Washington Restaurant Magazine by Washington Hospitality Magazine

WA S H I N GTO N

RESTAURANT May 2011

Formerly The Front Burner

MEGA TRENDS ISSUE

Survival Guide to

Health Care

Reform PRSRT STD US POSTAGE PAID OLYMPIA, WA PERMIT NO 668

Your your

menu is fabulous, staff is the bestâ&#x20AC;Ś

protect your reputation.

Establishments are 82% less likely to experience critical violations during a health inspection when they have staff certified in advanced food safety. Protect your reputation. Register your staff for an online course or an instructor led class at WRAhome.com/servsafe!

The Washington Restaurant Association Education Foundation is proud to offer ServSafe Advanced Food Safety, a nationally accredited program that satisfies requirements for advanced food safety training nationwide.

May 2011 | 3

Inside 9

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Features

Federal health care exchanges positioned to change industry Learn how state health care exchanges are being designed to help restaurants offer coverage.

The specifics of special session and what is spells for restaurants At press time, the WRA’s government affairs team was headed into a special session of the state Legislature. Check out their agenda for keeping your business safe.

How the health care reform impacts my restaurant What one restaurant operator had to say to the subcommittee on Health, U.S. House Energy & Commerce Committee earlier this year about how health care requirements will affect his business.

Build sales through strategic labor management Let our expert help you understand the ins and outs of labor cost control. It’s a tricky subject—don’t navigate it alone.

Determining a coverage level for my business Determining the level of insurance coverage needed for your business is dependent on multiple factors. Find out what you need to know to be compliant.

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This article is worth sharing with your managers, chefs, bartenders or other restaurant staff.

Other stories

WA S H I N GTO N

RESTAURANT

News Briefs

Being your primary source of information matters most now

Health care reform implementation FAQs

Small employers get further reprieve on mandate for W-2 reporting

Is your restaurant healthy inside and out?

Health care implementation timeline

Health care reform by the numbers

What about the Small Business Tax Credit

What should you know about health care exchanges

Premises security 101 for northwest hoteliers and restaurateurs

What to look for in an online ordering system for your restaurant

Calendar/New members

Marketplace

Restaurants by the numbers

May 2011

Formerly The Front Burner

MEGA TRENDS ISSUE

Survival Guide to

Healthcare

Reform

May_11.indd 1

4 | www.WRAhome.com

4/27/2011 10:46:17 AM

On the cover It’s been nearly a year since our last issue on health care. This month, we’re updating you on the latest info you need for your business.

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EDITORIAL STAFF Anthony Anton, Publisher Lex Nepomuceno, Executive Editor Camille St. Onge, Contributing Editor Heather Donahoe, Managing Editor Lisa Ellefson, Art Director WRA BOARD OF DIRECTORS Bret Stewart, President Center Twist Jim Rowe, Vice Chair Consolidated Restaurants Robert Bonina, Secretary/Treasurer Washington Athletic Club Steve Simmons, Past Chair S & S Hospitality, Inc. Naja Hogander, WRAEF President Daniel’s Catering WRA EXECUTIVE TEAM Anthony Anton President and CEO Teran Petrina VP Internal Operations Bob Decker Director of Membership Bruce Beckett Director of Government Affairs Camille St. Onge Director of Marketing & Media Relations Lex Nepomuceno Director of Member Info & Resources Lyle Hildahl Director of Education Victoria Olson Director of Business Development 510 Plum St. SE, Ste. 200 Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 www.WRAhome.com

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.

Megatrends in the restaurant industry By Lex Nepomuceno, Executive Editor Trends carry significant weight in the restaurant business. When setting budgets for the year, operators are well-aware of the holiday rush, the dog days just after New Years and other predictable fluctuations throughout the year. Thus, Washington Restaurant Magazine will have special “Megatrends” issues up to four times per year to educate members on important movements on specific issues. Why health care reform? Last summer, the WRA had an entire issue dedicated to health care reform. The publication provided restaurateurs valuable information on the main elements surrounding the controversial issue. However, in less than nine months, significant trends have dramatically affected the complexion of the health care debate. Republicans have taken control of the U.S House of Representatives, ever-soaring gas prices continue to stun economic recovery and continued increases in health care costs have resulted in a different landscape of how policymakers and businesses are approaching health care reform. Major developments and uncertainty In April, President Obama signed a bill that repeals 1099 reporting rules. The enhanced 1099 mandate was part of the 2010 health care reform package and would have required businesses begin filing 1099 information—reporting forms for most business-to-business transactions starting in 2012. Opponents of the new reporting rules argued that the law overburdened businesses and would have added significantly to costs. Less than a year ago, the 1099 issue was a major battle cry for those in favor of repealing the health care reform law in its entirety. Significant developments such as this, as well as delays in rule changes have left many businesses in a lurch as they consider their options for health insurance coverage. The goal of this issue of Washington Restaurant Magazine is to help readers navigate the complexities of health care reform and become aware of major trends and developments. Employers and employees both understand the potential costs associated with health care, but providing this bird’s-eye view of the issue will hopefully help the restaurant community be better prepared if and when changes do happen.

ADVERTISING INQUIRIES MAY BE DIRECTED TO: The Silver Agency 109 North Tower, Ste. 200, Centralia, WA 98531 T 360.736.8065 F 360.330.7960 www.silveragency.com Washington Restaurant Magazine is published monthly for Association members. We welcome your comments and suggestions. email: news@WRAhome.com, phone: 800.225.7166. Readership: 6,310.

May 2011 | 5

Primary Source of Information | News Briefs Northwest Foodservice Show is a big hit in 2011! With a packed house turning out at Portland’s Oregon Convention Center, the 49th annual Northwest Foodservice Show concluded its April 3-4 event with a head of steam indicative of an economy on the rebound. 5,750 foodservice professionals turned out for the opportunity to make new business contacts and peruse goods and services at 423 vendor booths, to take advantage of free seminars on some of the most timely and relevant industry topics, to observe and learn from exciting northwest chefs and to network with peers and colleagues. Business cards were exchanged, deals struck and relationships forged or solidified. Presenting Sponsor:

While some attendees came to the show ready to do business on the spot, others took a look-and-see approach, scoping out potential future suppliers for themselves or for clients and associates. For vendors, these are leads that may not materialize into direct sales for several months or more, but are important prospects nonetheless. For these exhibitors, simply making their presence known via participation at the show is a key component of their marketing, a strategy they are well aware of and which attendees also seemed to appreciate. “It didn’t contain ‘pressure to buy now’ tactics” said Mary Gober, owner of WRA member Smitty’s, a full-service restaurant in Lacey, Wash. “As a buyer, and having that in plain view on my name tag, I appreciated that”. FDA issues proposal on how to implement new nutritiondisclosure rule for chain restaurants, food establishments The Food and Drug Administration released long-awaited draft regulations spelling out how the agency proposes to implement a new federal law that requires certain chain restaurants to add calorie data to menus and menu boards and make other nutrition data available to guests upon request. The draft rules come a little more than a year after Congress passed the federal law setting the first uniform federal standard for nutrition disclosure in some chain restaurants. The federal standard, enacted March 23, 2010, will replace a grab-bag of confusing and overlapping state and local menu-labeling requirements for covered restaurants. “The National Restaurant Association strongly supported and advocated for the law that will provide consumers with uniform and consistent nutrition information in hundreds of thousands of restaurant locations nationwide,” said NRA President and CEO Dawn Sweeney. “From Portland, Oregon, to Portland, Maine, the new standard will help chain restaurants provide the same type of nutrition information to consumers in any part of the country.” For more information, go to http://wra.cc/fda0411. WRA honors excellence in Spokane restaurant community The Washington Restaurant Association’s Spokane Chapter recently recognized some of area’s most outstanding restaurants. The honors were given to those industry leaders who exemplify strong customer service, quality food, cleanliness and overall appearance, integrity in dealing with suppliers, community involvement and participation in WRA programs. Congratulations! The 2011 winners are: Full Service Restaurant of the Year: Hills’ Restaurant & Lounge Casual Dining Restaurant of the Year: The Flying Goat Quick Service Restaurant of the Year: Zip’s Drive Inn – E. Francis 6 | www.WRAhome.com

continued top right

Also given special recognition were two allied WRA members who exhibit dedication to their customers, service to the hospitality industry, Association participation and community engagement. The 2011 allied winners are: Supplier Company of the Year: Spokane Restaurant Equipment Supplier Representative of the Year: Jenny Harvey-Hernandez, Pepsi Beverages Company Washington’s Kona Kai Coffee Company receives national award for philanthropic contributions Kona Kai Coffee was recognized by the National Restaurant Association for outstanding service to their community and received the Restaurant Neighbor Award in the small business category. “Washington’s restaurants are passionate about their communities and Kona Kai is a perfect example of that,” said Anthony Anton, Washington Restaurant Association president and CEO. “Contributions from small businesses, like Kona Kai, make a significant impact on our communities and we should continue to recognize their efforts.” Kona Kai Coffee Company, Kent, Wash. assists in running a program that provides homeless and disadvantaged individuals job training and employment in the espresso, hospitality and food service industry. They donate their café space; their staff volunteers to train and coach program participants as well as donate their time to market the program for fund raising events. Kona Kai estimates that 60% of the people they intern find job placement. Cash in on restaurant equipment rebates The Environmental Protection Agency recently updated its online guides to help restaurants find cash rebates for energysaving kitchen equipment. The rebates range from $30 for an automatic door closer to $2,000 for a high-volume dishwasher or other major equipment. The incentive to purchase highefficiency equipment also could take the form of financing assistance, says Una Song, program manager of the EPA’s Energy Star conservation effort. For more information, go to http://wra.cc/eparebates

