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Restaurant Industry

Restaurant Insurance – Current Market For Commercial Insurance Favors Restaurant Owners

The insurance industry enjoyed record profits of $60 billion less than two years ago. In the wake of these prodigious returns, the commercial insurance market was flooded with hundreds of millions of dollars worth of capital. This created an increase in the amount of carriers, as well as a greater capacity to take on risk. Ultimately, the influx of capital into the insurance market has resulted in an insurance environment that is extremely soft, with prices falling quickly. For restaurant owners who approach this soft commercial insurance market correctly, some of the largest premium decreases in years are available.

To understand why such attractive premiums are out there, understand a couple points:

First, insurance pricing is cyclical. The inflated prices simply cannot be maintained in the new commercial insurance environment of 2008. A major reason for this is that most commercial insurance companies are public companies. Thus, their shareholders demand growth. In order to grow, prices must be reduced to entice new clients and retain current ones. In addition, insurance carriers must enter new areas that they have no been active in historically. These carriers are then forced to write new lines of the coverage for industry segments like foodservice, hospitality, and franchise programs.

The second point to understanding the reason for the availability of lower premiums is that in the world of commercial insurance foodservice and hospitality is a niche area. Consequently, there is a limited amount of insurance carriers competing against one another to write a restaurant insurance account when the market is stable or hard. Now consider the reality of 2007 and 2008. You may have found that the number of carriers seeking your business doubled. The impact of this insurance market on niche industry segments like foodservice and hospitality can be exponentially greater than what is happening in the standard insurance market. This large supply increase as demand stays static leads to the falling prices that restaurant owners are now finding.

Why is it that buyers are usually the last people to realize the state of the commercial insurance market? Most policies only get renewed one time each year. The can lead to an information gap because the reality is that buyers rely on their brokers to let them know this critical information about the direction in which the market is headed. With markets shifting course substantially, and quickly, insurance buyers sometimes are not made cognizant of the shift until nearly a year later.

Furthermore, select industry groups, brokerage houses, and insurance carriers themselves usually are the ones formulating reports about the insurance industry. Oftentimes, these reports can lag six months behind. Rarely do they portray a precise picture of the current environment in the market. However, consumer expectations are driven by these reports. Many large companies who settled for a 10% pricing reduction will find out later than they could have gotten reductions of 25-30% instead.

There is no doubt that this inefficiency is the Achilles’ hell of the commercial insurance industry, especially at a time when the industry seems to be cannibalizing itself. For foodservice and hospitality companies it is also a situation that should be taken advantage of, especially in light of the fact that it will eventually swing the other way.

While we are currently in a buyer’s market, do not allow yourself to become careless when it comes to risk management. You can keep your insurance expenses at levels 25-40% lower than your competition by paying close attention to details and working with an expert. Controlling the basic elements of your risk will allow you to enjoy the benefits available in the market regardless of what cycle it is in.

Here are three additional questions you should be asking that your broker might not be answering adequately, or at all:

1) What is my renewal strategy? Keep in mind that you want to work the commercial insurance cycle, not the other way around. In soft markets, it is sensible to cancel a current policy in an effort to capitalize on lower rates. However, when the market hardens, you may want to negotiate 18-month or multiyear rate terms. You have the potential to reduce your restaurant insurance costs by 20-40% over a five-year period simply by paying close to attention to insurance cycles and acting appropriately.

2) Am I overinsured? You have little to no chance of losing every building you insure in any one single event. However, some people continue to purchase coverage for that very unlikely occurrence. If you have ten $1 million buildings in a state, you do not need a $10 million insurance policy. This is wasted coverage and can be extraordinarily costly, especially in a hard market. Your broker should run a Probable Maximum Loss to determine what the appropriate loss limit should be. Depending what your locations are, you realize that you only need between a $2-$3 million policy to cover the $10 million in buildings.

