Analysts exchanged views on the state of the restaurant industry in a teleconference that preceded the ICR XChange, a restaurant and retail investment conference, last Friday in Orlando. Frigid weather and middle- and lower-income wage decreases intensified by the Affordable Care Act have been the recipe for first quarter restaurant industry struggles. Despite these obstacles, many restaurants are seeing better numbers this year. Managing Director for equity research at Raymond James, Bryan Elliot, believes that the casual dining and quick service segments will be forced to continue to focus on value until middle- and lower-income families see more purchasing power. Analysts predict that technology-use will soar this year for both operational and consumer purposes. “The biggest challenge is transitioning from TV to mobile and Internet marketing,” predicts Elliot. Other trends? Fast-casual pizza is the “category du jour” and tiered value menus will continue to snowball.
Bobby Flay’s Gato to Open Next Month
Bobby Flay’s Spanish/Mediterranean restaurant Gato will open on 324 Lafayette Street in approximately one month. A cat that passed by the first time Flay saw the space inspired the restaurant’s name.
Coffee Bartering at Tonx: Starbucks Card for “Higher Quality” Coffee Beans
Coffee subscription company Tonx is offering dollar-for-dollar credit towards “better quality” coffee beans in exchange for your Starbucks gift card balance. Their philosophy: “We Source. We Roast. We Ship. You Brew.” The Tonx team comprises coffee mavens whose resumes boast high-end roasters Ritual, Intelligentsia and Stumptown.
Tonx’s homepage forces prospective subscribers question the value of a dollar through a compelling visual:
$38 at Starbucks = 8 frappucinos
or, 11 cappucinos
or, 17 drip coffees
or, 48 cups of “carefully sourced, expertly roasted, super fresh coffee.”
The website proceeds to highlight the company’s differentiation points— “highest quality beans, brew guides, affordable tools, one-on-one brew help, coffee ratings, weekly publications,” and most importantly, “happiness.”
Liquiteria to Replace Gray’s Papaya on 8th Street
Gray’s Papaya’s loyal patrons have been in mourning since news broke that the venerated hot dog chain would be closing because of a $20,000 rent hike— from $30,000 to $50,000. Owner Nicholas Gray is scouting new locations, and the original Gray’s Papaya in the Upper West Side is still operating as usual. On January 26th Liquiteria, a celebrity and health-enthusiast haunt with currently one East Village location, will take Gray Papaya’s place.
Bare-Handed Food Contact in California is Prohibited
A new section (113961) of the California Retail Food Code bans restaurant workers in California from handling ready-to-eat food with bare hands. The code went into effect Jan. 1, however health officials have implemented a soft rollout for the initial six months in consideration of operators who would likely be unprepared to handle the sudden changes. The rules apply to any ready-to-eat food that will not be cooked or reheated, including sushi, bread, baked goods, salads and garnishes like parsley, lemon wedges and pickles. Foodservice employees must still wash hands with soap and warm water thoroughly before prepping food, putting on clean gloves and between glove changes.
The new law states:
(a) Food employees shall wash their hands in accordance with the provisions established in Section 113953.3.
(b) Except when washing fruits and vegetables, as specified in Section 113992 or as specified in subdivisions (e) and (f), food employees shall not contact exposed, ready-to-eat food with their bare hands and shall use suitable utensils such as deli tissue, spatulas, tongs, single-use gloves, or dispensing equipment.
ChikaLicious, 10 Years Strong
Serious Eats interviewed Chef Chika Tillman of ChikaLicious Dessert Bar and Dessert Club. In a sea of bakeries serving high-quality food, it’s inevitable that most of them will fail. Chef Tillman makes her operations look like a piece of cake. Here’s her take on ChikaLicious’ longevity and success:
“It’s probably because I’m the owner, the chef, the investor, and I’m the one working all the time. I don’t have to get paid! I just have to serve good food. But if you hire the chef, the chef has to get paid. The waiter has to get paid. I’m just one cook. Cooking is not the only thing you have to do as the owner but, in the end, the other part is, “How can I make a dessert that I believe in, and then get the customer to believe me?”
