Opportunities: CohnReznick Presents 2015 Hospitality Webinar Series

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CohnReznick LLP, one of the top accounting, tax, and advisory firms in the United States, will hold the second session in their Hospitality Webinar Series on May 21st titled The Technology Landscape: Understanding What You Need and What Works. This webinar will cover the past, present and future of hospitality industry technology and identify the best platforms based on a company’s technological need. The webinar will be moderated by Christopher Mahon, Partner at CohenReznick and will feature James McGhee, Partner at Results Thru Strategy. Screen Shot 2015-04-28 at 12.39.44 PM

The series goal is to present webinars focused on the financial and operational issues that face hospitality companies. Other upcoming topics for the series include Public Relations and Social Media Strategies, The ABCs of Lending: The Finance Market for Restaurants, Both Big and Small and Legal Issues for the Hospitality Industry.

CohnReznick, headquartered in New York, offers specialized services for middle market, Fortune 1000 companies, private equity and financial services firms, government contractors, government agencies, and not-for-profit organizations. Founded in 1919, they have over 300 partners, 2700 plus employees and bring in an annual revenue of more than $500 million dollars.

To register for this webinar, please click here

The Hedgehog Concept and Foodservice Businesses

In Jim Collins’ seminal book, Good to Great, he outlined what enterprises have done to go from a good company to a great company. One of these principles, the Hedgehog Concept, can be perfectly applied to foodservice businesses in any stage—whether just starting up or expanding.

The idea is simple in concept but trickier in execution. It consists of three parts: being the best in the world, being passionate, and knowing what drives your economic engine. In this Enterprise Insight, we’re going to look at the three parts and how they apply to a foodservice business.

Being Passionate

This is the easiest for some and hardest for others; you have to be honestly excited and in love with what you’re trying to achieve. The type of restaurant an owner operates is largely driven by what they’re passionate about—whether that’s a great hospitality and a café, high-end cuisine and a fine dining restaurant, or coffee and coffee shop. If you’re not passionate about coffee, your coffee shop won’t be as good as it can be; you’ll never get to be the best without passion for what you’re doing.

Being the Best in the World

“Best” is subjective and someone’s world is tied the context of what that person has experienced. So, what we mean here is simply doing what you’re passionate about better than anyone else in your market. The goals for a local-favorite, third-place café are drastically different from a restaurant like Noma. However, they both are executing on what makes them great; warm service and familiarity with the café and cutting-edge, locally-driven cuisine at Noma.

Knowing What Drives Your Economic Engine

This is the integral third leg on the stool because all the passion and expertise in the world won’t guarantee that you turn a profit. Jim Collins explains the economic denominator as the “Profit per X”—the metric that would have the greatest, most sustainable impact on cash flow over time. In the foodservice industry, the most obvious economic metric that comes to mind is average check, and this is certainly valuable information. However, you can understand and drive your business in a more specific direction by choosing the metric that best reflects your ability to make money, because your average check is limited to your type of business.

For example, a coffee shop that’s focused on being the best in a given market would want to capitalize as much as possible on repeat guests. The average check at a coffee shop is not going to be able to increase drastically over time simply because of the product category. However, you could drive more sales per repeat customer per, say, week, by focusing on quality and service, thus compelling more customer visits. So, in this case, the average sales per repeat guest.

In a fast food or quick service restaurant, again, average check won’t rise over time. A better metric to push might be profit per labor hour. Limited-service restaurants need to run lean in order to be profitable, so finding the balance between maximizing sales while minimizing labor could drive you in the right direction. Meanwhile, a full-service casual restaurant should consider profit per seat, because it needs to maximize the number of turns per shift.

Applying Jim Collins’ Hedgehog Concept to your foodservice business can help to define or reposition your strategy. It is important to remember that the three items are reliant on one another: being passionate, being the best, and knowing your economic denominator, and when applied simultaneously, can be a powerful tool.

Financial Reflections for the New Year

The start of a new year is typically a time for reflection, new perspective and a sense of excitement about what lies ahead. For many of us, it is also the end of our fiscal year—  a time to close any outstanding items, prepare annual statements, and evaluate both our financial history and future strategic goals. For many operators, this becomes a daunting task that can be burdened further by unreliable and inconsistent financial information. For those who have dependable financial records available to them, it is often difficult to tie this information back to specific business operations. While financial statements are frequently prepared by third-party affiliates, there is rarely any context, interpretation or explanation accompanying them. Owners and management teams are in turn, left to fend for themselves.