Industry Outlook | WRA President & CEO

Being your primary source of information matters now more than ever In two of the biggest industry stories of the year, health care reform and the 9th District Court ruling on tip pooling, the WRA is working hard to be your primary information source. We’re committed to keeping you in the loop on two issues that are bound to change the structure of the industry. Both tip pooling and health care reform underwent significant changes last month. Late last year, we changed our website—WRAhome.com— to be more news-based, with key industry headlines highlighted each day. We were the first business association in the northwest and the first restaurant association in the county to create an iPhone app so you can check out the latest information right from your smartphone.

Tip pooling update Earlier this month, the Department of Labor caught many off guard when they issued rules reinstating their position on tip pooling, essentially reiterating their position taken in the 9th Circuit Court case last year, Cumbie v. Woody Woo, Inc. DOL states that an employer may not control or use the tips of a tipped employee, except for a valid tip pool in regard to an employer taking a tip credit in states where tip credit is allowed (not in the state of Washington), or even (as in the Cumbie case), when the employer pays the employee a full cash wage equal to or higher than the minimum wage (MW). DOL states in the issuance that the “Department respectfully believes that Woody Woo was incorrectly decided.” The US Court of Appeals dismissed DOL’s position stated in its amicus brief in the case as “plainly erroneous and unworthy of any deference.” DOL’s position now stated in the regulation attempts to do an “end-around” with what the court rejected last year. However, employers, particularly in the 9th Circuit, which includes the Washington state, are now left in a difficult and unsettled legal position if they pay tipped employees the full minimum wage in cash and then, like the Woody Woo case, take control of the tips and distribute them to the back of the house employees (DOL deems invalid any tip pool that includes cooks, dishwashers, etc.).

Anthony Anton, president and CEO

This “end-around” would take effect May 5. The National Restaurant Association has been in direct contact with the Administration because of our industry’s objection to two sections of the Rule. On April 22, the NRA submitted a letter officially asking for a withdrawal of the offending sections. At press time, DOL had not responded to the request, and it was unclear if they would by May 5. The WRA, the NRA and the Oregon Restaurant and Lodging Association are weighing our legal options. If you are currently considering enacting a tip pool, you may want to drag your feet a few months until the nowmuddied water becomes clearer. If you currently are tip pooling at your facility, please contact the WRA’s Consulting Network to get the latest information so you can decide if any action is necessary to protect your business given this new development.

Health Care Update Two pieces of news around the Health Care Reform Act: The biggie is that President Obama signed the repeal of the new 1099 requirements. The issue that was virtually unknown the day that health care reform had passed, had become a major concern for business as the issue came to light, and the operational nightmares on how to implement such a requirement were brought forward. This was a big win for the industry, and a big thanks is owed to the National Restaurant Association for their work in this area. Also, the IRS has issued the changes necessary to implement the new W-2 requirements of the Health Care Reform Act. The mandate requires businesses to report value of company-sponsored health insurance on employees’ W-2s for information purposes. The IRS last fall made the requirement optional instead of mandatory for businesses for tax year 2011, and last week made the requirement optional for small businesses (fewer than 250 W-2s) through at least tax year 2012. You can learn more about the changes at WRAhome.com. May 2011 | 7

Health Care | Questions Answered

Health care reform implementation FAQs By WRA and NRA Q: Are there requirements of all employers, regardless of whether you have to offer coverage or not? A: Yes, here are a few examples: All employers will serve as a source of information for their employees. As of March 1, 2013, employers must inform employees about the existence of the exchange in their state and how employees can access it. Guidance will be issued about how and what must be provided. Also, employers who offer health plans must begin reporting the value of employee’s health benefits on their W-2 forms. This rule takes effect for large employers (those who file 250 or more W-2 forms) for tax year 2012 W-2 forms, usually filed in January 2013. The IRS has said the reporting is optional for smaller employers at least for 2012 W-2 forms. Q: Will I be required to offer health care to all my employees? A: Employers with 50 or more full-time-equivalent employees (see calculation below) will be required to offer their fulltime employees affordable “minimum essential coverage” health benefits package starting in 2014 or may be liable to pay a penalty for not doing so. Minimum essential coverage has not yet been fully defined. Part-time employees’ hours are considered solely for the purpose of determining if a business is above or below the 50 FTE threshold. At no time does the law require employers to offer affordable minimum essential coverage or pay penalties for part-time employees. Q: How do I know if I am considered a small business and therefore not subject to the employer mandate? A: The threshold is determined by the following formula, which you would calculate on a monthly basis: ___ Number of full-time employees (defined as those who average 30+ hours a week for that month) + ___ All hours worked by part-time employees that month ÷ 120 hours = ___ Number of full-time equivalents. Q: Do I have to offer coverage for my part-time employees? A: No. Part-time employees (those working less than 30 hours per week on average) are counted only in determining whether an employer meets the 50 full-time equivalent threshold for coverage under the law. The employer

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responsibility section of the law does not require employers to offer health care coverage to their part-time employees or pay health care penalties on their part-time employees. Q: Are there penalties for employers subject to the law who do not offer coverage? A: Yes. An large applicable employer who is covered by the employer mandate may choose not to offer coverage to their full-time employees, but if at least one employee uses a premium tax credit to access coverage on the exchange, the employer will be subject to a penalty of $2,000 per fulltime employee annually (or $167 monthly). Employers may exclude the first 30 full-time employees in calculating their penalty. For example, a covered employer who has 60 fulltime employees chooses not to offer coverage, and at least one employee uses a premium tax credit on the exchange, the employer would face an annual penalty of $60,000, assuming a constant workforce. [60 total full-time employees – 30 full-time employees excluded from the calculation = 30; 30 x $2,000 penalty = $60,000.] However, it should be noted that the penalty is calculated and assessed on a monthly basis. Federal agencies have not yet issued any regulatory guidance on exactly how the penalty would be calculated. Q: Are there penalties for employers who offer the required coverage but it is unaffordable to their employees? A: Yes. If an employer offers coverage to their full-time employees, but the employee’s contribution is more than 9.5% of their household income, and at least one full-time employee accesses coverage using a premium tax credit on the exchange, the employer is subject to a $3,000 annual penalty per full-time employee doing so (or $250 monthly). The maximum amount of penalty is limited so that it cannot be any greater than what the employer would be liable for if they did not offer coverage at all. Q: What is the individual mandate? A: The individual mandate requires everyone to obtain minimum essential coverage for themselves (and their dependents) or pay a penalty. The penalty is phased-in to $695 per calendar year or up to 2.5% of income (as of 2016 and beyond). There are income exemptions. Only individuals under 30 can purchase a catastrophic plan to satisfy this mandate; the law does not allow an employer to offer a catastrophic plan and claim it to satisfy the requirement for minimum essential coverage.

