I NSP I RAT ION FOR TRANSFORMI NG THE BUS I NESS OF FOOD
2020 Changed the Game Digital Metrics Matter For Future Restaurant Success
Help guests feel afe: TIPS FOR CLEANING POS EQUIPMENT
TAX OPPORTUNITIES DURING THE COVID CRISIS BY HENRY + HORNE
THE MAGAZ I NE OF THE AR I ZONA RESTAURANT ASSOC I AT ION
It’s busy season! As the weather cools down, Arizona restaurants start to pick up, even during 2020. This issue provides good resources and reminders of our industry’s best practices as we start into this busy season.
2 4 2020 CHANGED THE GAME : DIGITAL METRICS MATTER FOR FUTURE RESTAURANT SUCCESS
3 4 TAX OPPORTUNITIES DURING THE COVID CRISIS BY HENRY + HORNE
4 6 HELP GUESTS FEEL SAFE : TIPS FOR CLEANING POS EQUIPMENT
Explore this global hub of industry news and commentary on food, drink, design and more.
4 ‘DINER PERSONAS’ REVEAL WHAT MOTIVATES RESTAURANT CUSTOMERS IN THE AGE OF COVID I 6
Get to know Arizona’s food scene through stories, interviews and conversations with industry insiders.
2020 CHANGED THE GAME: DIGITAL METRICS MATTER FOR FUTURE RESTAURANT SUCCESS 2 4
PRESIDENT’S MESSAGE 0 8
MESSAGE FROM THE CHAIRWOMAN I 0
Learn from the best with this business know-how guide filled with ideas, tips and resources.
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TAX OPPORTUNITIES DURING THE COVID CRISIS BY HENRY + HORNE 3 4
HELP GUESTS FEEL SAFE: TIPS FOR CLEANING POS EQUIPMENT 4 6
President & CEO Steve Chucri
Vice-President of Administration Jana Shelton
Chief Operating Officer Dan Bogert
REIMAGINE WHAT’S POSSIBLE.
ProStart & Education Foundation, Manager Paula Bugg
ARA Events & Events 360 Brynn Johnson-Beam Director of Marketing Jamie Stone
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We have seen customers motivated to support our industry in many ways; from donating to our Arizona Restaurant Strong Fund, allowing us to distribute $500 grants to displaced workers, to continuing to keep restaurants in business when dine-in wasn’t an option. It has been a challenge keeping up
e have always prided ourselves at the Arizona Restaurant Association as being an innovative organization, disciplined in knowing the needs of our industry and working to provide the resources and support needed to continue to serve our loyal diners. Nothing could be truer as we have navigated through 2020.
with the demands of consumers, some with pent up desire to get out of the house, others not wanting to leave. Those who will only go out with masks and others who prefer to leave their masks at home. Our front-line industry workers have been tested and challenged to adapt and hit the mark, all with the common goal of making it through these tough times.
Our leaders have shown their resilience, ability to pivot and creativity while working tirelessly to meet and surpass the ever-changing expectations and needs of diners. ffff
We recognize the leaders of our industry who continue to push the limits. Our leaders have shown their resilience, ability to pivot and creativity while working tirelessly to meet and surpass the ever-changing expectations and needs of diners. The restaurateurs that spearhead our industry should be recognized for being successful in such a dynamic and challenging time. Customers often do not have a true appreciation as to what takes place behind the kitchen doors or the fast-paced pressure and immense priority for food safety. It has taken talent, dedication, passion, and leadership to make it to the top, even before COVID-19. This year has put a spotlight on these attributes which have proven to be more important than ever. 8
We continue to recognize and appreciate every member of our restaurant family, especially as we move into the holiday season.
Steve Chucri President & CEO, Arizona Restaurant Association
message from the chairwoman
Leadership is a difficult skill to teach –
it is a skill that is usually best tested by the challenges we face. While certainly not ideal, 2020 has provided our industry with what will likely be the greatest challenge of our time. And, 2020 has shown that the restaurant industry is full of leaders; some in front of cameras, some behind scenes, some in offices and some in kitchens or on the dining floor, each ready to tackle what each new day brings. As restaurants continue to navigate this difficult year and for the months still yet to come, leaders have been and will continue to be the drivers of change, necessary for our industry to evolve and persevere. But as much as the leaders drive the change, it takes a team of dedicated people to execute it. Only then is there true success.
Feature The support staff across all facets of our industry have been top notch, working tirelessly to roll with the punches brought on by this pandemic, embracing the change and continuing to put our loyal customers first, all with a smile, albeit a weary one some days. Here at the Arizona Restaurant Association we applaud all of our industry workers, the leaders and their trusted staff, and thank them for continuing to put their best foot forward, day in and day out, and for keeping our employees and customers safe.
