10% in the initial development phase for the overruns.

The accountant in me says develop a capital cost for build out and soft costs and be sure to have enough for operating cash, please.

Many restaurant operators find themselves wondering when they need to invest in a remodel and what the deciding factor typically is. I always like to look at the sales trends for this as well as any guest or staff comments. If the sales trend is not going up, and this is a sound operation, it might make some sense to take a hard look at the décor and environment package. It is better to be ahead than to get behind the remodel curve. Sometimes allowing the environment to go unchanged/unattended for too long can make for just that much more loss in sales, as well as capital cost to rehab a facility.

Interestingly, most operators are not necessarily looking at their environment and trying to make it better. I have

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seen where it takes an outside influence for them to see it.

They generally focus on service, cleanliness and the quality of the product so it is almost like they have blinders on to the environment. Deferred maintenance can give staff and customers the impression that if management doesn’t have a good attitude about the restaurant, then neither should they.

Determining how much and what to invest in a remodel depends upon the scope. I would say the line items to look at that make impact to the public eye include coloration, lighting, fabrics, flooring and restrooms. Chairs can stay and even table tops. If the HVAC is not working, that should absolutely be addressed. How about the outside as well? Take a look at it. Is it tired looking, or is it fresh and crisp? Maybe it is just landscaping. These elements won’t cost a fortune, and they are well worth the investment. The staff is happier, as are the guests, who in turn bring more frequent business into the restaurant.

Cash flow is important when planning a remodel, but upgrading a restaurant’s elements incrementally can help soften the financial blow. It is important to remember that you should always “put back in what you take out.” You reap what you sow. Call friends and enemies in to give you an honest assessment of what they think of the place. Have your staff ask the guest. You will get good feedback. 

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Restaurant Industry 2020 A snapshot of the Future

MENU

CONSUMERS

TRAINING AND EDUCATION

TECHNOLOGY

Ordering will continue to more individualized.

More training will be provided online and on smartblogs.

FOOD SAFETY

Product traceability will improve.

PROFITABILITY

Smaller operators will have greater access to fully integrated software systems.

GOVERNMENT

Consumers will look for higher quality take out foods.

Restaurant operators will make better use of mobile technology.

FACILITIES AND OPERATIONS Electronic pay at the table and mobile payments will be commonplace.

ECONOMY

Job growth remains key for the health of the restaurant industry.

Restaurants will become more active in lobbying activities.

These excerpts are from the recently released report “Restaurants Industry 2020� available from National Restaurant Association, www.restaurant. org. The report includes details on consumer demographic trends in 2020, including age and ethnicity, that will shape how restaurant menus and marketing will evolve. The report also covers how the labor pool will change in the next several years, indicating changes to recruitment and retention trends. Members can receive their copy for $34.95.

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Off-year elections not to be ignored: here’s why this one matters to WRA members

By WRA government affairs staff

Elections and candidate races during the year after presidential elections are often very quiet.

While there is only a handful of races and issues on this November’s ballot, a number of them are of keen importance to the hospitality industry. The WRA has taken a position in five races/issues that will appear on this November’s ballot.

The following provides some background on each of these important ballot options.

Proposition #1 SeaTac: WRA opposes The Service Employees International Union (SEIU) and UNITE HERE have been unhappy over changes in airline industry baggage handling and leasing policies at SeaTac International Airport. The two unions have not succeeded in passing legislation requiring unionized airport services (including restaurants and hotels), and have failed in their attempt to change leasing policies at SeaTac. Accordingly, the unions drafted, and after a lengthy court battle, placed a Proposition #1 on the November general election ballot in the City of SeaTac. Proposition #1 would:

Impose a $15/hour minimum wage (indexed annually) on hospitality and airport businesses in the City of SeaTac. Require paid sick and safe leave benefits – which could be cashed out by the employee.

Require employers to hire displaced workers from other SeaTac businesses, instead of being able to

hire employees who meet the employer’s particular requirements.

Require employers to advance part time workers before hiring any new full time workers.

Specify that tips are the property of the server.

Impose enforcement and regulatory oversight by the City of SeaTac. Allow collective bargaining agreements to waive any, or all of these requirements; but denies that right to nonunion employers.

Finally, Proposition #1 presumes an employer is guilty of non-compliance with these laws if their records are deemed inadequate.