Health Care | State exchanges

Federal health care exchanges positioned to change restaurant industry By Randy Ray, CEO, LyfeSystems State health care exchanges required by the year-old federal health care law will fundamentally change how restaurant employers and employees access health care. The Washington State Legislature just passed a new law beginning the establishment of one here. The shift will not be in how health care is provided. Instead, significant changes are on the horizon for a world where individuals and families—not employers— own their health care policy, manage their health care and health care spending and are engaged directly in choosing their health care services. Neither government nor the private sector is ready for this transformation. The Federal Affordable Care Act (ACA) that passed last year creates a new paradigm of personal ownership of health care. According to one of the world’s leading management consulting firms, federally-mandated exchanges and other provisions of the ACA will combine to drive a shift of 50% to 70% from the group market for insurance to the individual market. Why? To start with, the traditional health insurance market was established at a time when dad worked and mom stayed home with the kids. One employer paid health insurance costs for an entire family. Employees often worked their entire careers for a single employer. We no longer live in that world. Now, mom works, too. Mom and dad, or both, may have a second or even third job. The kids might also work to help pay bills for themselves or the family. And rising health care costs make it very difficult for even the most profitable companies to afford coverage for a whole family. Rising costs have led to group policy premium cost increases that are less and less affordable for a person or family or a company. While nearly every employer wants to provide health benefits, more and more are downgrading or dropping their group coverage completely. But new options are available that give an employer a way to offer affordable health care support for employees that still enables the workers to secure quality coverage and meet the requirements of the ACA.

Increasingly, employers are looking at health care funding options that enable employees to purchase individual policies. These policies range in price and levels of benefits, but are frequently 20%—70% less expensive than group coverage. In addition, these new funding methods enable employers to share the costs of health care for employees with other employers of a family. While only one employer can fund a group plan, multiple employers can share tax-deductible contributions that an individual or family can combine tax-free to pay for their personal or family policy. This means that a restaurant employee who works during the week at one restaurant and on weekends at another can receive contributions from each employer to help pay for their health care. Next, another reason for the projected shift in the group to individual market is that only in the exchange can an individual or family receive federal subsidies to purchase health insurance. Subsidies are tied to income, but will be available to a single person who makes less than $44,000 a year and for family making no more than $88,000. Many in this income bracket fit the restaurant sector. To add on to the shift, cheaper and multi-state policies can only be bought in the exchange. A young person continued on page 21 May 2011 | 9

POLITICAL REPRESENTATION

The specifics of special session and what is spells for restaurants By Bruce Beckett, WRA government affairs director

The 105-day regular legislative session adjourned in late April, ushering in a special session. Gov. Gregoire called lawmakers back to Olympia to finalize the budget, which remained up in the air. While legislative leaders and the governor insist the special session will be used only for budget work, it is certainly possible that attention could be given to other bills with substantial support. At press time, the special session, which could technically last through the end of May, was just beginning. Budget writers believe that a final budget will require 45-60 different bills to implement, accordingly, once an agreement is reached on a budget, it will take considerable time to simply manage the process to pass all the bills necessary to implement the budget. While special sessions are often burdened with uncertainty and risk, the WRA is keeping a close watch on several issues with the potential for action over the next few weeks. While these issues may be resolved by the time you read this, here’s an overview of what the WRA government affairs team is monitoring during the special session

Liquor license fees—The pressure to increase fees to raise

more revenue to support state activities. Unlike taxes, enacting an increase in fees only requires a simple majority vote to pass. Although earlier in the session, the WRA opposed proposals to raise liquor license fees. Even though the bill failed to even garner a hearing in the Ways and Means Committee, we fully expect the idea to reemerge during the special session. Liquor prices—the Senate budget contains a WRA-backed provision that would eliminate the liquor price increases imposed in 2009 for licensee customers.. The rollback in prices to licensees is very controversial – the Liquor Control Board had indicated that it will result in raising the markup to retail customers from 51% to 59%; many distillers are objecting to the change because of the expected price hikes on retail customers. The WRA is pleased that the Senate budget contains the price rollback because it reflects a bipartisan agreement consistent with recent legislative intent. Liquor privatization—the House budget includes $300 million in new revenue from leasing the state’s liquor distribution to a single private operator, akin to the

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model employed in Maine. The Senate budget does not include this revenue. The WRA, and a coalition of retailers, grocers and major “big box” outlets, have worked to oppose the idea, and instead, have introduced a revised system-wide privatization model that allows for free market competition for liquor sales and distribution in Washington state. Taxes— a number of late bills have been introduced to reduce, or eliminate, specific tax breaks, exemptions and/or credits that currently exist. Although it is doubtful that any of these bills could pass because of the twothirds vote requirement to change current exemptions or credits, one bill would ask the voters to decide whether changing existing taxes should only require a simple majority vote. If this bill were to pass, and the voters ratified it, then these late bills will likely become part of the next session’s agenda. Workers’ compensation—The business community has worked all session to pass legislation that would allow voluntary settlements for long term workers’ compensation claims. The bill, SB 5566, which passed the Senate with a strong bi-partisan vote, has not had a hearing, or any action whatsoever in the House, even though it appears that there is support for passing the bill in a bi-partisan manner. 

Health Care | Rule change update

Small employers get further reprieve on mandate for W-2 reporting of employee health insurance coverage From NRA staff reports The IRS has again delayed a mandate that will require employers to report the value of employer-sponsored health insurance coverage on employees’ W-2 forms.

employers to start reporting the value of employees’ health insurance benefits on tax year 2011 W-2 forms, which employers generally distribute to employees in January 2012.

year 2012 W-2 forms. The optional treatment for smaller employers will continue until further guidance is issued, the IRS said in interim guidance published March 29.

The IRS is giving smaller employers, defined as those who file fewer than 250 W-2 forms, at least one more year before reporting is mandatory.

But last fall, the IRS made the 2011 reporting optional for all employers and said the rule would instead take effect for tax year 2012 W-2 forms, usually filed in January 2013.

The reporting is for information purposes only, not to assess or collect taxes from employers or employees. Visit irs.gov for more information. The agency will take comments through late June on its interim guidance. 

The mandate was part of the Patient Protection and Affordable Care Act of 2010, last year’s health care reform law. PPACA originally required

This week the IRS took the additional step of making the mandate optional for smaller employers at least for tax

May 2011 | 11

Training and Education | ProStart

Is your restaurant healthy inside and out? By Lyle Hildahl, director of WRA Education Foundation

Jamie Oliver, one England’s celebrity chefs, is making a splash on TV with his latest project that targets school food programs and the use of processed foods. As many of you know, Michelle Obama launched a program with White House Chef Sam Case to put a national spin on childhood health and wellness. It’s front of mind—getting healthy. However, I want to talk you about caring for the health of your restaurant. What does it take for your restaurant to be healthy? I would argue that it starts with two things. 1. Looking good, and 2. Feeling good. So let me explain. When I co-owned a restaurant in Anacortes, Wash., my partners Alan and Gwen Buchan would walk the grounds daily as well as inside the restaurant. They would water 12 | www.WRAhome.com

the plants, pick up cigarette butts, make sure all the lights worked, etc. They wanted their guests to feel good when they arrived by making sure the physical structure and amenities felt welcoming. Have you ever walked into the restroom before dining and walked out because the restroom was dirty? It was my job to motivate the team, cooks, servers, bussers and bartenders to look good as well, i.e. clean body, clean uniform and more importantly feel happy to serve guests and thus feel good. What are you doing to make your restaurant look good to the customers who visit you; and just as importantly, what are you doing to motivate your team to feel good so the customers catch the energy, smile and have fun? I heard recently that the Pike Place Fish Market’s “Fish” training video is the largest selling video. The Pike Place Fish Market team learned early on not to worry about selling fish, but instead focus on the energy of fun and making a difference with the customers they came in contact with. And low and behold they sold more fish. They made their environment look good and by feeling good, they attracted more customers. I recently visited a restaurant in Olympia that was packed, but instead of feeling rushed and stressed, the host and server made me feel welcome. The place was very clean and well-organized, and everyone was having fun. I visited another restaurant that was open but looked closed, and the attention of the crew, which outnumbered the guests, was somewhere other than on the guests.

What do your grounds look like—the parking lot, the plants, the signs, the menus, the plants the restroom supplies, your crew? Who’s paying attention? Are you having fun?

Our mission with the WRA Education Foundation is to help you succeed by being your solutions resource for education training and career development. Let us assist you in developing solutions to motivate your team to look good and feel good. 

2011 Washington Restaurant Association

Board Member Nominations

To complete your ballot, mark the boxes to the left of the names of those candidates you are voting for. Write-in nominations are also accepted.