Wishing all of you continued safety and a Happy Thanksgiving.
Alicia Casale Chairwoman, Arizona Restaurant Association
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4 Diner Personas Reveal What Motivates Restaurant Customers in the Age of COVID
by Patricia Cobe
After several months of quarantine, many consumers embraced the return of restaurant dining. But others are still wary, venturing out only to pick up a meal curbside or have dinner delivered to eat at home. Meanwhile, restaurants are scrambling to enforce health and safety protocols, juggle takeout and delivery with dine-in service, set up outdoor seating and create menus that cover all these scenarios. The good news is that 38% of consumers are looking forward to dining out again in the next three months, according to a new survey conducted by YouGov and commissioned by SevenRooms, a data-driven guest experience platform. But every potential customer has different needs and expectations. To make it less challenging for operators to navigate the new dining landscape, SevenRooms grouped these needs into four “diner personas” based on the survey results. The pickup patron: These consumers won’t be ready to dine out until there’s a vaccine. Nearly 1 in 4 (23%) will only order for takeout or delivery for the remainder of 2020. Restaurants seem to be doing a good job with these platforms—about half of all Americans continue to feel comfortable ordering food to go. 18
The safety-savvy consumer:
It’s no surprise that customers want to see restaurants following health and safety guidelines. Face masks and 6-foot social distancing are givens, but this group of guests is looking for more. Over one-third of respondents (37%) want physical barriers between tables, 33% want personal hand sanitizers placed on the table and 24% want their food covered when it’s served to them.
The tech-conscious contactless diner: About 1 in 7 consumers (13%) will only visit restaurants that offer a contactless dining experience. Topping the list are virtual waitlists, with 22% of respondents saying they want to join a waitlist before they arrive so they can be seated immediately. Around the same number (21%) want operators to use contact tracing technology, and 17% are in favor of QR codes for ordering and paying.
The carefree guest: This diner persona is eager to dine out in restaurants and less concerned about risks and restrictions. While 29% are comfortable sitting indoors at a restaurant, many more (42%) are limiting visits to outdoor venues. Familiar restaurants are more likely to be on their list—37% are more comfortable dining at places they’ve been to before, but 25% would visit a new restaurant. Bars are not a priority; only 15% of consumers would patronize a drinking establishment.
“As local economies across the country continue to reopen, restaurant operators are navigating the right balance between safety and traditional models for hospitality,” said Joel Montaniel, CEO and co-founder of SevenRooms. “Our research has made one thing clear: Operators need to be flexible. Whether it’s in regard to outdoor dining, virtual waitlists or contactless order and pay—guest have different needs.” YouGov PLC conducted the survey with 1,237 Americans from July 31-Aug. 3. The four diner personas are identified in the company’s new report, “Restaurant Reckoning: Dynamic Diner.”
brush title tbd digital metrics matter
2020 Changed The Game: Digital Metrics
Matter For Future Restaurant Success
by Hope Neiman Forbes Councils Member
The restaurant industry has changed drastically as a result of the Covid-19 crisis, and many of the new practices built to navigate these unprecedented times in food service are likely to remain long term. While nobody is sure when a “return to normal” might be, or what that will look like, but one thing that is certain: Our future “normal” won’t be the same as our “normal” of January 2020. The world of restaurant dining used to be almost entirely service-focused. People understood what to expect from a restaurant: You go in and sit down at a table, a service staff member brings your drinks and food and so on.
Today, every restaurant is different. Some have open dining rooms, while others are only offering to-go options. Some do curbside pickup, others deliver. Some are on GrubHub, Postmates, Uber Eats and other food delivery apps, while others choose digital tools of their own. It’s more complicated and more uncertain than ever before. Except, in that uncertainty, a new way of operating is raising the cream to the top. Based on what I’ve seen, the brands that were agile in their menu execution, their in-store and digital operations, and their willingness to rethink the approach to food service during the pandemic are the ones thriving. The winners have been overt in their communications, direct with their consumers and built and leaned into a strong digital game. For some, that reliance on technology was already in place, and a pivot to an almost entirely digital restaurant demand generation effort felt natural. For others, this was the year when the “nice to haves” of mobile apps and online ordering tools became the most important tech project for the brand. I believe online ordering and delivery are here to stay long term because so many customers have learned to rely on them during this unique time. The consumer data we see at Tillster suggests it’s not just millennials or Generation Z utilizing digital tools like restaurant apps or websites for ordering, pickup and delivery. Instead, even the baby boomers have learned to embrace the tools.