When asked about whether her focus was on the menu during the opening stage, “the best part is following the seasons and what’s the freshest; I go to the market and think about what I want to make, because we don’t have the space to store and so don’t carry a lot! So every day, things are fresh. We are very small—only two chefs with no waiters—so we don’t have a middleman between the customer and I myself can explain the dessert I’m serving.”
Chef Tillman claims the focus has always remained the same. “With more customers we have to work harder, but I think I shouldn’t make any detour or shortcuts. It’s always, ‘Don’t touch too much, but don’t be lazy with a dessert’.”
Adult “Happy Meals” at Harlem Shake
Harlem Shake, the healthy neighborhood diner on 124th St and Lenox Ave., has recently introduced the “Happy Meal“— an adult-friendly take on the popular fast-food combo meal. Instead of a plastic toy and unhealthy fare, this Happy Meal pairs a glass of from Harlem Shake’s new wine list wine with all-natural, healthier renditions of classic American comfort food, like the Kale & Chickpea Salad or the Harlem Burger. There’s a Happy Meal to fulfill everyone’s cravings, whether customers’ New Years resolutions are to be a better penny pincher or to indulge themselves more, both financially and nutritionally.
Fast Casual Restaurants in Hospitals
Nation’s Restaurant News details the latest trend in healthcare— an elevated dining scene in hospitals. Hospitals are infamous for serving inedible cafeteria food that does anything but promote health, ironically. Patients’ higher expectations have led Northwestern Memorial Hospital in downtown Chicago to construct a 70,000-square-foot dining and retail space, “Shop & Dine Northwestern,” which includes local, relatively healthy fast-casual brands including GRK Greek Kitchen, Sopraffina Marketcaffe, Protein Bar, Saigon Sisters and Au Bon Pain.
Northwestern Memorial Hospital did not have to work hard to propose the concept to restaurant operators, as the proximity to Chicago’s “Magnificent Mile” and constant foot traffic are compelling enough reasons to open. Another obvious perk to opening fast casual restaurants inside hospitals is the 24-hour operations.
Operators are taking note of the success of fast casual concepts in urban hospitals nationwide. “The trend in restaurants is that folks are trying to cater menus to healthier, fresher options, and given that we’re in health care, it was important for us,” explained Gina Weldy, vice president of real estate for Northwestern Memorial. “In the work environment we’re in now, people eat three meals a day near the office. These concepts give us the ability to offer that.”
Bushwick’s Fine and Raw
Fine and Raw in Bushwick is concocting delicious, unsweetened hot chocolate with just the right consistency. At $4 for a standard cup and $5 for a large, this 72% organic Madagascar varietal is a healthier alternative to mainstream brands. Staff suggests adding cayenne pepper or sugar afterward and offers soy milk. For the more adventurous crowd, Fine & Raw serves Sea Salt and Espresso bars for $7 to $8.
IRS Cracking Down on Automatic Tips
Nation’s Restaurant News reported that The IRS is becoming much stricter with restaurant tip reporting. A tip is “voluntary, it has to be entirely set by the customer; it has to be the subject of something the customer comes up and not dictated by a policy; and the customer has to decide who gets the tip,” explains Tax Foundation Vice President of legal and state projects, Joseph Henchman. Fixed gratuities, commonly added to large parties’ bills, do not fall under the definition of a tip and are therefore legally considered service charges, which are a part of wages and are to go through payroll accordingly.
The revised IRS Ruling 2012-28 will in turn make included gratuities less attractive for restaurant owners and wait staff, and it will be more difficult to secure wait staff to work large parties since the financial gain is incalculable.
The biggest change the new ruling will incur is that servers will not be able to take their tips home at the end of their shift, but rather their tips will have to go through payroll and they will receive them in their next paycheck. The best way for restaurant owners to navigate this operational transition is to encourage open lines of communication with their servers and ask for their feedback to make their working experience optimal. There are delicate ways to remind patrons to tip without including gratuity.
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