BOARD NOMINEES

q WRAEF President, 1 year term, Nancy Swanger – WSU School of Hospitality Business Management q Spokane Chapter President, 1 year term, Don Parkins – Bluz at the Bend q Seattle Restaurant Alliance President, 1 year term, Travis Rosenthal – Tango Restaurant q Hospitality Operator Position, 3 year term, Craig Schafer – Hotel Andra q Tavern Licensee Position, 3 year term, Pete Hanning – Red Door q Gambling Licensee Position, 3 year term, Bob Materne – The Swinging Doors q Allied Member Position, 3 year term, Matt McCarthy – Southern-Odom Spirits West q Quick Service Operator Position, 3 year term, Karissa Bresheare – Gourmet Latte, Inc. q Quick Service Operator Position, 3 year term, Shari Nixon – McDonald’s q Full Service Operator Position, 3 year term, Jar Arcand – Santiago’s q At-Large Member Position, 1 year term, Chris Kealy – Iron Horse q At-Large Member Position, 1 year term, Reggie Frederick – Chalet Bowl q At-Large Member Position, 1 year term, Lane Hoss – Anthony’s Restaurants, Inc. q At-Large Member Position, 1 year term, Scott Dickinson – Dickinson Northwest, Inc./KFC q Write-in nomination ________________________________________

_______________________________________ __________________________________________ ________________________ Signature Restaurant or Firm Date

Fax this ballot back to Allison Woody at 360.357.9232 by Monday, May 16, 2011

Health Care | Implementation timeline

2010

2011

HEALTH PLANS

No preexisting conditions for kids age 19 No lifetime limits for essential health befits Older benefit coverage up to age 27 Primary Care Provider definition changed Plans must cover (without cost sharing) certain preventative care services Plans must cover emergency services as though in-network New appeals procedure No rescission unless fraud or intentional misrepresentation Retiree subsidy available up to 80% of claims between $15,000 and $90,000 Wellness changes

EMPLOYERS

Small business tax credit Tax credit up to 35% for small

Employers (up to 25 employees and an average comp of $50,000) Fully insured plans subject to discrimination testing

OTHER PLANS

Establishment of high risk pools (for the uninsured individuals with pre-existing conditions)

OTHER TAXES

Indoor Tanning Service Tax (10% on services after 7/1/2010

2012

HEALTH PLANS Excise tax on non

qualified HSA withdrawals increases from 10% to 20% Rebate for those with lower than an 85% Medical Loss Ratio (MLR)

EMPLOYERS

Employers with 200 or more

fee is $1 per participant for the first plan year and $2

employees must enroll automatically Employers must disclose value of benefits on employees W-2 Government-run long-term care program created; employers may be required to enroll and handle payroll deductions

OTHER PLANS

Over the counter medicines cannot be reimbursed through health FSA HRA, HSA or archer MSA (unless prescribed) Creation of a SIMPLE Cafeteria Plan passing nondiscrimination tests, but employer must 1) Match 1 to 1 up to 5% of pay or 2) Give nonelective 2% of pay Medicare Part D discounts. The new law will provide a 50% discount on all brand name drugs Additional preventive health coverage Medicare beneficiaries get a free wellness visit, cost sharing for preventive services is eliminated.

OTHER TAXES

New flat fee on prescription drug companies: starts at $2.5 billion and goes to $4.1 billion in 2018. Will be allocated across the drug manufacturers according to market share

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Comparative effectiveness fee;

2013

2014

HEALTH PLANS

Quality of care reporting, effective case management, etc. annual reporting Standardized plan summary (4 pages in length) Health plans must implement uniform standards and business rules for the electronic exchange of health info

Plan cannot deny participation

or routine patient costs due to participating in clinical trial for certain conditions such as cancer No waiting period greater than 90 days

EMPLOYERS

Small business tax credit phases

EMPLOYERS

Deduction for Part D subsidy eliminated Notice of health insurance exchange requirement

INDIVIDUALS

Additional Medicare tax of .9% on wages greater than $200,000 for a single and $250,000 for joint filing Additional unearned income tax of 3.8% on interest, dividends, rent, etc. for people with the same incomes as stated above Increase the threshold for deductible medical expenses from 2.5% to 10% Health FSA cap of $2,500 (inflation adjusted beg 2014)

OTHER TAXES

New hospital worker tax on

incomes greater than $200,000 single and $250,000 joint filer (tax at .9%) Medical device excise tax (tax is 2.3%)

2018

EMPLOYERS Cadillac Tax: 40%

up to 50% Reports to the government— employers with 50 or more employees must report annually the name of each employee, the plan cost, waiting period, etc. Reinsurance fee that is imposed on the insurer Pay or Play mandate—Employers with 50 or more employees must offer insurance or pay a fine

nondeductible tax on “excess benefit” of coverage, limits are $10,200 for singles and $27,500 for families

INDIVIDUALS

The individual mandate that everyone

must be covered or $95 fined up to $695 in 2017 Premium assistance credit available for those whose income is between 100% and 400% of the Federal Poverty Level (FPL) Free choice voucher available to employees 1) Whose required contribution on the employer plan would be between 8% and 9.5% of household income; 2) Who don’t make more than 400% of FPL and 3) Who do not enroll in the employer plan

OTHER TAXES

Health insurance provider fee—starts at 8

billion and goes up to 14.3 billion in 2018, will be allocated across health insurers according to market share

May 2011 | 15

Health Care | General consensus

Health care reform by the numbers By WRA and NRA Staff

Restaurants are job creators. Despite being an industry of predominately small businesses, the restaurant industry is the nation’s second largest private-sector employer, employing more than nine percent of the U.S. workforce. The industry is comprised of 960,000 restaurant and foodservice outlets, providing jobs for 12.8 million people who serve 130 million guests daily. The restaurant and foodservice industry is unique for several reasons. First and foremost, small businesses dominate the industry—with more than seven out of ten eating and drinking establishments being single-unit operators. The industry also employs a high proportion of part-time, seasonal and temporary workers. Restaurants are employers of choice, especially for employees looking for flexible work hours. The workforce is typically young, with nearly half under the age of 25. Restaurants also have a high average workforce turnover rate relative to other industries—75 percent average turnover rate in 2008 compared to 49 percent for the overall private sector. In addition, the business model of the restaurant industry produces relatively low profit margins of only four to six percent before taxes, with labor costs being one of the most significant line items for a restaurant. Accordingly, it only makes sense that the restaurant industry would have some strong opinions about the development of a new health care system—one that most certainly will affect the economics of the industry. By and large, restaurants have been proponents of a system that functions well within the confines of their business model, as well as for the needs of their employees. This issue will continue to challenge the restaurant industry and lawmakers to develop a mutually agreeable arrangement moving forward. In the meantime, here’s a look at public opinion on the new health care system. By now, you’ve likely drawn your own conclusions, and the illustrations here will give you a better idea of how your views align with the rest of America. Four in 10 Americans believe health care law goes too far Americans are most likely to say the health care law passed earlier this year goes too far (42%), while 29% say it does not go far enough and 20% say it is about right. Those who believe the law goes too far tend to favor repealing it and passing a new bill as opposed to scaling back the existing bill or repealing the law and not passing new legislation in its place. (Source: Gallup) 16 | www.WRAhome.com

Views of health care law Taking everything into account, do you think the new healthcare law goes too far, is about right or does not go far enough? Would you like to see Congress keep the health care law in place but scale it back considerably, repeal the health care law and start work on a new heathcare bill, or repeal the health care law and NOT pass a new health care bill? Goes too far

42%

(Should keep in place but scale back considerably) 7 (Should repeal and work on a new bill)

(Should repeal and not pass a new law)

Is about right

20%

Does not go far enough

29%

No opinion USA Today/Gallup, Nov. 4-7, 2010

Rising costs for employee health benefits

The cost of claims in employer-sponsored health plans continues to increase, according to a recent trend survey by Wells Fargo Insurance Services. Although the rate is slightly lower than six months ago, the survey found overall claim cost will continue to increase in the low double-digits. With more than 60 insurance companies participating, the nationwide survey was conducted between February and March 2011. Reflecting claim activity over a six-month period, projected increases in the national average cost of claims include: Health maintenance organizations (HMO) and point-of-sale plans (POS) - 9.6 percent increase Preferred provider organizations (PPO) and consumer driven health plans (CDHP) - 10 percent increase Exclusive provider organizations (EPO) 10.6 percent increase Indemnity plans 11.1 percent increase Prescription plans - 8.7 increase

As the economic downturn continued to strain health coverage in 2010, Medicaid and CHIP maintained their central role of offering affordable coverage options to low- and moderate-income families. Number of States Improving Access to Health Care Coverage, January 2010 â&#x20AC;&#x201D; January 2011