Proposition #1 would apply to businesses in the airport and in the surrounding community. The City of SeaTac is a unique community of voters and, clearly, SEIU and UNITE HERE are hoping to set a national precedent by going directly to the voters to adopt these sweeping policies.

Local and national media have focused on this ballot issue because it is viewed as a barometer of whether unions will pursue direct voter action elsewhere in Washington state and around the nation.

The WRA does not believe it is the role of local governments to be setting and enforcing wage and hour policies. Those rules and regulations should be governed at the state and federal level.

The WRA has worked with local businesses, airlines, hoteliers, car rental companies and other service providers to organize a campaign to defeat Proposition #1. The campaign, Common Sense Sea Tac, has been underway since July, and will be actively communicating to voters in Sea Tac. For more information, go to www. commonsenseseatac.com.

WASHINGTON STATE SENATE WASHINGTON STATE SENATE

There are three special elections this fall to fill vacancies in the Washington State Senate.

The Senate is currently led by a unique coalition of 23 Republicans and two Democrats (called the Majority Coalition Caucus). This delicate balance in the Senate could be altered with the outcome of any of the three special elections. WRA has taken a position in each of the races.

26th Legislative District --- WRA supports Rep. Jan Angel (Rep.) The 26th District is considered SED R O “ground zero” in D N E determining the future balance of power in the Senate. The Senate seat was vacated early in 2013 when Derek Kilmer was elected to Congress in the 6th Congressional District. Following Kilmer’s election to Congress, Dr. Nathan Schlicher (Democrat) was appointed to fill the seat for the 2013 session; however, he must run for election in November to fill out the remainder of Kilmer’s original term. This race has attracted widespread attention because

Republicans see an opportunity to gain an important new seat in the Senate. Conversely, Democrats are working very hard to defend the seat.

Sen. Schlicher is a newcomer to politics, and began service in the Senate shortly after the session convened in January. Accordingly, there is not a long record to evaluate Schlicher on; however, during the 2013 session, Schlicher voted for a budget that required more than $1 billion in new taxes to fund, voted against reforms in workers’ compensation supported by the business community and many in his caucus, and voted against legislation to clarify paid sick and safe leave policies.

Rep. Angel, who served as a Kitsap County Commissioner from 2000-2008, was first elected in 2009 to the State House of Representatives. She has worked in business for much of her career, has a long track record of civic engagement in the District and has worked on difficult issues such as transportation, growth management and education. She is well known in the district because of her past service as a Kitsap County Commissioner and her current position in the State House. Rep. Angel has been a strong supporter of small business during her tenure in the State House – and has worked closely with restaurant owners in her district to understand their concerns and issues.

SED

ENDOR

7th Legislative District – WRA supports Sen. John Smith Sen. Smith was appointed to fill the seat vacated by the resignation of long-time Sen. Bob Morton and must run for election in November. The 7th Legislative District stretches across the northern part of Washington from the Idaho border to the crest of the

October 2013 | 17

WASHINGTON STATE SENATE Cascades. It’s a District dependent on natural resources and agriculture.

Sen. Smith is a private business development consultant.

He also owns and manages the Colville Farmers Market, while he and his family live on a small, working farm, raising timber, cattle, chickens and produce.

The WRA worked with Sen. Smith during the 2013 session and found him very knowledgeable on the issues and concerns of restaurant owners. He has shown his strong support for small businesses in the state, and is very thoughtful in his approach to stakeholders. The WRA is excited about Sen. Smith’s candidacy and looks forward to working with him in the future.

8th Legislative District – WRA Supports Sen. Sharon Brown Sen. Brown was appointed in January to fill out the vacancy created when long time Sen. Jerome Delvin was elected to the County Commission. The 8th Legislative District is dominated by the Tri-Cities, and issues of agriculture, the Hanford Reservation, economic development and the Columbia River are of keen interest to voters there.

Sen. Brown, who is an attorney for Hanford subcontractor, Longnecker & Associates, has also served as a Kennewick City Councilwoman and formerly as Mayor Pro Tem for the City of Kennewick.

During the 2013 session, Sen. Brown worked closely with business groups and demonstrated a strong understanding

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of the issues and concerns of small business around the state. The WRA is enthused about the opportunity to work with Sen. Brown is the future.