• Customer Lifetime Value: Look at ensuring your guests are taking action to make them more valuable. Some guests already come in a lot, so while you may not get more visits, try to increase their average check with upsells to increase their value to you. Others may spend a lot but don’t come in often enough. Try bounce-back offers to improve their value. In other words, look at what you can get different segments of your customers to do to make each more valuable. • Yield On Individual Items: Yield is what you actually get from an item. The sandwich may cost $8.29, but adding extra cheese makes its yield closer to $9. Tracking yield, especially versus an in-restaurant experience, is a way to increase profitability. Asking if your customer wants to add cheese or encouraging a combo are simple ways to drive the bottom line on individual purchases.
So, if everyone has become reliant on the digital tools for food ordering and delivery, it’s a safe bet that these tools will remain important beyond the days of the pandemic. The question isn’t, “Are digital tools here to stay?” but rather, “Now that digital tools are here to stay, how do restaurants best utilize them and maximize their investment?” The answer is in the data. If used correctly, digital tools, like the ones my company offers, don’t just create an order ticket in a kitchen; they create a loyal customer, a growing audience and incremental spending. So, here are a handful of metrics you should be managing and building programs around, on a segment-by-segment basis, and some actionable tasks you can do with each: • Average Check Size: Look at the percentage of upselling and cross-selling and what you can do to improve those rates. Try shifting higher-priced items higher in the selection process to driver increased average check sizes. • Frequency Of Visit: All restaurants have an “average” visit frequency. Try approaching the middle tier of customers and see if you can improve the frequency even by a little. For example, if the average customer comes in one time per quarter, using messaging or offers to improve that to 1.2 times per quarter should yield big gains given the size of the cohort.
• Reclaiming Trailing Customers: Consumers may get distracted by the next shiny object, and that includes taking advantage of the offers your competitors are providing. Build an automated win-back program that reaches out and reclaims your guests before they are lost for good. Experiment with simple messaging or offers and track the return on investment (ROI) to see the best time to trigger them in order to optimize revenue.
With digital tools and performance analytics, successful restaurant brands can start to look and behave like e-commerce organizations. Restaurant owners and marketers are able to understand which orders are the most profitable and which customers are, too; build programs that bring more high-value customers into the fold; work toward retaining existing and trailing customers with timely offers and coupon programs; adjust efforts to drive incremental visits from customers and encourage traffic during otherwise slow times; and gain a clearer perspective of how dollars spent on marketing translate into orders. None of this was really possible until the advent of digital ordering tools, and the circumstances of 2020 reshaped the game for restaurants moving forward. Leveraging this data is how brands are able to provide an omnichannel experience in an era where the dining room is secondary. Successful restaurants can create location-agnostic businesses by leveraging data to keep their guests’ needs at the center. Now that consumers and restaurants alike understand the convenience of digital ordering, the way I see it, there is no going back.
tax opportunities during covid
HENRY + HORNE CORNER
During the COVID Crisis
by Austin M. Bradley, CPA, Manager
2020 has been an incredibly challenging year for everyone. With the COVID-19 pandemic, the restaurant industry has been especially hard-hit. Fortunately, various pieces of legislation passed throughout the year have created a number of significant opportunities for tax savings, which could prove to be more important than ever for your business during this unprecedented time. Let’s start off with net operating losses, known as NOLs in the tax professional world. These are tax attributes generated when losses allocated from business activities exceed a taxpayer’s income for the year. While common sense might tell you that one generally wouldn’t want to be in a net operating loss position, as that would indicate you are losing money rather than making it, the tax benefits of NOLs can be quite significant. For many years the rules associated with net operating losses allowed taxpayers to choose how to apply their net operating losses against taxable income. Taxpayers could carry an NOL forward to future tax years, offsetting future income until the NOL is fully absorbed, for a period of up to 20 years. Alternatively, taxpayers could choose to carry an NOL back to the most recent two previous tax years for a refund of taxes already paid. This changed with the passing of the Tax Cuts and Jobs Act of 2017 (TCJA), which repealed the carryback option but still allowed for the carryforward. 36
Fast-forward to March of 2020, and the passing of the CARES Act (Coronavirus Aid, Relief, and Economic Security). Suddenly, carrybacks are back on the table for NOLs generated in 2018, 2019, and 2020, and many struggling taxpayers are jumping at the opportunity for a carryback and a potentially sizable refund. There are plenty of complications that come with these carryback claims. Certain types of tax, such as self- employment tax, cannot be offset by net operating losses. For purposes of the alternative minimum tax, the amount of your NOL will oftentimes be different. This means that if you were in AMT in prior years, that carryback may not help you as much as you think. These carrybacks are not a DIY project. You will definitely want to work with a tax professional if you believe you may be in this position.