15 13

14 12

12 10

Eligibility

Enrollment/Renewal Proceedures 6

5 3

3 1

Total

Children

Pregnant Women Parents/Other Adults

Facts at a glance

The Kaiser Commission on Medicaid and the Uninsured

WA #

WA %

US #

US %

# Living in Primary Care Shortage Area, 2008

623,112

9.5

35,817,861 11.8

% total pop

% of Medicaid Enrollees in Managed Care, 2009

86.0

71.7

includes PCCM

Medicaid-to-Medicare Fee Index, 2008

0.93

0.72

excludes MC

Health Care Expenditures per Capita, 2004

$5,092

$5,283

Medicare Spending per Enrollee, 2004

$7,110

$8,304

Average Family Premium for ESI, 2009

$12,758 100

100

$13,027

100

% total premium

Average Family Employee Contribution, 2009

$3,476

$3,474

family share of total

Guarantee Issue, Individual Market

Continuous for some individuals

6 Yes

Rating Restrictions, Individual Market

Adjusted Community Rating

Temporary High Risk Pool Operation Decision

State-run

27 State-run, 24 HHS-run

Access to Health Care

Health Care Costs

Private Coverage, 2010

Applied for a Health Insurance Premium Grant Yes The Henry J. Kaiser Family Foundation, statehealthfacts.org

45+DC Yes

May 2011 | 17

Health Care | Operator perspective

How the health care reform impacts my restaurant By Larry Schuler, restaurant owner* My businesses are typical of many restaurants in our industry. Each of my three restaurant locations is a distinct entity: a Sub-S corporation with shared ownership with my father and two limited liability corporations fully owned by me, one of which is solely a seasonal business. For the most part, each of these businesses employs different employees with some overlap. We have a large group of seasonal employees that include a number of college students, some who work seasonally for us multiple times per year. The law defines a single employer based on the common control clause in the tax code, and based on the ownership of these restaurants we must consider the employees of all three restaurants as one employee pool for the purposes for the health care law. Yet other benefits, such as 401(k), will continue to be offered separately by each company, making benefits administration more complicated. Our employees appreciate the flexible scheduling the industry is known for, and their hours can fluctuate greatly based on the time of year. For one of our locations, average hours worked during the 2nd quarter range from 18 to 35 hours per week, while the 4th quarter is our busy season and hours average 40 to 65 hours per week for the same employees. We are very close to the 50 full-time equivalent workers threshold. The number of hours our part-time employees work will determine if we are a “large applicable employer” or not. What this means for my restaurants and our employees is that depending on the time of year and the number of hours worked by our team, the three entities combined could be considered a large applicable employer and subject to the most stringent employer mandates in the law some months, but not others.

our restaurants (the S-corp) and first considered the cost impact to the business if all full-time employees were offered and took our plan. We also considered the costs if half of the eligible regular and seasonal full-time declined the coverage. Lastly, we considered the penalty amount we would be required to pay if we decided to no longer offer coverage to our employees. This is not something we want to do, as we are very proud of the fact that we have offered full medical coverage to our employees for a long time. Not only is it the right thing to do, but in such a competitive industry, where good employees who stay with the company for a long time are rare, offering coverage like we have does create a competitive advantage for a business like mine. Employee loyalty also keeps training costs to a minimum. The restaurant and foodservice industry experiences such high turnover rates that attracting and retaining employees is a top priority for all restaurant operations. We first calculated the number of full-time equivalent (FTEs) employees just for this one location as defined in the law, using real 2010 employment numbers. Whether combined with the other restaurants as one employer or not, this one location would put us over the 50 FTE threshold. We feel that we are a small business yet this law considers us a “large applicable employer.” Here, we present the average of our analysis and what follows are the breakouts by quarterly periods examined. In 2010, on average, the restaurant employed 33 full-time employees and 26 full-time equivalents working part-time hours, for a total of 59 FTEs that place us over the threshold and subject to the coverage and penalty requirements of the law. We employed 24 seasonal part-time employees and five seasonal full-time employees as well, for a total of 38 full-time employees to whom we would be required to offer coverage under the new law as a large applicable employer.

In addition, our employees could be full-time employees one month and part-time employees the next, changing the obligation we have as a large applicable employer to each of them under the new law. Like so many of my peers, how closely employees’ hours are managed may determine if we are above or below the large applicable employer threshold of 50 full-time equivalent employees.

Should all 38 employees opt-in to the coverage, we would see a 282% cost increase to the business over current premiums. Today, we insure seven employees at a cost of $2,067 monthly/$24,808 annually. This would jump to $7,892 per month or $94,669 per year, if all 38 full-time employees opted into our coverage.

We recently completed a detailed analysis of the new law’s impact on our restaurants, including the impact of the seasonality of our business. We examined four different work periods in each quarter throughout the year for just one of

If we assume our pick-up rate is 50 percent and half of those eligible opted in for coverage (19 employees) the cost increase would be 141% over current premiums, or $4,979 monthly/$59,754 annually. If we chose not to offer coverage

18 | www.WRAhome.com

at all, we could pay on average $1,375 monthly/$16,500 annually in penalties. The penalties are less than what we are paying for health care now. We believe that offering health care coverage is the right thing to do. However, faced with these very large increases in coverage costs, which do not take into consideration the likely premium increases, it will be extremely difficult for us to absorb these costs and continue offering coverage. We cannot raise menu prices high enough to cover these costs and to do so would drive away the customers who are just beginning to return to our tables. Our only option will be to closely manage our workforce’s hours to be able to eliminate 10 FTEs from our staff and remain below the 50 FTEs large applicable employer threshold. Across the industry, part-time will probably be 25 hours or less on average in a week, impacting the number of jobs some of our employees may need to take on. It is not something I want to do, but given that this law will only increase my costs, I will have to do what I can to keep our 4th generation family business profitable and operating. My fellow restaurateurs are thinking about this law in the same context as I am. As a result, we are all taking a second look at any expansion opportunities we had been considering because of the additional burden and cost, which is somewhat still undefined. Because this law is so complicated and there remain so many unanswered questions about how it would function, it is extremely difficult to know how to expand and handle the hurdles you know will be coming at you. Every fellow restaurateur I talk to says that they feel in the dark, that they had no idea just how complicated and burdensome this law is. I fear that there are many in our industry who, despite our efforts to educate them about these challenges, do not yet realize the magnitude of the impact this law will have on their businesses. At the very least, this law and the requirements it imposes on employers will impact all of our decisions going forward, especially in regards to our employee base. 

U.S. Employer-Based Health Coverage Continues to Decline

The percentage of Americans who report getting health insurance from their employer has been steadily decreasing over the past three years, dropping to a low of 44.6% in February. Over the same time period, the percentage of Americans covered by government health care—Medicare, Medicaid or military/veterans’ benefits—has been increasing and now includes slightly more than one in four American adults. (Source: Gallup) Health Insurance Coverage Type: Employer-Based vs. Government Program Among adults aged 18 and over % Employer-based % Government program (Medicare, Medicaid, or military/veterans’ benefits 50

50.0 44.6

25.7 22.5

Jan. ‘08

Jan. ‘11

January 2008-February 2011 Gallup-Healthways Well-Being Index

* Testimony by Larry Schuler, Owner Schu’s Grill & Bar and Schuler’s Restaurant of Marshall (Marshall, Michigan) Subcommittee on Health, U.S. House Energy & Commerce Committee on March 30, 2011. May 2011 | 19

Ask the Expert | Restaurant Profit Coach

Build Sales through Strategic Labor Management

PASS IT ON

By Rick Braa, CHAE, WRA Consulting Network

My labor cost, including taxes and benefits, is running about 38%. What should the percentage be?