Seattle Mayor --- WRA supports Senator Ed Murray Seattle’s mayoral election is headed into the final stretch this month and the voters will be hearing plenty about what each candidate has to offer for the next four years.

Incumbent Mayor Mike McGinn finds himself trailing challenger, State Sen. Ed Murray, both in overall contributions received and in almost every poll that has been released thus far; but anyone watching this race knows that McGinn should not be counted out quite yet.

He is well known for his ability to get his supporters to vote, and his “ground game” is widely regarded as one of the best around. That said, Sen. Murray has a highly skilled and sophisticated campaign team that has done a remarkable job of cultivating support from a broad range of industries and constituent bases, including business, labor and the environmental community, which shows the depth and breadth of his support base. The WRA is optimistic about Sen. Murray’s chances.

The Seattle Restaurant Alliance (SRA) took the opportunity provided by this very important election to enter the arena of local elections. After conducting thorough interviews of almost every candidate running for mayor and focusing on those the SRA had not previously met with, SRA members voted unanimously to support Sen. Ed Murray for Seattle Mayor. The SRA was proud to support Sen. Murray as a state representative and state senator for downtown Seattle. Since 1995, he has shown

WASHINGTON STATE SENATE

time and again his willingness to stand up for restaurants in his district and fight for issues that are important to our industry. This past year, he was instrumental in helping restaurants get relief from the Liquor Control Board’s erroneous rulemaking, which put a 17% fee on purchases from contract and former state-owned liquor stores. Additionally, Sen. Murray was a champion for two important fixes to the tax code around purchases of charcoal, wood and related products used in restaurant kitchens, as well as the removal of a vague law around taxes owed on admissions and cover charges. This important modification helped the WRA’s nightlife members achieve

clarity in taxes owed moving forward.

As a champion of the foodservice industry and someone who will make an excellent mayor for Seattle, the WRA encourages all Seattle members take a long, hard look at both candidates before making a decision on who to support. The WRA wishes Sen. Murray’s campaign the best of luck and is hopeful that if elected the industry can begin working with his administration immediately on ways to help Seattle restaurants open, stay open and thrive into the future. 

October 2013 | 19

Health care reform FAQs: Eligible employees and employee notification

By Donna Steward, President, Kiawe Public Affairs

The most extensive provisions of the Affordable Care Act (ACA) take effect in January 2014. Among these provisions is the requirement for employers with more than 50 full-time equivalent employees to provide coverage to their full-time employees or face an IRS penalty. A recent announcement by the White House indicates that the IRS will be waiving the penalty for employers who fail to provide coverage during the first year of implementation, but the requirement to provide the coverage remains the same.

For employers that utilize a large number of variable hour employees, identifying which employees must be offered coverage can be a challenge. Employers subject to the law must offer coverage to all employees that work on average 30 hours per week. To accommodate some of the challenges associated with the use of variable hour employees, the regulations provide employers with a safeharbor approach to determining eligible employees. Under the safe harbor approach, employers must establish annual measurement and stability periods to determine which variable hour employees are offered health care coverage by the employer. The federal rules allow 2013 to be a transition year wherein measurement and stability periods may differ in length. However, beginning with the 2015 coverage year, both the measurement and stability periods must be the same length of time. Due to the staging of the measurement and stability periods, the measurement period established in 2014 determines the stability period in the 2015 coverage year.

Employers also have only a few more weeks to comply with another ACA requirement – employee notification of the availability of the state-based exchange. Federal Department of Labor (DOL) rules require all employers provide the notification to all employees. The DOL has 20 | warestaurant.org

developed a model notice for employers to use to share this information.

The following are Frequently Asked Questions regarding the safe-harbor provision for identifying eligible employees and the employee notification requirement:

Eligible Employees What does “safe-harbor” mean?

Under the safe-harbor provision, employers that follow the process outlined in the rules for determining eligible employees will not be issued a penalty by the IRS if one of their eligible variable hour employees is found eligible for a federal subsidy in a state-based exchange.

Who are “variable hour” employees?

All employees who are not full-time employees are considered variable hour employees. Full-time employees are those that work 30 or more hours per week, including salaried employees that work more than 30 hours per week.

For purposes of the measurement and stability periods, seasonal employees and salaried employees that work less than 30 hours per week are also considered variable hour employees.