Detailed statements and the right financial analysis can offer extremely valuable insight into key business drivers as well as areas for operational improvement and growth. It is essential to have the ability to compare and benchmark against historical periods as well as relevant industry standards. Beyond analyzing past information, operators often have no predictability and little foresight into future months or quarters.

At TaraPaige Group, we understand the powerful insight detailed financial records and analysis can provide. In our own work, we consistently rely on and implement the following building blocks to help our clients achieve financial success:

  1. A robust accounting management system that is customized and fitted to your business
  2. Accurate and timely recording of sales and vendor transactions
  3. Standardized reports and materials with relevant operating and financial metrics to be monitored on an ongoing basis
  4. Detailed operating budget that focuses on revenue drivers, expense breakdown and payroll
  5. Weekly and monthly performance tracking against operating budget to unlock opportunities for improvement and growth
  6. Long term financial that accurately reflects company’s growth strategy

Whether your business is in early stages of development or positioned for near-term growth, there’s no time like the present to evaluate your current financial operations. It’s the start of a new year, which calls for a fresh perspective and the right tools to tackle your strategic and financial goals. At TaraPaige, our goal is to create the optimal financial and operating foundation for our clients’ long-term profitability and success. For more information on how we partner with clients, please visit www.tarapaige.com.

Happy Reporting…TaraPaige Group.

Overcoming the Unthinkable: Local Artisan Brooklyn Slate Bounced Back from Sandy

When Superstorm Sandy hit nearly a year ago, many local enterprises were directly in its path.  Their operations were disrupted, their inventory destroyed, their staff stranded, their spaces and equipment ruined.  Unfortunately, some enterprises were unable to recover.  And even for those who could weather the storm—both physically and financially—the past year has been a rebuilding one.  But in spite of the challenges, New York City enterprises are thriving.  In this month’s Enterprise Insight, we profile Brooklyn Slate, which has come back strong since Sandy, to explore how they prepared, rebuilt, and are looking ahead to this year.

Founded and operated by Brooklynites Sean Tice and Kristy Hadeka, Brooklyn Slate sells slate cheese boards and coasters using slate from Kristy’s family’s quarry upstate, as well as cheese knives, high-end sweets, and pantry items.  In addition to their wholesale business, Brooklyn Slate has seasonal outposts and a Red Hook retail storefront.  They were just moving in to the Red Hook location when Sandy hit.  In the storm, they lost significant inventory, experienced construction setbacks, and had to work double-time to prepare for the upcoming holiday season and open the store.  Below, we share some of Sean’s lessons-learned and advice for other enterprises about how to be prepared for the unthinkable.

1)    Assess Your Risk and Adjust Accordingly

Whether you are opening a new location or even just doing an annual enterprise assessment, it is important to reassess your risks and insurance needs on a regular basis.  In their old location, Brooklyn Slate did not have much risk of flooding, said Sean, so the enterprise did not have flood insurance.  “So when we moved, we didn’t even think about it.”  It is much harder to get a policy such as flood insurance after you or your area experiences a risky event, so stay ahead of the game and maintain regular contact with your insurance agent to keep your policy current.

2)    Have an Operating Plan for Contingencies

Even though New York shut down in the wake of infrastructure failures, business nationwide proceeded as usual. “We can’t stop operating,” said Sean. “Even if a storm comes through here, we still have to get product out.”  With their office destroyed and their staff unable to travel to work, Sean and Kristy took matters into their own hands and created a temporary office in their apartment.  They realized that, in the future, having a contingency plan no matter the situation will minimize confusion and downtime so that they can continue operating as normally as possible.  “Have some plan in place to respond accordingly no matter what may happen,” advised Sean.

3)    Take Charge of Your Financial Preparedness

Make sure your enterprise has working capital for an emergency, as you will still have some operating expenses to cover even though you may not be able to open your doors.  Furthermore, insurance may not cover the full extent of your damage.  And while many volunteer organizations launched commercial recovery efforts, the only way to ensure your enterprise is prepared is to prepare yourself.  “You really can’t rely on grants and such,” said Sean.  Coming into this year, they are focused on “having that rainy day fund always being there, just in case.”