Good labor percentages are close to 30%, including taxes and benefits—a difficult task in Washington state. Once labor cost exceeds 35% it will be difficult to make much money unless you have a low product cost. Is labor a necessary evil or strategic advantage? Most restaurants don’t have a labor problem; they have a sales problem. Use labor to strategically drive sales and results. Require excellence from each position in the restaurant, raise and set high standards. Don’t tolerate less than “A” behavior from any person, especially the owner. The goal of the owner is to run a great and profitable business. The kitchen goal is to execute recipes precisely and timely as the recipes are intended for the guest. The front desk is to provide an enthusiastic, interactive “greet and seat,” a genuine “thank you” upon the exit of the guest and an engaging experience over the phone. The server is to provide an exceptional dining experience resulting in emotional satisfaction of the guest, a repeat visit and an enthusiastic referral. Connect with every guest. According to Gallup research, guests who feel the staff stands out are roughly five times more likely to return if they have a memorable experience with those that serve them. Interaction between the staff and the guest is far more important than the food served. Surprised? I’m not. Emotional connection is THE differentiator; excellent service, great food and a clean restaurant are expectations. Connecting and providing a place of belonging for the guest will drive return visits, one of the key areas in building sales. The impact of sales on labor cost percentage cannot be underestimated. Consider the following: With Sales Increase Sales Management Hourly Taxes & Benes Total Labor

20 | www.WRAhome.com

Amount $100,000 7,000 26,000 4,950 $37,950

% 100.00% 7.00% 26.00% 4.95% 37.95%

Amount $110,000 7,000 26,600 5,040 $38,640

Notice the percentage of labor drops from roughly 38% to below 31% by adding more sales. To get those extra sales, stay focused on what is necessary to keep the labor percentage where it needs to be. Reverse-engineer your labor goal for the day; know how many apps, entrees, desserts and drinks are needed to hit the sales goal for the day. Provide top level, engaging service and encourage the guest to come back more often with a friend that has never visited before. Continually invest in training your staff. If you don’t have an ongoing training program, develop one. Spend your time making yourself and your staff better and continually upgrade where possible. The staff must possess perfect knowledge of every item on the menu, no exceptions! How can you confidently sell what you’re not knowledgeable or excited about? Test product knowledge and execution frequently; trust character, but verify results. Measure productivity—plates per hour out of the kitchen by person and in total, guest check average by server and in total, guests seated and calls answered at the front desk. Inspect clock-in and -out times to make sure they match the schedule and reflect business volumes. Go skinny on the shoulders of busyness and overstaff during busy times. The more attentive and customized the service, the higher the sales. Perfecting the guest experience must be top of mind, and exceeding expectations should be the goal of every shift. Labor cost is an investment, not an expense. The more you drive sales, the guest experience and measure results the easier it will be to achieve a percentage around 30%.  For a more information on improving profitability and driving sales, contact BRAA Associates at rbraa@braaconsulting.com Rick Braa is the founder of BRAA Associates, a consulting firm specializing in helping companies grow profitability.

% 100.00% 6.36% 24.18% 4.58% 35.13%

Amount $120,000 7,000 27,200 5,130 $39,330

% 100.00% 5.83% 22.67% 4.28% 32.78%

Amount $130,000 7,000 27,800 5,220 $40,020

% 100.00% 5.38% 21.38% 4.02% 30.78%

continued from page 9 under 30 can buy a high-deductible policy for themselves in the exchange that is not available elsewhere. A policy with multi-state coverage can be bought only inside the exchange. These policies cannot be purchased outside the exchange. All this change is overlaid on a backdrop of the new world of work. Working 40 years for one company and retiring with a gold watch is a memory that will only be preserved in old movies. The US Department of Labor recently estimated that today’s graduates will have between seven and 10 jobs by the time they are 38. Jobs are now task- and talent-oriented, and people are more mobile. In the new world, when you change jobs you also are very likely to move to a new city or another state. Owning one’s own portable health insurance policy that you can take with you meets the needs of employees today and tomorrow. Portability, better choice of policies, shared employer financial support and the federal subsides will attract millions of individuals and families to the 50 state exchanges. One catch about the exchange is if your employee goes to the exchange and receives a subsidy, the employer is fined $3,000! But, adjustments are being developed that would

allow an employee to get a subsidy without an employer being fined. Restaurant workers flow around a city, between cities, around Washington, through the region and across state borders. It is extremely difficult, if not impossible, for group plans to provide continuous coverage for a person who enrolls in Washington state, then moves to Oregon for nine months, then to Idaho for 12 months, then back to Washington. But increasingly, this is how people are living. Group policies will continue to exist, but will increasingly be used only at highly profitable large employers. Personal ownership via affordable individual policies will be the new norm. What many restaurant For information on the owners and managers do establishment of a state not know is that changing exchange, see page 24 from an old group policy twentieth century market, to an individual policy twenty-first century economy format with individual policies will create new savings and less work for the restaurant, but give better benefits to one’s staff. 

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4/26/2011 6:34:23 PM

Health Care | Tax credits What about the Small Business Health Care Tax Credit? By WRA and NRA Staff The health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. The following questions and answers provide information on the credit as it applies through 2013, including information on transition relief for 2010. An enhanced version of the credit will be effective beginning in 2014. Which employers are eligible for the small business health care tax credit? Small employers who provide health care coverage to their employees and who meet certain requirements (“qualified employers”) generally are eligible for a federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a “qualifying arrangement.”

Other key points of the tax credit: The amount of the credit is phased out based on number of employees and their wages using a formula. The full credit is available to employers with 10 or fewer employees with average wages less than $25,000. The sliding scale tax credit is available beginning in 2010, for two consecutive years beginning with the first taxable year the employer offers one or more qualified health plans through the Exchange. The small business credit expires after six years. The amount of credit is 50 percent of the lesser of the aggregate amount of the employer contribution for employees’ premiums of qualified health plans offered by the employer in the Exchange OR the average premium in the small group market. This small business tax credit is considered part of the general business credit and can be used against Alternative Minimum Tax obligations (beginning in 2011 and to carrybacks of such credits). 

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Join the revolution … and discover how you can improve your restaurant.

The National Restaurant Association, Council of State Restaurant Associations, 40 state restaurant associations — including the Washington Restaurant Association — and Heartland Payment Systems® have joined forces to upgrade the crucial business services of every restaurateur. Full Course Business SolutionsSM — an exclusively endorsed suite of payments products and services — does just that, helping you reduce expenses, enhance operations and increase profitability. Our offering will grow as the industry — and your needs — evolve.

Full Course Business Solutions Card Processing • Gift Marketing • Payroll Services • Check Management To learn more about how this movement can help revolutionize your restaurant, visit GoFullCourse.com and call 866.941.1HPS (1477) x150. © Copyright 2010 National Restaurant Association. All rights reserved. © 2010 Heartland Payment Systems, Inc.

Health Care | State exchanges What you should know about health care exchanges By Jim Rivetts, contributing writer Federal health care reform law, the Patient Protection and Affordable Care Act (PPACA), mandates that states create health insurance exchanges, or that states join together to create regional exchanges. The exchanges will function as a clearing house for individual and small-group purchase of health insurance. PPACA requires every American to buy government-approved health coverage or pay a penalty, effective 2014. Federal taxpayer subsidies will be available in the exchange. At press time, health care exchange legislation, with amendments, was headed to Gov. Gregoire’s desk for a signature. The two bills, Senate Bill 5445 and House Bill 1740, will establish a health insurance exchange in Washington state. Both bills require the governor to appoint a nine-member board to establish and manage the exchange. This board must be in place by Sept. 1, 2011, and is required to be a nonprofit, public/private entity. Washington state had already been designing their version of a health insurance exchange, Health Insurance Program (HIP). HIP has been enrolling employers since Sept. 1, 2010 for coverage effective Jan. 1, 2011. HIP is administered by the Washington State Health Care Authority and receives its funding from a grant from the federal Department of Human and Health Services. This grant is anticipated to fund subsidies for employees enrolled through an employer sponsored plan within HIP through 2014. It’s possible with the recent budget cuts this funding will cease sooner than expected. The appointed board may decide to establish a new exchange or use the current HIP program for the required PPACA health insurance exchange in 2014.  If you are interested in more information or to see if your company qualifies for HIP, please contact JLR & Associates LLC at jlr@jlrassociates.com or 877.246.0545.