What is the “measurement” period?

The measurement or look-back period, is the length of time an employer must evaluate the hours of variable hour employees to determine whether they are eligible for health care coverage in the upcoming coverage year. In 2013, employers may establish measurement periods of 3 to 12 months. Measurement periods in 2014 must coincide with stability periods in 2015 and may not be less than 6 months.

What is the “stability” period?

The stability period is the time during the coverage year that a variable hour employee must be guaranteed access to coverage. For the 2014 coverage year, eligible variable hour employees must be offered coverage for either 6, 9 or 12 months. The stability period in 2014 may not be less than the 2013 measurement period. The stability period in 2015, must be equal to the measurement period established for 2014.

Must I include seasonal employees in my measurement period?

Once I set measurement and stability periods, are they set in stone or can I change them in the future?

Yes, you must evaluate the hours of seasonal employees if they are employed during the measurement period and must offer those employees coverage if they: Work more than 120 days during the year; Work more than an average of 130 hours per month, as determined by the measurement period; and Are still in your employ at the beginning of the coverage year

You may change the periods for the following coverage year but may not change them for the upcoming coverage year (EX. The current year is 2013; the upcoming coverage year will be 2014; and the following coverage year will be 2015).

Beginning in 2014, once a measurement period begins it is linked to the stability period of the upcoming coverage year. In practical terms, the measurement period used in 2014 determines the stability period in 2015 and so on. All changes must therefore begin by altering the upcoming measurement period. Changes can either increase or decrease the measurement and stability periods as long as the periods are still 6-12 months long.

May I have different measurement and stability periods for different employees?

Yes, you may establish different measurement and stability periods for categories of employees such as salary/hourly; collective bargaining/noncollective bargaining; etc, but periods established within the categories must be applied uniformly to all employees within the category.

What happens if the hours of a variable hour employee drop after they are enrolled in the health plan?

The established stability period guarantees employees access to coverage during that time unless the employee

October 2013 | 21

notifies the employer they are no longer able to make the required employee premium contributions. An employer may not make an assumption the employee is unable to afford the contributions even though payroll deductions may not be possible. The employee must notify the employer they are unable to make the payments before the employee can be disenrolled during a stability period.

Employee Notification What information must be included in the employee notification of the state-based health insurance exchange?

The notice to inform employees of the state health insurance exchange must include the following:

Information regarding the existence of the exchange,

as well as the contact information and description of the services provided in the exchange; Notification that the employee may be eligible for a federal subsidy if the employee purchases coverage through the exchange; and Notification that if the employee chooses coverage in the exchange, that he or she may lose the employer contribution (if any) to coverage offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

Can I just hold a staff meeting and verbally tell all employees about the exchange?

You may hold a meeting to discuss the availability of the state-based health insurance exchange, but the official notification must be provided in writing to all employees and must be written at a level in which your average employee will understand the information in the notice. If your business is organized to allow electronic notification, you may provide the information electronically to your employees, but you must follow the Department of Labor’s safe harbor guidelines for electronically transmitting notifications.

How am I supposed to know how to write at the “level” in which my “average” employee can understand the written notification?

The Department of Labor has issued model language that employers are encouraged to use either in its entirety or as

22 | warestaurant.org

a guideline for how to draft a more tailored notification.

Two versions are provided, one for employers that offer coverage and one for those that do not. The model language is provided in both English and Spanish versions.

You may find the model language at: http://www.dol.gov/ ebsa/healthreform/index.html How often must I share this information with my employees?

The law indicates that employers must provide this information annually to all employees. However, the rules recently issued are temporary and speak to notification of all current employees prior to October 1, 2013, and to all new hires within two weeks of hire. Permanent rules regarding communication of this information after 2013 will likely be released next year.

I am not currently providing coverage but plan to in 2014. Which notice should I issue in October?

Employers not currently providing coverage are on safe ground using either available version so the choice is up to you.

RESOURCES Exchange notification technical release: http://www. dol.gov/ebsa/newsroom/tr13-02.html

Department of Labor model language for employee

exchange notification: http://www.dol.gov/ebsa/pdf/ FLSAwithplans.pdf

REMINDER Don’t miss the WRA’s health care conference call October 30: Dispelling the Myths about How to Comply with Health Care Reform. This conference call is Wednesday, October 30 at 9 a.m. PST. The call-in number is 1-800-309-2350, conference ID is 6328387.