3) How can I effectively manage my loss history? A good broker will assist you in this endeavor, but most do not even mention it. Understand that your insurance losses stick with you for five years, regardless of whether you have two locations or 1,000 locations. Commercial insurance companies use these past losses to help them predict what your future losses may be. This can have a tremendous effect on your insurance prices. If you are like most companies, you have limited knowledge of the details behind the insurance companies’ loss runs. In essence, you are still being charged for a claim that occurred three or four years prior. Have them audited to be sure that details and numbers are accurate.

One point that cannot be overstressed is the importance of choosing the right broker to partner with. Unfortunately, most brokers simply do not handle enough restaurant insurance claims to maintain up-to-date knowledge on the insurance market for the industry. Obviously, the firm you partner with must understand your business, but you need to also be confident that they also are competent in understanding the environment and knowing the markets.

Keep in mind that these people are your representatives. You should choose them as meticulously as you would choose your legal representation. Try not to be a firm’s lone client, but also make sure that you are not a “small fish in a big pond.” A great broker will keep you ahead of your competition, keep you safe, and ultimately add to your bottom line.

You should also make every effort to meet your insurance carriers. Have a relationship with them, in addition to your broker. The carriers need to know you and understand what expectations you have. Not to mention, being on a first name basis will be a big help if you ever need a favor; inevitably you will at some point.

Finally, make sure you are maintaining open dialogue with both consultants and internal employees regarding customer-and-employee injury issues. You have to be tough on claims; but remember that communicating proactively and listening empathetically can turn cut fingers and strained backs into loyal employees and lifetime customers.

Restaurant Industry

Catering Equipment and Commercial Refrigeration for the Hospitality Industry

The hospitality industry is a large, very active, and ever evolving industry. The demand for their services is high, and customers expect the best service at any restaurant or hotel that they visit. In order to remain competitive as well as supply to the demand of the customers, restaurants and hotels need to have efficient processes in place as well as the correct catering equipment. They need to be able to deliver consistently and quickly every time. In response to this need, there is a wide range of catering equipment and commercial refrigeration available to the hospitality industry.

The vast array of catering equipment available to the hospitality industry includes the following products.

Every restaurant needs crockery and cutlery. It’s best to invest in durable plates, cups and saucers to minimize damage.

Display dishes and serving dishes are very useful for hotel restaurants that make use of buffet areas. Chafing dishes and bain marines are also high in demand in this area.

Coffee machines and urns are required for serving warm drinks especially during breakfast times. It’s ideal to find a commercial coffee machine that is able to endure the constant demand for coffee on a daily basis and at all times of day and night.

There are various warmers that keep dishes warm before serving such as pie warmers, cup warmers, plate warmers, induction warmers, and heated display cabinets.

Other catering equipment available to the hospitality industry includes fryers, grillers, chip dumps, pasta cookers, toasters, ovens, carvery stations and many storage options. Finding the right catering equipment for your restaurant or hotel will depend on how many customers you serve on a daily basis and most importantly the food items on the menu. Different food items require different kitchen equipment as preparation and cooking methods vary vastly. Also, consider the types of food you serve and if you can prepare it in advance or when it is ordered. These criteria will narrow down your search for the correct catering equipment for your restaurant.

Commercial refrigeration equipment includes beverage coolers, blast chillers or freezers, cold food bars, chest freezers, cold rooms, freezer rooms, wall chillers, upright freezers, and display fridges. The range of display fridges available for the hospitality industry include ice cream display fridges, pastries display fridges, and cake display fridges. For your specific restaurant, you have to do your homework in order to choose the correct one to suit your requirements.

The hospitality industry is spoilt for choice when it comes to quality catering equipment. There are many options that are designed to save you time and money as well as increase your profits while keeping customers happy.

CaterWeb stocks a full range of commercial kitchen products and we even offer free demonstrations as well as hands on training if necessary. Visit our website to access our online store or alternatively we welcome you to visit our new showroom.

Restaurant Industry

Four Things Investment Firms Can Learn From The Food Network’s Restaurant Impossible

The premise of Food Network’s Restaurant Impossible show is that muscle-bound chef Robert Irvine is given two days and $10,000 to save a restaurant from going out of business. Some of these restaurants are literally within days of closing, and many are hundreds of thousands of dollars in debt. These owners are so desperate they invite the often-blustery Irvine to expose their mistakes to a national television audience.