24 | www.WRAhome.com

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Primary Source of Information | Securing your business

Premises security 101 for northwest hoteliers and restaurateurs

PASS IT ON

By Greg Duff

iven the recent attention paid by clients to local security issues, I thought it a good time to review the obligations imposed by law on hoteliers and restaurateurs in Washington and Oregon to protect their guests and customers from crimes committed by third parties. In other words, what responsibility does a hotel or restaurant owner have for guests or customers who are injured (or whose property is damaged or stolen) by criminals. As I explain below, the more a hotel or restaurant owners knows about potential criminal conduct at her establishment, the more likely it is that she may be held responsible for not warning and/or protecting her guests or clients against it. To fully appreciate and understand this issue, it is important to have a little background. First, state law in both Washington and Oregon (and nearly every other state) imposes on business owners of all types the obligation to protect customers from dangerous conditions that a business owner knows or has reason to know to exist on the business premises. Second, these same state laws rarely impose on people the obligation to protect others from the criminal acts of third parties. Finally, exceptions to the second principle have been found to exist where business owners enjoy special relationships with their customers so as to put the business owners in a unique (and possibly better) position to be able to protect their customers or clients. Examples of these “special relationships” included transportation providers and their passengers, employers and their employees and, you guessed it, hotel owners and their guests. In 1997, Washington (like a growing number of states who have addressed this issue, including Oregon) concluded that all business owners (regardless of the type of business) have customer relationships sufficient to impose an obligation to both discover and warn or protect their customers against criminal acts where such acts are reasonably foreseeable. So what does this mean practically for hoteliers and restaurateurs? There are a couple of important key points to remember:

Hoteliers and restaurateurs only have a duty to discover/

warn/protect when the harm to the guest or customer by a third person is foreseeable. Not until the hotelier or restaurateur knows or has reason to know of the harm does the duty arise. Foreseeability is likely found to exist where the hotelier or restaurateur knows or has reason to know of the specific harm or general category of harmful activity. In other words, while the hotelier may not have had reason to know that his guest would be physically assaulted in the

hotel’s garage, the hotelier could be held responsible if he knew of general ongoing criminal conduct (e.g. car prowling, theft, etc.) in the hotel’s garage. Knowledge on the part of a hotelier or restaurateur includes both actual knowledge and constructive knowledge (i.e. knowledge imposed under the circumstances). Constructive knowledge can be based on the general location or nature of the hotelier’s or restaurateur’s business or the hotelier’s or restaurateur’s personal experience. Courts that have looked at this specific issue tend to focus on the history of violence known to the business owner. In other words, the more you know about crime being committed in or around your business, the more likely it is that you will be found to have knowledge of future crimes being committed against your guests or customers. Finally, and perhaps most importantly, the duty owed to a hotelier’s or restaurateur’s guests or customers includes both (a) the duty to discover that criminal acts are being committed or are likely to be committed and (b) the duty to warn guests or customers so that they may avoid harm or to protect them against harm. As I said at the outset, the more a hotelier or restaurateur knows about crime at or around his location (which is the likely outcome of the hotelier or restaurateur fulfilling his obligation to discover criminal activity), the more likely it is that the hotelier or restaurateur must discover even more about the crime and warn of, or protect his guests or customers against, the crime. The standard creates somewhat of a vicious circle for any business owner facing crime at or around his or her business. While I never advise clients to bury their heads in the sand and ignore the events and activities going on around them, I do routinely advise clients that taking a responsible and proactive approach to area crime requires that they must act appropriately in response to the information that they receive. Knowledge plus inactivity is a recipe for disaster.  Greg Duff is Chair of Cairncross & Hempelmann’s Hospitality, Travel & Tourism group, a team designed to address the unique legal needs of restaurant owners and operators. Members of the team work routinely in the areas of acquisitions and dispositions, finance, franchise, leasing, sales & marketing, employment, trademark, and liquor licensing. Members also sit on boards and act as general counsel and legal advisors to many of the region’s restaurant and hospitality industry associations, including the Washington Restaurant Association.

May 2011 | 25

Industry Tools | Online ordering

What to look for in an online ordering system for your restaurant

PASS IT ON

By Tim Sunderland

Each year, the figures show us what we already know: Takeout is a bigger and bigger part of the pie for more and more eating establishments. But in the last few years another number has become as important. Restaurants are also finding that if they really want to drive that take-out business, online ordering is the ticket.

Is it accessible by mobile media? Conservative estimates peg the number of smartphones (mobile phones that can access the web) at 50 million. If you own one, you know that you quickly start to live your life on it. If you can order from your favorite restaurant on your mobile phone, that’s even better. This is a must-have feature.

Orders can be placed, you can up-sell by suggesting additional dishes or dessert specials and payment can be received. The only thing the customer has to do in some cases is come up pick up their meal--or have it delivered to them.

Think twice about portal-based systems. Portals group a number of restaurants on one website for diners to search and find restaurants based on a variety of criteria. It’s typically free for a restaurant to get listed. They simply pay a percentage of each order. It appears to be a good deal. You only pay when you get the business.

The benefits are there, too. Restaurants that use online ordering report average ticket size is up to 20% larger— often more. Online ordering is so convenient that customers increase their take-out frequency. There is greater accuracy of orders. But with all selections come questions: What are the features I need to look for in an online service? What are the trends? Is it going to be complicated? Will my employees be able to work with it? What follows is a list of what you should consider when selecting an online ordering system? Can the online component be made to look like your website? You have invested a lot of time and capital in developing a website that reflects the brand and personality of your restaurant. When a customer goes onto your online ordering site, you want them to feel this is a logical extension of your website. You want it to be seamless. The more the online component is integrated into your website, the more you can promote it. If the online ordering component looks like your website and reflects your brand, this also allows you to take greater ownership of it. You can add a message to your customer receipts. You can promote it on signage and table cards and in your menu. Does it take advantage of social media? Facebook has more than 500 million users. Each of them has an average of 130 friends. The progressive online ordering systems have a Facebook icon on their site that, when clicked, automatically posts on their pages that you just ordered. Some even include a link that lets their friends click it and automatically go to your menu. They can order just as easily. 26 | www.WRAhome.com

But most portals show the same listing for every restaurant, offering no individuality or branding capabilities. It is also hard to control your menu. You may receive an order for a dish you no longer offer, or the price has changed. Finally, the service charge to your restaurant is often steep--as high as 15%. Ouch! Restaurants with the most successful online ordering businesses use a site-based system with integrated marketing functionality. A custom site can help reap huge rewards if they promote the service to customers. For example, a restaurant in the Seattle area began pushing their online ordering to customers using Twitter, Facebook, store signage and messages on their receipts. Within six months, their online ordering site helped them to almost double their take-out business. Orders roll in every day. Does the online ordering company take their business seriously? The good online ordering companies are prepared. Their websites—and in turn your website—are hosted on servers in secure co-location sites. There are redundancies and firewalls, so your information is not lost and your site is always functioning. Review these criteria and make your decision based on it. Online ordering can move your restaurant to another level of business, but the best results will come when you have selected a service that offers the best features.  Tim Sunderland handles marketing for NetWaiter—a simple, customizable, yet cost-effective online ordering system proven to grow take-out sales and increase profits. For more information, email info@NetWaiter.com

INDUSTRY CALENDAR

Visit www.WRAhome.com/calendar for a full list of events.

Training | Meetings | Events | May & June Events June 7

Meetings Spokane Golf Tournament

Training May 3 May 19 May 26 June 7 June 13 June 20

ServSafe®, Seattle ServSafe®, Tacoma ServSafe®, Kent ServSafe®, Seattle ServSafe®, Kent ServSafe®, Everett

May 3 May 3 May 4 May 4, 11 May 10 May 11 May 11

HIHIT Trustee Meeting Executive Committee Meeting Seattle Restaurant Alliance Morning Mixer Government Affairs Committee Conference Call Member Services Committee Meeting Retro Investment Group Retro Trustee Meeting

May 11 June 1 June 7 June 14 June 28

MSC Sub-Committee Meeting Seattle Restaurant Alliance Morning Mixer Executive Committee Meeting Spokane Chapter Meeting Board Development Meeting

NEW MEMBERS Banwait, LLC, Neward Big Y Cafe, Leavenworth Brouwer’s Cafe, Inc., Seattle Brown Lantern Alehouse, Anacortes Burger Bungalow, Vancouver Cactus Jacks, Spokane Valley Cattin’s Family Dining, Puyallup Chuckanut Brewery LLC, Bellingham Crash Landing Pizza, Seattle Dante’s Inferno Dogs, Seattle Demetris’s Woodstone Taverna, Edmonds Great Harvest Bread Co., Olympia Kids Cooking Corner, Inc., Vancouver Kokopelli Grill, Port Angeles Oma Bap, Newcastle R Bar, Port Angeles Rancho Bravo Tacos Co., Seattle Sand Point Grill, Seattle Steam Plant Grill, Spokane Sunset Bar, LLC, Monroe Sushi I, Spokane Top Burger Drive In, Vancouver Waffles Plus, Spokane

NEW ALLIED MEMBERS ChopChopSites Michael Wyatt PO Box 2843 Vashon, WA 98070-2843 2064521977 mike@chopchopsites.com www.chopchopsites.com Mobile Web Specialists, division of Zigflitz, a full Service Web Development Company. 25% off monthly fees for 1 year.

Deborah Ward Interiors Deborah Ward 2007 Northwood Ave NE Tacoma, WA 98422-4082 2539271224 dwinteriors@comcast.net www.dwardinteriors.com

See Pat Production Cris Larsen PO Box 3106 Bremerton, WA 98310-0406 360.479.0109 gr8cris@comic.com www.thegreatcris.com

Commercial interior design specializing in the restaurant industry. First consultation free.