4)    Communicate and Work with Other Enterprises

Sean said communicating with other enterprises—from fellow owners to vendors and suppliers—was key during the initial aftermath of the storm.  When it came to accounts payable, Brooklyn Slate was able to negotiate for extra time to minimize the impact of the storm on their cash flow.  Suppliers may not realize the extent of your disruption, so let them know your situation and ask for a way to work together.  Furthermore, they gained valuable support from other local enterprises.  “Everyone was suffering in some way,” said Sean. “So talking to one another is really important.”

5)    Connect with the Community

Let your guests know when you are open again after a disruption.  After the storm, “no one knew who was open,” said Sean, which hurt businesses regardless of how they were affected.  Ask loyal guests to spread the word through social media that you are open again, support your rebuilding efforts with more frequent visits, and bring friends along.  Knowing your guests are excited to see you come back will also be a huge boon to your outlook and your staff morale.

This year, Brooklyn Slate is still seeing sales growth and plans to return to the Union Square Holiday Market.  And after opening their Red Hook space in April 2013, they are back in the swing of business.  “Now things feel pretty normal,” says Sean, although they are of course preparing for “the slim but definite possibility that it could happen again. It’s 100% worth it…to prepare.”

No matter the obstacle, your enterprise can be prepared with some operational and financial planning to minimize disruptions and get back on track as quickly as possible.

Happy preparing…TaraPaige Group.

News on the Minimum Wage Increase from NYSRA

We received this breaking news from the New York State Restaurant Association:

Governor Cuomo, Speaker Silver and Senate Co-Presidents Skelos and Klein have just announced an agreement on the New York State Budget that includes a minimum wage increase.
We are pleased to announce that instead of increasing the minimum wage all at once, it will be phased in over three increases. The final increase will go to $9.00 an hour by the end of 2015. There was no mention of indexing the minimum wage to the Consumer Price Index and it is believed that the language has been removed.

There has been no official announcement on the cash wage for tipped foodservice workers at this time. Budget bills are being printed as you read this and we will release more information as it becomes available.

 

What the Minimum Wage Increase Could Mean for Foodservice

Nation’s Restaurant News reports on several restaurant brands’ response to a possible federal minimum wage price hike.Though there has been little discussion, industry insiders say the proposal will “likely cause labor pains for foodservice companies if it becomes law.”

Quick Tips for Maximizing your Revenue Streams

When opening a retail store or fast casual restaurant, we always hear from clients that right away they are going to wholesale, deliver and offer catering services out of their store. We love ambitious enterprises and want to see it happen, yet opening a retail store on its own is a very large undertaking and one that needs a lot of care and attention. Starting with a retail store, catering, wholesale and delivery are 4 different revenue streams with 4 with different associated costs. We recommend the following for getting your revenue streams in order and maximizing your future potential.

1) Open your retail store first. Understand your clients needs, get comfortable with the ordering, receiving, production and presentation of your products. Streamline your menu, stay true to who you are, you cannot be everything to everyone.

2) Dig deeper into the analysis of your current pricing model and your food costs. If you are in line and comfortable, you can then prepare for the additional revenue streams.

3) Start with catering or delivery next depending on your enterprise. Catering is a great way to produce a lot of the same product and charge in bulk. In addition, you can time your orders and prepare for the catered event in advance. Delivery is a way to add incremental revenue from individual guests that happens in real time.

4) Add Wholesale only if you feel that each account justifies the gross profit for the products sold. Remember, typically you are selling the same products for 50% off of retail prices.

5) For all of the above, prepare a simple budget accounting for the extra staff needed, packaging required and increase in food costs.

Lastly, if you plan to add these revenue streams to your business, please plan with your architect to allot for the extra space needed to produce, store (refrigeration, freezer, dry storage) and package. Starting with a retail store is a great way to get known and give a face to your business. Once you have received great press and reviews, you will get busy and approached by many for wholesale, delivery or catering. It is your business, your home and best to take some time to really prepare for the operations and processes before you say yes. Once your business has a good rhythm, let the floodgates open.

Happy Revenue… TaraPaige Group