You might wonder how in the world Restaurant Impossible relates to the investment industry. As it turns out, many of the mistakes made by new, and even experienced restaurant owners are the very same mistakes that prevent investment firms from achieving sustainable success. After all, restaurants are great microcosms for SMBs (small to medium-sized businesses) because they are usually privately-owned, operate in single locations, and employ staffs and systems to perform daily operations.

Here are four recurring themes on the show that provide valuable lessons for our industry.

1: DYSFUNCTION STARTS AT THE TOP

Thanks to clever editing and a snappy one-hour format, the poor management in most of these restaurants becomes immediately obvious to the viewer. There are owners who are present only for an hour or two every day, expecting the restaurant to run itself. Conversely, there are owners that practically live in their restaurants, and have become so insulated from reality that they no longer realize that the bad food/bad service/bad ambience is killing their business.

A distinct lack of leadership is a common thread. Numerous episodes feature individuals with no real experience who bought a restaurant, and subsequently struggle to define a purpose or vision for the business (other than simply surviving).

Menus are often littered with dishes that the owner wants or likes, but not necessarily what the marketplace demands. Staffs are disorganized and fail to perform even the most basic functions of their jobs (such as cleaning, which sends the already testy Irvine into histrionics). It isn’t always because the staff is incompetent – it is because they are not given clear directives from owners and management as to what priorities and expectations are.

The leader in any organization must set the tone for that business. Does management articulate and share a common vision and goals for the business? Does the leader foster a culture of calculated risk-taking and innovation, or cling to the things that made them successful in the past? Are employees given clear expectations, and held accountable for performing their responsibilities? Is there an emphasis on constant evaluation and improvement?

In a small enterprise, all of these need to come from one place: the top.

#2: BEING A GOOD COOK DOES NOT MAKE YOU A GREAT OWNER (AND VICE-VERSA)

We are forced to play many roles in a SMB, but top-performing restaurateurs understand that the mere fact of owning a restaurant doesn’t make them a great cook. At the same time, being a fantastic chef does not always make one a savvy entrepreneur.

Several Restaurant Impossible shows feature husband/wife teams who mortgaged their homes or used their entire retirement savings to buy a restaurant because one of them “had a dream and is a good cook.” Almost universally, these restaurants begin losing money from day one, because, as they quickly learn, being a good cook is not the same as running a business.

Similarly, private companies in our industry often have management structures that are determined by ownership stakes as opposed to expertise or ability. The CEO of a portfolio management firm might be the individual who created the portfolio trading strategy. The sales manager might be an advisor who brought over a large book of business in exchange for equity. But do they have the skills to run a business or manage people? Maybe, maybe not.

When the direction of the company is determined by ownership (as opposed to expertise), business decisions regarding management, marketing, technology and long-term strategy are not always optimal. In the most effective organizations (and restaurants) the owners are willing and able to self-assess, and empower others to help create a thriving enterprise. They know that the key to success is doing what you are good at, and surrounding yourself with great people who are good at doing the rest.

#3: IF YOU AREN’T MEASURING IT, HOW CAN YOU MANAGE IT? (E.G., ANALYTICS 101)

Like Chef Irvine, we are amazed at the number of failing restaurants on this show that still use paper tickets instead of automated POS (point of sale) software to manage their businesses. These are the same restaurant owners who, in the show’s opening on-camera interview, don’t know their food costs, their labor costs, or their profit margins on specific dishes. Prices are set arbitrarily, based on competitors or “intuition.” Business intelligence is anecdotal (“we seem to be slowest on Wednesday nights, but I’m not sure”).

In one such restaurant, the owners tell Irvine how grateful they are for their catering business because it is the “only thing keeping our restaurant afloat.” A cursory examination of their financials reveals that the catering business is actually costing the restaurant tens of thousands of dollars per year because it is priced incorrectly.