This publication is intended to inform employers about provisions of the Patient Protection and Affordable Care Act and how those provisions may affect them.

This information should not be construed as legal or tax advice, and readers should not act upon the information contained therein without professional counsel. 

Divulging the hospitality’s industry’s best kept secret

By Lyle Hildahl, WRAEF director

I remember a visit with a legislator from Moses Lake several years ago. We were looking at the Grant County Skills Center project, and I introduced Sen. Janéa Holmquist to Moses Lake High School’s ProStart program.

ProSafety, a hospitality industry workplace safety program, and a teen variance for hiring teens.

All ProStart students are required to have a food handler’s permit. Many of our schools also require the student to successfully complete ServSafe manager, the advance food safety program. I know I am grateful that this program puts food safety and workplace safety at the forefront so when I dine out, I feel safer.

We gave Sen. Holmquist a tour of the classroom, enjoyed a lunch prepared by the students, and listened to them tells us about their experience, excitement and passion for ProStart. Sen. Holmquist seemed blown away.

She commented that she had no idea the WRA was involved with a program like ProStart. My experience with other state leaders has been similar.

Many decision-makers who finally hear about ProStart are astounded by the program and everything it offers to high school students throughout Washington.

Unfortunately, ProStart is still one of the best kept secrets, even within our own industry. Unfortunately, the WRA’s most recent member survey revealed that only about half of all WRA members are aware of the ProStart program.

This is a disappointing figure, considering that the WRA has facilitated the ProStart program in Washington high schools for more than a decade.

The National Restaurant Association Education Foundation (NRAEF) is working on a marketing campaign to bring this great program out in front for industry and the public. Trends that impact all of us like nutrition, green projects, teen labor, social media and technological innovations are all topics studied and embraced by the ProStart students. The NRAEF just moved their offices to D.C., so that the ProStart story becomes top-of-mind for government movers and shakers.

At the state level, the WRAEF works with many government agencies. Our relationship with the Department of Labor & Industries has created teen workplace safety program call

Some of our programs have recently worked area restaurants’ kids’ menus to ensure that kids who dine out have healthy options that taste and look good.

Current pilot programs include partnerships with Boys and Girls Clubs of America, and Chef Guy Fieri Cooking with Kids Foundation. This involves high school ProStart students working with middle school students to learn about healthy eating, healthy ingredients and how to cook.

ProStart is such an amazing program because of the diverse make-up of its students, including at-risk kids, some who are homeless, as well as students wanting to manage and own their own business someday.

These students recognize that the pathway to college scholarships and a brighter future can be achieved through ProStart.

The future of this industry is in the hands of these students. Currently there are about 2,500 ProStart kids in Washington and more than 90,000 nationally. It’s up to all of us to acknowledge, support and embrace ProStart, the best kept secret in town. Help us make ProStart top of mind. Become an industry mentor, find out if ProStart is in your school district, become a sponsor or make a contribution to ProStart through the WRA Education Foundation.

Thank You! 

October 2013 | 23

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INDUSTRY CALENDAR

NEW RESTAURANTS

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OCTOBER/NOVEMBER 2013

Freeland Cafe, Freeland

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Nov. 5

ServSafe® Manager, Seattle

Louie G’s Pizza, Oak Harbor

Nov. 18

ServSafe® Manager, Kent

Moose Creek BBQ, Woodinville

Nov. 21

ServSafe® Manager, Tacoma

Meetings

Scar Foods and Services Inc., Bellevue Sandella’s Flatbread Cafe, Seattle

Oct. 8

Spokane Chapter Meeting

Oct. 9

MSC Subcommittee Meeting

Oct. 22

Finance Committee Meeting

Oct. 29

WRA Fall Board of Director’s Meeting

SoDo Deli, Seattle

Oct. 30

EF Fall Board of Director’s Meeting

Pac Island Grill, Federal Way

Nov. 5

Executive Committee Meeting

Nov. 6

Seattle Restaurant Alliance Social (All Members)