Another major benefit generated by the CARES Act was the correction of the Qualified Improvement Property “glitch” originally caused by the TCJA. Without getting too much into the weeds, a drafting error in the legislation caused leasehold improvement properties that should be eligible for a 15-year recovery period as well as 100% bonus depreciation, to be eligible for neither. As a result, such property could not be expensed with bonus depreciation and must be depreciated over 39 years. This was bad news for taxpayers opening new locations or doing major renovations. Fortunately, the CARES Act corrected this “glitch”, and leasehold improvement property is now again eligible for 15-year recovery period, and more importantly, 100% bonus depreciation. This ties in closely with the net operating loss provisions that we discussed earlier. By allowing for major capital expenditures such as buildouts and remodels to be fully deducted up-front, business owners undertaking these projects may suddenly find themselves in a net operating loss position. The final item from the CARES Act that we will address is the Employee Retention Payroll Tax Credit. This credit is available to businesses whose operations were fully or partially suspended due to COVID-19 related government orders, as well as businesses whose gross receipts for the 2020 quarter decline more than 50% when compared to the same 2019 quarter. For employers with greater than 100 employees,
the credit is equal to 50% of wages up to $10,000 paid to employees who are not performing services, with a max credit of $5,000 per employee. For employers with 100 or fewer employees, the credit is equal to 50% of wages up to $10,000 paid to any employees, regardless of whether they were performing services, again with a max credit of $5,000 per employee. The wages can be paid from March 13 to December 31, 2020, and the credit is claimed on Form 941 as part of your quarterly payroll tax filings. Of significant importance to note, employers who received loans under the PPP program are NOT eligible for the Employee Retention Credit. If you have received a PPP loan, there are still other credits available that you might be eligible for. The Families First Coronavirus Response Act (FFCRA) provides for two other
payroll tax credits, both of which are available to recipients of PPP funds. The Emergency Sick Leave credit is available to employers who have paid employees for up to 80 hours of sick leave related to COVID-19, whether they are caring for themselves or others. This credit is limited to the lesser of two-thirds of the employee’s regular pay, or a daily rate of $511 or $200, depending on the reason for leave. A similar credit for Emergency Family Leave is also available for employers
that have paid employees for up to 12 weeks of leave to care for dependent children under the age of 18, whose school or usual care provider is unavailable due to COVID-19. This credit is limited to the lesser of two-thirds of the employee’s regular pay, or a daily rate of $200. Similar to the Employee Retention Credit, the FFCRA credits are claimed on Form 941. Keep in mind that while these credits are available to recipients of PPP loans, any wages used for receipt of a credit cannot also be used in your calculation for PPP forgiveness. Additionally, these credits are only available to businesses with fewer than 500 employees. The volume of information available regarding COVID-19 relief in the form of credits, grants, PPP forgiveness, new depreciation rules and net operating losses can be overwhelming. Additionally, there can be significant and complex interplay between all of these items, and it is not much of a stretch to imagine taxpayers inadvertently putting themselves in a bind by not considering the potential consequences of accepting one form of relief, without taking into account the impact on another. Be sure to consult with your tax advisor before making any decisions about the above items to make sure you get the best bang for your buck from the available COVID-19 relief, without accidentally getting into a jam.
PPP loan forgiveness You’ve got a lot on your mind right now. Here’s some news that will help alleviate your worries a bit. You may have gotten a Paycheck Protection Loan to help get your through the pandemic. Your loans are about ready to go through the forgiveness process. The good news is forgiven loans are excluded from gross income and not taxable. If your loan was for $50,000 or less, the path to forgiveness is smooth. You’re exempt from reductions in loan forgiveness amount based on reductions in FTEs or reductions in salaries and wages.
Stay up to date on COVID-19 + restaurant news The Side Dish blog has the latest insights you need to know
Brad Dimond, CPA Henry+Horne Partner
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Help guests feel safe: tips for cleaning POS equipment
by Heartland Payment Systems
Create a safe environment for guests and employees.
Restaurateurs, guests may be able to safely eat away from home after months of staying in, but they’ll need to feel safe to make it a regular practice. While your restaurants operate according to state and local COVID-19 guidelines, everyone plays a role in maintaining public safety - including you, your employees and your guests. While social distancing is one task assigned to us all, regularly cleaning and disinfecting point- of-sale (POS) equipment and using handheld POS devices are some of the most effective, and prominent, contributions you can make.