In another restaurant, owners insist that they sell “lots of the beef wellington,” but, because they fail to track or understand business analytics, they don’t realize that only long-time customers buy the beef wellington, and that there aren’t enough long-time customers to sustain the business. Or worse, that the beef wellington costs more to make than the restaurant charges for it.

How many firms in our industry continue to set fees arbitrarily, based on intuition or competitors’ pricing, without considering how much it actually costs them to provide services? For firms that charge fees based on a client’s assets under management, are all clients “created equal?” Is a $50 million relationship always more profitable than a $10 million relationship? Can you calculate, with reasonable accuracy, the total servicing cost of every relationship you have? (This includes your staff’s time, fees paid to third-party services for reporting and custody, client retention costs, etc.)

Sometimes, in the restaurant world, the group that has a $500 meal but holds a table (and consumes the attention of the staff) for three hours is less profitable than three $100 customers who quietly come and go during the same time period.

The reverse can happen as well. We have all seen or heard horror stories of clients with relatively small accounts who cost hours of productivity by making individualized, and sometimes unreasonable, requests for custom reports or frequent face-to-face meetings.

The point is this: if you don’t track these costs, you may be attracting clients who cost YOU money at the end of the day, regardless of the revenue they bring your business. But you will never know it if your analytics are contained within a few disparate Microsoft Excel spreadsheets, anecdotal observations, or worse, nothing at all.

#4: CLINGING TO THE PAST (INSTEAD OF BUILDING FOR THE FUTURE) IS NOT A ‘RECIPE’ FOR SUCCESS

Not every failing restaurant featured on Restaurant Impossible is owned by people who are inexperienced or naïve. In fact, some of the most intractable owners on the show have years of experience, and have successfully owned one or more restaurants in the past.

Their most common line of thinking is this: “It used to work then, why isn’t it working now?”

One aspect of the show’s $10,000 “makeover” budget is that a professional designer comes in to “freshen up” or modernize each restaurant’s interior. Many of these owners struggle with letting go of the clutter and dated décor, believing, incorrectly, that design standards of the 1980s will continue to attract younger or more affluent customers now.

They stubbornly resist changing menus that haven’t been updated in years to reflect different trends in the food industry or in their own communities. In one episode, the owners refuse to consider altering the menu or décor because both are adored by a handful of long-time customers. The problem is that, aside from the weekly visits by these loyal diners, the restaurant is a ghost town.

We in the investment industry are particularly guilty of this phenomenon. The 1980s and 1990s were a great time to be in this business. With a soaring economy and a stock market to match, it was a time of prosperity in which elegant and expensive offices were seen as harbingers of success and trustworthiness. Relationships with prospective clients were built on golf courses and in steak houses. It was almost impossible not to provide clients with healthy performance in their portfolios.

The industry-altering events of 2008 are still being felt today, but many firms have failed to adapt to a new and more austere view of money management, transparency, and wealth itself. The industry is still woefully behind the technology curve, with software purveyors and so-called “robo-advisors” making enormous inroads while traditional firms (which still comprise the majority of the market) languish.

A huge investment generational gap exists, wherein most studies have shown overwhelmingly that Generation X and Millennials will not be using their parent’s advisors (and for some of the same reasons stated above).

INGREDIENTS FOR SUCCESS: A CHECKLIST

Many of the restaurants that have heeded Chef Robert Irvine’s advice – and most importantly, continued to adopt his best practices going forward – have reported increases in sales and profitability after nearly going out of business. Here are some “ingredients” to use for your own future success:

• Define the goals of your business. Remember, making money is not a goal. It is a result.

• Build the culture of the business around the goals of the business.

• Ensure that every employee in your business – up to and including leadership at the top – has defined expectations and duties (defined meaning documented). Share this with everyone in your organization.

• Owners and principals need to be honest with themselves, focusing on what they are good at and letting others handle the rest.

• Management and ownership are two different beasts. It takes talented experts, regardless of their ownership interests, to run successful organizations.

• Make business decisions based on data, not intuition. Understand how much every client is costing you. Build your pricing models around your costs and the added value you provide. If you are building pricing models simply around what your competitors are doing, you are a commodity.

