Tag Archives: political

SURPRISE! Raising Wages = Higher Prices.

Chipotle just raised its prices in San Francisco 14%, exactly the same % as the raise in wages with the new minimum wage in the city. A popular chain like Chipotle has the option to do this, while most Mom and Pop restaurants and less trendy chains typically cannot raise prices.   They (we) just have to take a 14% hit.

There is no willingness of consumers to pay a little more so their fellow citizens who work in food service can make a living wage. Instead, “the dollar store mentality” rules with most customers. The lowest prices for the fattest burritos and self-throat-cutting “deals” drive sales. Thus, small businesses seem likely to lose out and possibly go out of business under the new inflationary scenario where operating costs rise but prices mostly cannot.

One lesson to be learned from Chipotle is great branding and marketing can help a business weather the storm.  Every business needs to give customers a compelling reason to look beyond the lowest prices.   Great marketing and branding can attract a high number of less price sensitive customers.  Volume plus profit margins equals survival in a time of rising costs!  This is something we are happy to say we’ve been able to help with for more than 40 hospitality locations.  Shoot us a note at A-List Marketing for a free consultation on how to beat rising costs and cheap customers.  It’s the only way to cover the ever rising costs in our businesses!

I liked this “Take Part” article about the Chipotle price hikes, as the writer seems shocked at basic economics.

Have a great day and enjoy every burrito! — TTBG

PS – I just want to add since I saw this – if you don’t tip because the minimum wage went up, you are a cheap ass.  You are not doing it on principle, you are a cheap ass.

http://wp.me/p2g9q8-CS

 

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Be Careful What You Wish For, Anti-Tipping Crowd

A Massachusetts Court ruled a Dunkin Donuts that has prominent signs saying that tips are not accepted can keep any money left on the counters and not give it to employees. Not my style of good morale management, but I can’t fault the court. If there’s “no tipping” than money left on the counter cannot by definition be a tip!
If you don’t like that logic than perhaps we are all better off preserving the personal touch of encouraging tips instead of taking another step toward a society with minimal human interaction.
As someone who earned the money to start out in life as a tipped employee, I say Long Live Tipping!
Read more here in Grub Street about this ruling.

Want help dealing with trends and challenges in restaurant and bar service?  Shoot us a note and have a free consultation!  Or join us on Facebook and Twitter to ask any questions!

Learn how to survive Obamacare from restaurants that started it early.

Learning from early adopters:  Illuminating article on the ACA from RestaurantBusinessOnline.com.

“Don Fox was busy designing a health-insurance plan for his workers when he got an unexpected reprieve from Uncle Sam: an extra year. Unlike many of his colleagues, he decided not to take the delay.

Before Obamacare’s rules kicked in, he wanted to shake down his insurance program, to find out how it would hit his operations and his bottom line.     …

For at least some early adopters, Obamacare may not be the apocalypse they had dreaded. “The numbers have generally gone down from what people feared would be the worst-case scenarios,” says Scott DeFife, executive vice president of policy and government affairs at the National Restaurant Association. There are several reasons, say benefits consultants.

One is that many employees just don’t sign up. Thirteen percent are covered under spouses’ or parents’ plans, according to the University of California Berkeley Center for Labor Research and Education. Others decide it’s cheaper to pay a tax penalty for going uninsured than to pay their share of premiums. “You’ve satisfied the obligation to offer the coverage,” says Keith McMurdy, benefit-plan attorney with Fox Rothschild in New York City. “There’s no requirement to force people to be covered.”

Some insurers are softening the blows, too, by offering lower-cost options tailored to restaurants. “Insurance companies have been nimble,” says Gary Levy, hospitality-practice partner with accounting firm CohnReznick in New York City. “They’ve gone out and designed plans that meet the act’s requirements that are very affordable.”

Speaking of work hours, millions of restaurants will need to start tracking them in January, even if they’re not yet offering insurance. That’s because they’ll have to report those 2015 hours to the IRS, to document who’s eligible. Michelle Neblett, director of labor and workforce policy for the NRA, recommends making sure your payroll system is set up to gather the numbers. “You’ll have a hard time if you wait to rebuild this data at the end of next year,” she says. “This is a massive hidden compliance cost, which a lot of people are not paying attention to.”

Try to remove whatever uncertainties you can, experts say, because there will be plenty remaining that are out of operators’ control—such as 2016 insurance rates, most of which won’t be set until next fall. By then, NRA lobbyists hope Congress might raise the definition of full time to 40 hours. That would exempt another 21 percent of restaurant staff from employer mandates, according to UC Berkeley Labor Center figures.”

Read the entire article here.  And thanks to RestaurantBusinessOnline.com, a great site and resource for F&B information and guidance!