It’s not enough for your restaurant to be clean- disinfect in front of your guests throughout the day so they can relax with friends and family, knowing they’ve made the right decision to enjoy a meal at your establishment. Similarly, leave pump bottles or contactless dispensers of hand sanitizer at every stationary POS station. The Centers for Disease Control and Prevention (CDC) recommend using hand sanitizer containing 60-95% alcohol for effective germ-killing power after touching surfaces and between handwashing trips. Uphold COVID-19 safety standards with handheld POS devices. They allow you to eliminate queues while maintaining safe distances between parties of guests and employees. Handheld POS devices also allow you to complete transactions tableside or in socially-distant locations. Guests are overwhelmingly using credit and debit cards in lieu of cash to improve hygiene and reduce contact. The National Restaurant Association recommends the use of contactless payments during the pandemic. Use handheld POS devices to elevate safety measures.
While cleaning removes visible marks, disinfecting kills germs. Put a small amount of alcohol-based cleaner (min. 60% alcohol) onto a microfiber cloth or soft towel or use alcohol- based wipes. Never apply liquids directly to your equipment. Never squeeze a cloth or wipe on or over your POS devices- it could cause liquid damage. Some cleaners have the power to destroy plastic and rubber components; avoid accidental contact- never use ketone-based solvents, bleach, thinner or trichloroethylene. Reference your user’s manual for a list of approved cleaners for your POS devices. Clean and disinfect your equipment throughout the day- POS equipment - stationary or handheld - are among the most prominent high-touch surfaces in your restaurant. Aim for visible cleanliness to put guests at ease, as well as thoroughly- disinfected surfaces to stop the virus’ spread.
Clean and disinfect POS equipment with care.
Power down and unplug POS devices prior to cleaning or disinfecting. If you’re only cleaning the touchpads or touchscreens, you may be able to keep your device on; read your user’s manual for confirmation. Next, wash your hands or clean them thoroughly with hand sanitizer, waiting for them to dry completely before touching the equipment. Never use soap or other cleaners on POS equipment. However, do use a microfiber cloth or soft towel with water. Make the cloth slightly damp and carefully clean all surfaces, taking care not to shake or drop the device which could trigger your tampering sensors.
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Are You Getting the Service and Value You Deserve?
When it comes to running a restaurant, sometimes little things make a big difference. From your employee uniform program to your supplies, the decisions you make shape your customers’ experience and help determine whether they become loyal fans or negative Yelp reviewers. You deserve and owe it to yourself to feel confident the products and service you receive from your vendors will delight your customers every time. As you’re evaluating options, keep these tips in mind to build supplier partnerships you can count on. DO YOUR RESEARCH Sometimes the most obvious option isn’t actually the one that will give you the best value and service. When you’re researching suppliers, look beyond the first name that comes to mind. Compare the quality and prices for each vendor, and never underestimate the value of customer service. Even the best prices can lose their value if your purchases are frequently late or incorrect, or if the ordering process is a hassle. Strong relationships and getting to know your partners brings more value to your programs. CONSIDER CONSOLIDATING Coordinating and managing multiple vendors can be time consuming and frustrating. Consider finding a vendor that serves as a one-stop-shop for all the supplies you need. If you can get table linens, employee uniforms, disposable food service products, restroom supplies, cleaning products, office items and more from a single vendor, you’ll save time and effort. And because you’ll be able to consolidate deliveries and benefit from bulk rates, you’re also likely to save money.
FIND THE SOLUTION THAT FITS YOUR NEEDS Every restaurant is different, and the solution that works best for you might not be the one that works best for others. For instance, some restaurants benefit from renting linens and uniforms, while some get better results by purchasing their own. Some restaurants prefer high-end, luxury supplies, while others prefer more cost-effective options or even an eco-friendly choice. Choose a supplier that takes the time to understand your needs and works with you to implement a personalized solution. Not sure where to start? We can help. For 90 years, Mission Linen Supply has been providing top-quality products and above- and-beyond service for customers like you. From linens, uniforms and laundry services to a wide selection of disposable food service products, cleaning supplies, PPE and other essentials, we have everything you need to keep your restaurant running smoothly. Plus, we’ve got exciting perks just for ARA members. Whether you are a new customer or a current customer, Mission will credit your ARA dues toward your Mission account. In addition, ARA members get 20% off and free delivery from Mission’s online store when you buy direct at buydirect.missionlinen.com/ ARA. Plus, a portion of the proceeds from your online orders directly benefits ProStart and AZ Restaurant Strong. We’re dedicated to doing MORE to help you succeed. Want to learn more? Visit missionlinen.com or call your local plant at 928-774-1891 for Flagstaff, 602-271-9114 for Phoenix or 520-622-4811 for Tucson.