• Look towards the future, not the past. Emulate the leaders in your industry. Harness the powers of technology to increase the scope of your message and decrease costs.

• Understand the defining characteristics of the generations that will inherit the wealth of the Baby Boomers. Start now to position yourself to those generations as someone who “gets it.”

Restaurant Industry

Pump Up Your Restaurant Business With the Convenience of Merchant Services

If you talk to anyone who runs a successful restaurant, you’ll quickly learn how positively crucial it is to accept credit and debit card payments. You need a merchant account, pronto. Here are all the details you need to know to pump up your restaurant business with the convenience of merchant services.

Customers who visit your restaurant want a convenient experience. Sure, they also want great food, but if the payment process isn’t quick and easy, then those customers are as good as gone. Your servers will thank you for accepting credit and debit cards, as well. This greatly increases their chances of earning better tips. If you don’t start processing credit and debit cards, both your customers and servers might soon head out in search of greener pastures. Don’t risk it!

So, if you’re ready to take this effortless plunge into the world of credit and debit cards, then you’re ready to learn some important details about merchant services. You’ll certainly want to choose a reputable provider.

There are many providers out there, but they’re not all the same. Just like great customer service is important to your restaurant, it’s equally important that you select a merchant services provider with great customer service, as well. This will aid with your business transactions. Should you happen to encounter any snags, or simply have some questions, it’s smart to select a company that has readily-available customer service representatives that will help you eliminate any downtime and help you secure smooth payment transactions. When you select a company that provides you with great service, you can breathe much easier.

So many processing systems… which one should you choose? There are many payment methods out there. It’s not just about credit cards anymore. Customers are now paying with debit cards, pre-paid check cards and gift cards, among other methods. Would you like to accept these forms of payment? That’s just another reason why you need a merchant services account. If a customer only has a pre-paid check card, and she can’t use it at your restaurant, then you lose that business, and the restaurant owner who accepts that payment method earns the business. See the pattern here?

A reputable merchant services company should offer you the latest features for the restaurant industry. Here are some of the most popular.

Tip Inclusion

This allows you to include tips into the total amount after the transaction is authorized.

Tabs

Customers love the ability to keep tabs open during their visit, especially if your establishment serves alcohol.

Bill Splits

How often have you witnessed a group of diners wanting to split the tab up between them all? This feature makes it quick and easy.

Individual Tracking

Quickly and easy monitor and follow each individual transaction.

Bar and Meal Merge

Combine the bar tab and food total into one bill. Customers love this!

Take-Out and Delivery Terminals

Wireless technology allows you to bill purchases for these services quickly and easily, tips and all.

Clearly, you’re seeing the value of choosing to use a merchant services account. If you don’t feature these great perks, you’re going to lose a ton of business, plain and simple. The restaurant business is all about customer service. The more conveniences you offer them, the more likely they are to return.

Is yours an elegant, sit-down restaurant? All the more reason to offer the conveniences that accompany a merchant services account. These customers are willing to pay for a great experience, and it’s up to you to provide it. If they can’t, say, merge their bar and meal tabs, they’ll be none too pleased. That other restaurant down the street will let them do it.

Even fast-food joints run smoother and reap more profits if they have merchant service accounts. Their customers are all about speed. They want to get in, get fed and get out. More and more often, the last thing these customers want to bother with is paper money, and especially change. If a drive-through window is involved, this is especially relevant. Drive-through customers want to hand the cashier a card and end the transaction. Treat your customers right: give them the option to use credit, debit or alternate forms of payment.

Have you officially decided to do the right thing and sign up for a merchant services account? Good. Do some research first. It’s important to choose a reputable company that’s directly affiliated with an FDIC-insured bank. If they aren’t, do not, under any circumstances, sign a contract. Keep looking. There are many great companies out there. Make sure their rates are about the same as their competitors, and you’re good to go.