So why haven’t we worked together? See Pat Productions... on the leading edge and yes... it is a funny way to do business.

Global Security & Communication, Inc. AJ Gomez 3212 Main St Vancouver, WA 98663-2753 360.693.1900 aj@global4security.com www.global4security.com

United Bank Card West Coast Division Jennifer Laifa 1522 Arab Dr. S.E. Olympia, WA 98501-5829 619.865.0270 jen@unitedbankcardwcd.com www.unitedbankcardwcd.com www.harbortouchforfree.com

Fire and burglar alarm systems and CCTV systems, 5% off. Peterson Sullivan LLP Rob Keasal 601 Union St Ste 2300 Seattle, WA 98101-2317 206.382.7777 rkeasal@pscpa.com www.pscpa.com

We offer FREE Harbortouch Point of Sale terminals to make running your retail or hospitality business easy and more profitable. As one of the largest and most reliable processors, we can handle all of your merchant service needs.

Peterson Sullivan LLP, founded in Seattle nearly 60 years ago. Proudly provides comprehensive accounting, audit, and tax services to publicly traded companies, closely held businesses, nonprofits and individuals.

May 2011 | 27

Endorsed Provider | Balcos Insurance

Determing a coverage level for my business By Mark Balcos The type and level of coverage you choose for your business will depend on a number of different factors, ranging from the size of your business to industry specifics. As a business owner, ultimately the decision regarding the level of coverage rests with you. The one certain thing is to ensure your business is adequately protected, but at the same time you do not want to be paying premiums—for instance, components that have no relevance to your business. Here are a few things you should take into consideration when looking into business insurance: Size of your business As your business grows, you will want to review your insurance to make sure you have adequate coverage. The minute you employ people to work for you, the level of liability on your company increases—not only from an employee point of view but also from a customer’s perspective. When other people are involved in the work process, there is always the risk of human error. Your new employees may not be as committed to quality and you may find that you have product or service issues. In this instance, product liability insurance becomes very important. In addition, there is the added risk of injury to employees in the workplace, regardless of the industry you operate in. Workers’ compensation is legislated in most states for fulltime employees. Type of business and industry Businesses in different industries will be exposed to varying levels and types of risk, so it’s natural the insurance coverage will be tailored accordingly. If you operate in a consumer market, it’s likely you’ll need a higher level and different type of liability insurance than if you were in a corporate environment. For example, restaurants and bars that have a high volume of people through their doors would require insurance that covers equipment, food spoilage, customer or product liability, workers’ compensation and property insurance, as a minimum. In addition to this, there are some insurance policies that are customized specifically for the hospitality industry. Manufacturing businesses will have greater risks in terms of property, equipment and product liability. 28 | www.WRAhome.com

Service-oriented businesses are likely to need less general insurance for property and equipment and will most likely have higher levels of liability insurance, with a specification for errors or omissions. In some professions, liability insurance is legislated such as malpractice insurance for medical professionals. Look at the characteristics of your business, and that should give you an indication of possible risks. Evaluate your business assets and perceived risks The level of insurance coverage will depend largely on these two factors. You will want to ensure that whatever business assets you have are protected so that you can consistently generate an income. An aspect of insurance that is sometimes overlooked is the cost of a business interruption. If, for example, an important piece of machinery breaks down, what will be the cost to your business now that you can’t produce products while it is being repaired? The cost of not producing can sometimes cripple a business, so it’s important to be aware of such risks. The industry or region where you work may be susceptible to particular risks. Get information from industry associations and colleagues to help you assess and ensure that you have adequate coverage. Call in the professionals Once you have completed a thorough analysis of your business, contact two or three different insurance companies for quotes. In most instances, they will send out an assessor to evaluate your business risks. Their expertise may highlight areas that you may not have thought of. Also, by getting more than one assessment and quote, you will be able to compare different insurance policies and evaluate which one will be most appropriate for your business. Remember that you do not want to be paying for coverage that has no relevance to your business. At the same time, you want to make sure that you have at least all the major risks adequately covered.  Protect your business from a future crisis, or learn if you can save money on your insurance by getting a quote today. Contact Scott Balcos at 877.783.0341 or email him at wra@balcosinsurance.com. The WRA has endorsed Balcos Insurance because of their 20 years of expertise in writing commercial insurance programs uniquely suited to the restaurant and hospitality industries. Learn more about Balcos Insurance at www.balcosinsurance.com.

Marketplace DOWNTOWN SEATTLE CAFĂ&#x2030; FOR SALE

SELLING OR BUYING?

Large box lunch business. Add significant profit center to your existing operation or good introduction into the restaurant business. Great life style, currently weekday breakfast and lunch only. Excellent lease and terms. Contact Jean Klein, CPA. www.smallrestaurantspecialist.com or (206)795-4443

Thinking about selling or buying an existing restaurant, or adding a new location? Call Allan Boden, Sunbelt restaurant specialist at 206.229.4717, or email a.boden@sunbeltnetwork.com. Sunbelt has been serving clients since 1982 with offices nationwide. http://seattle1.sunbeltnetwork.com

CONSULTATION, PLANNING, AND CONCEPT DEVELOPMENT

Thinking about opening up a new restaurant, moving into an existing, or re-modeling? DYNAMIK will provide a complimentary initial consultation to review your project. Email Melanie@dynamikspace.com to determine a plan for your concept, design, schedule, and construction.

FREE LABOR LAW POSTERS

Take advantage of your WRA membership and get your FREE labor law posters today! Call 800.225.7166 for more information.

Choices H.I.H.I.T. understands that choices are as important as affordability.

Did you know... H.I.H.I.T. offers health care statewide. Whether you are in Spokane, Seattle or Neah Bay, H.I.H.I.T. offers a statewide network for all your health care needs. Plus, with H.I.H.I.T. you can: s s s

Keep using your existing doctor Choose from 800 Group Health physicians Access more than 9,100 contracted providers

H.I.H.I.T. is the plan of choice when it comes to offering benefits and options to the hospitality industry. Enroll in a health care plan today. Call Pam Moynahan toll free at 877.892.9203.

Lower Your Workers’ Comp Rates t Save money on your Workers’ Compensation costs t Have 24/7 access to FREE customizable online safety training The WRA provides you with the necessary tools and support to close claims and bring people back to work quickly.

Start taking advantage

WRA’s Retro benefits today! of

Visit www.WRAhome.com/Retro, or call Jill Brady at 800.225.7166, ext.134.

Golf FORE! Education August 16, 2011

Washington National Golf Club in Auburn

Help sustain the future of our industry by supporting culinary students’ programs and scholarships at our annual golf tournament! Stay for the after party featuring Washington’s finest breweries, wineries, culinary fair and silent auction.

EFGolfAd_halfpage.indd 1

4/26/2011 6:46:12 PM

Industry Overview | Your customers

Restaurants by the numbers $1.7 Billion Restaurant industry sales on a typical day in 2011.

Restaurant Industry

Share of the Food Dollar

47 Percent of adults who said they would be likely

to patronize a mobile truck parked near their home or office if it was offered by one of their favorite restaurants.

47 Percent of adults who said they would be likely to

25%

utilize an option of delivery directly to their home or office if offered by a fullservice restaurant.

49%

1955

37 Percent of adults who agreed that purchasing

Present

meals from restaurants, take-out and delivery places makes them more productive in their day-to-day life.

29 Percent of adults who said they would be likely to place an order using a mobile phone application if it was offered by a quickservice restaurant.

71 Percent of adults who said they are trying to eat

healthier now at restaurants than they did two years ago.

$2,619 Average household expenditure for food away from home in 2009.

$79,623 Sales per full-time-equivalent non-

supervisory employee at eating-and-drinking places in 2009.

74 Percent of adults who agree that going out to a

restaurant with family and/or friends gives them an opportunity to socialize and is a better way for them to make use of their leisure time rather than cooking and cleaning up.

Total Restaurant Industry

Employment 11.3 million

12.8 million

14.1 million

69 Percent of adults who said they are more likely

to visit a restaurant that offers locally-produced food items.

57 Percent of adults who said they are more likely

to visit a restaurant that offers locally-produced food items.

57 Percent of adults who said they are more likely to visit a restaurant that offers food that was grown or raised in an organic or environmentally-friendly way.

2001

2011*

2021*

*Projected

52 Percent of adults who said they are likely to

make a reservation choice based on how much a restaurant supports charitable activities and the local community. National Restaurant Association May 2011 | 31

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Renew at www.WRAhome.com today.