Nov. 6

Retro Meeting

Nov. 6

Retro Investment Meeting

Nov. 7

MSC Subcommittee Meeting Appeals

Nov. 9

Spokane Cork & Keg Festival

Nov. 12

Spokane Chapter Meeting

House of Hong, Seattle

Nov. 26

Government Affairs Committee Meeting

Triple Play, University Place

Matt’s in the Market, Seattle Home Plate Pub, Bellevue

Las Margaritas, Auburn Seattle Salads, Seattle

Pizzuto’s Italian Cafe, Seattle Ravishing Radish Catering, Seattle

Tall Timber Restaurant & Lounge, Eatonville

Jan. 27

The Forum, Puyallup

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No Limit Enterprise, Puyallup Corina Bakery, Tacoma Frog N Kiwi Cafe, Tacoma Amici Italian Eatery, Graham Anton’s Catering, Tacoma COA Mexican Eatery, Mount Vernon Sweet N Salty Inc., Spokane Pita Pit, Spokane Old World Deli, Bellingham

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Ask the Expert | Restaurant Profit Coach

Script Your Success

By Rick Braa, CHAE

Q: We’re heading into a new fiscal year with a positive but cautious attitude. How can we drive ahead to get the best results during the next 12 months?

A:

Quarter 4 is full of the promise of a new year and a rekindling of goals. As the leader of the organization, provide a framework within which the team can write great goals. Here are five areas on which a successful restaurateur must focus his/her team. Have each person on your leadership team take a fresh look and meet with them to discuss after your discovery process.

Define and refine vision, purpose and values- Start with some quiet time as the leader, then get your team together.

Evaluate how the company is progressing and whether it is on track to meet the vision. Sharing your vision will help the team feel fully engaged. Great employees want to play on a winning team that is going somewhere.

After refreshing your vision turn to the purpose of the organization. Why is the world a better place because your company exists? Once you know where you are going and why you exist, revisit your values, evaluate how they are being used and how the employees behave within them.

Adopt the behavior a leader must have, cast your vision, define your purpose, live your values and talk about them all frequently.

Improve the guest experience- Look at your business from the perspective of your guest. Ask your frequent guests what they like and don’t like. Scrutinize the entire experience from the moment the guest drives up to the moment they drive away. Dine in your restaurant(s) daily as a guest with friends for one to two weeks in different meal periods and see the experience through the eyes of the guest. Record your observations and form your hit list of what needs to happen and share it with the team.

Enhance the employee experience- Sit down with every “A” player in your company (about 20% of the workforce are “A” players). Ask them for direct feedback with leading questions such as, “Would you enthusiastically join our company again?” Force them to look at how the workplace could be improved for the employee experience to be top notch. Measure employee satisfaction with benefits, compensation, development, recognition, incentive programs and training. Highly engaged employees produce 3 times the profitability than non-engaged. You don’t have to have a fancy compensation program or offer a library of benefits; just provide a caring place to work with direct feedback and as little drama as possible.

30 | warestaurant.org

Increase profitability-Study your financial data. Discover trends in the profit and loss statement. Begin at the top.

Look at the food to beverage mix, and then study the product mix report on what is selling. Most number one sellers in a category have not hit their limit for price increase. The largest sellers will have huge impact on the bottom line. Next move to product cost to improve your purchasing practices with your vendor on your best products. Vendors know more than they’re given credit and can save you money just by simply asking the question of, “How can I get my price down on these items?” Work down the P&L and question every line item and how it can be improved then set goals with your team.

Advance systems- All high performing companies have excellent systems. Break your business down into buckets of systems and evaluate whether your systems are adequate to grow your organization. Start with financial and IT; you should receive clean financial statements on a regular basis and use that information to teach, train and develop managers and staff to be great financial leaders. IT systems must be solid and supportive if you expect high performance from employees. Customer and guest systems should be focused on feedback, service and relationship management. Sales and marketing systems need to be focused on external and internal communications, product development, quality assurance and sales building.

Lastly, evaluate planning systems to determine whether the appropriate time and effort are spent evaluating the business and driving it forward with well-planned goals and execution.

Pull the leadership team together to meet for a day or two to discuss these areas. Determine the areas in which the most critical few things must be done. Write down three.

These “critical few” should drive 80% of team effort. The remainder of the goals, no more than six, should take the remaining 20% of team effort. With this approach, you’re guaranteed to create focus in your organization and get better results.

For a more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.

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