Restaurant Industry

Things You Should Know Before Splashing Cash on a Food or Restaurant Franchise

The restaurant industry employs millions of people in the United States of America and Canada. It is the second largest private sector when it comes to employment after the Government. Many people dream of owning a fast food business or restaurant because it is exceedingly profitable. People need to eat as a means for sustenance and survival. The food industry remains one of the most rewarding businesses on the planet.

One of the best ways to cash in on the opportunity to own a restaurant or food business is to purchase a franchise. A franchise reduces the risks of business failure. You are provided with adequate training, on-going support and you have a brand that the people know at your disposal. Purchasing a restaurant franchise has its benefits. But it also requires loads of hard work, perseverance and organizational skills. Here are a few tips for you to consider before splashing cash on a franchise.

Is this Really What You Want?

One of the keys to a successful food franchise is to develop your skills and aptitudes. You have to go beyond the trainings and workshops that are offered by the franchisor. You need to learn under the watch of someone who has succeeded in the culinary business. This is not going to take an hour or 2. It might take a few weeks or even months. What this does is help you find out early if the eating business is really for you. In other, words if it is too much for you to handle, you have room to bail out.

Gun for a Good Name

There are many food franchises in the market. The competition is rife to say the least. Try to make things easy for yourself by going for a brand that has a track record for success and repeat customers. The franchise must be renowned for offering top-notch customer service and providing a nice environment for people to eat.

Franchise Assistance

The government goes through great lengths to ensure that the restaurant business is highly regulated. In other words, there are plenty of guidelines that must be met before a food business can be declared safe and open.

Ensure that you pitch your tent with a franchisor that will help you deal with the zoning, permits and other site-oriented issues. You probably do not have a clue about how to get these things done. So if a food franchisor is dilly-dallying and refusing to offer you support in this regard, forget them and look for a one that does.

Learn to Motivate Yourself

If this is your first entry into the food business, you do not rest on your oars when you purchase your franchise. You need to motivate yourself to keep your customers happy. You need to build up a passion for food and keeping a clean environment. You need to interact with your customers and contribute the community. The food business requires late nights and longer hours. You must be dedicated and committed. If you are in it for only the money, you lose.

Restaurant Industry

Excellent Customer Service and Kitchen Hygiene Are Needed for Restaurants’ Success

Any business providing services to customers and clients is advised to pay attention to the quality of service they are providing and in a competitive market like the hotel and restaurant industry this is absolutely vital.

Business gurus generally advise that it is far easier and more cost effective to win more business from existing customers than to get new ones.

While the standard and quality of the food and drink are obviously essential in the hospitality industry because dining out is a non-essential activity it needs to try harder to win customer appreciation and loyalty.

Therefore it is important that all the company’s employees are behaving in a way that is not only efficient but also welcoming and responsive to customers’ needs or requests.

Staff need not only to be aware of what is expected of them but also to be trained in how to engage with customers to demonstrate the company’s commitment to providing them with the best possible service and experience.

It can be useful to put yourself in the customer’s shoes and ask yourself how you would expect to be treated. What would make the experience memorable for you when you are eating out? Aside from the food how much does the environment matter?

Understanding, listening and acting are the three key ingredients to nurturing relationships with customers.

Offering them the chance to make suggestions can help a business to innovate but will also signal to the customer that their feedback is important. The outcome may also provide some great testimonials that the business can use in its marketing.

This is all helpful to ensuring that your restaurant or hotel stands out for its excellent catering and service but none of it will make any difference if the basics of food hygiene and kitchen cleanliness are neglected.

Consumers are increasingly well educated about the importance of food hygiene and the Food Standards Agency’s promotion of its ratings system has meant that they are more likely to look for a hygiene certificate displayed at the entrance to the restaurant.

A regular kitchen deep clean is necessary to maintain the standards inspectors want to see and they will also want to see a written certificate that this has been carried out.

Using a professional cleaning company that has the right equipment as well as the highly trained operatives to carry out kitchen deep cleaning to the standards required by inspectors and is also able to provide the proper certification is rapidly becoming an essential part of activities needed to ensure that any place that is providing meals to the public can win the business that it needs to survive and prosper.