Steve Zagor - Instructor, Restaurant & Culinary Management

Little to Big

ohoadmin — Fri, 19 Jan 2018 16:42:05 +0000

Little to Big ohoadmin Fri, 01/19/2018 - 11:42 Little Lessons for Big Results for New Food Entrepreneurs January 19, 2018

By Steve Zagor - Instructor, Restaurant & Culinary Management

What a year! As ICE’s Dean of Restaurant & Culinary Management, I feasted on the stories, successes, errors and reboots of dozens and dozens of industry notable guests, students and alumni. As a consultant, I peered over the shoulders of some huge industry names, as well as investors and stakeholders. As an expert in my field, I’ve researched numerous articles about current issues in our industry.

Each day, I get to inspire, inquire, admire, rewire and even satire soon-to-be and long-standing successful food entrepreneurs. There isn’t a day that goes by that I don’t learn something new. So, you might wonder, what, if anything, do those successful food entrepreneurs have in common?

Steve (right) with Guest Speaker Marc Murphy

As I remind students in my Restaurant & Culinary Management classes, success stories in this industry aren’t the norm. New food products hit the market at a rate of about 100,000 per year with only a small number actually achieving enough financial success to be able to comfortably support the founders over the long term. New restaurants open by the hundreds across the country every year with fewer than half reaching five years of existence. It’s the rule of the economic jungle.

All of these enterprises start with an epiphany — a zinger of an idea, a clever design, a long simmering passion, a raging flavor, a cost-plunging value, a super ingredient combo — an Ah ha! To name a few examples: A guy’s quick-serve taco store became Chipotle; a grad student’s taste for Icelandic yogurt became Siggi’s; a man’s coffee tour of Italy became Starbucks; a visionary’s hot dog stand in a park became Shake Shack; a chemist’s personal taste for vodka became Skyy; and so on.

What made some succeed when so many others didn’t? Is there a magic dust or is there a teachable skill? Here are some common takeaways I learned this year listening to culinary entrepreneurs.

Let’s call them tips for going from "little" to "big":

Just do it. Most people have no idea what they’re doing when they start a business, and many still have hazy, confused procedures even after they appear successful to the world. More than one entrepreneur has stated that no single course in school, no experienced mentor’s advice, no related job experience will fully prepare you for your own ride on the venture coaster, or tell you when the time to start is right. Classes will help to vaccinate against some types of errors, but there is no vaccine to specifically protect you from “failure-itis.” My advice: Just do it, and be prepared to make lots of mistakes and flubs.
Have enough money. This seems obvious, but a common tip from entrepreneurs and creators was to be well-funded. Too little capital at the beginning made for needless problems and bad decisions that later haunted business owners. Have enough money to launch effectively and sustain all the flops and screw-ups in the early months.
Ask for help. All of our guests were firm in their people principle — get help when you need it. No one can do or is effective at doing everything that needs to be done, especially in the early stages. Find help — disciples, mentors, teammates, experts, maybe a psychiatrist — you’ll need them.
Think and focus small. Go slow. Create the startup prototype, the first location, the first customers, the beginning recipes, and give them 100% of your focus. You will need all of your resources, capabilities, creativity and more at the start. Don’t get distracted, no matter how seductive a new location, new market or business offshoot is. Food businesses are really a process and logistics. Make it work. If you start thinking too big, too soon, ‘little’ will never be ‘big.’
Know your market and everything about it. You can’t just make it or build it and they will come. There’s too much competition. The knowledge you gather about the market will affect everything — ambiance, packaging, pricing, mission, menu, flavors, etc. Test, refine and test again. Be a listener and observer. Allow ideas to morph and don’t be too headstrong. Find out what your market thinks and feels, what makes the competition successful and who’s doing something similar elsewhere. The best ideas may be out there already — just put your spin on them. Never, ever forget you’re building an emotional bond with your customers.
S**t will happen — not MAY happen — WILL happen. Keep going. No, this is not an ad for Allstate featuring Mr. Mayhem. Your main source for custom breads with whom you spent six months developing recipes has a fire; you are sued because someone thinks your name is too close to theirs — and you lose; your manager and key employee get married and without notice move to Boise; an irate customer tears you up on Yelp for no apparent reason. These things happen. How you handle them and things like them will define you. Good things are easy to handle — it’s the bad things that make you stronger.
Anyone can do it. If you met the people I’ve met you would wonder, “How did they do it?” Aren’t they too young, too old, uneducated, over-educated, too quiet or too obnoxious? And you’d be right, but they’ve done it. Why can’t you? (Answer: you can.)
You won’t regret it. Prepare to work really hard. It will occupy your brain 24/7 and be both painful and pleasurable. No matter how many scars the entrepreneurs I’ve spoken with have earned, and how many sacrifices they had to make, none regret having done it. They might have done it differently, but they have no regrets for having done it. They could have spent their whole lives in the passenger seat. They moved to the driver’s seat.

Those are my tips for food business entrepreneurs; you can now cancel your Amazon order for self-help books. Just remember: The adventure will have lots of unknowns and the only way to figure them out is through experience. Start "little" and maybe one day you’ll be "big."

In 2017, I piloted a fantasy drone equipped with an X-ray camera that peered into the foodscape below — magically seeing into the hearts and minds of key players in the culinary industry. I was able to hear their in-depth stories and deep insights.

The lessons learned were not earth trembling, but were notable in their similarity and cherished in their value. Being an educator can be a great way to be educated — I’m looking forward to 2018 and seeing more littles become bigs.

Interested in launching your own food business? Click here to learn more about ICE’s Restaurant & Culinary Management program.

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Sexual Harassment in the Restaurant Industry

ohoadmin — Wed, 03 Jan 2018 19:48:40 +0000

Sexual Harassment in the Restaurant Industry ohoadmin Wed, 01/03/2018 - 14:48 How to Prevent It and Where to Begin January 3, 2018

By Steve Zagor - Instructor, Restaurant & Culinary Management

A crying waitress sprinted past me to the bathroom. She was relatively new. As I later learned, a floor manager had made advances toward her in the walk-in refrigerator — and it wasn’t the first time. No was not an option, she explained to me. If she failed to succumb, her schedule suffered and her income dropped.

Eventually, the waitress quit. The damages were both personal — she was threatened, demeaned and harassed — and professional, as her experience both ended her career at that restaurant and negatively impacted staff morale. Co-workers were angry and a potential rising star was gone.

Photo by Michael Browning

This incident occurred more than 25 years ago, in the days before most companies had defined sexual harassment policies. In those days, it was one of the occupational hazards of working in the restaurant world. Not uncommonly, you cooked in a snake pit kitchen and served in a smoke-filled dining room jungle. Has much changed since?

Not an easy question to answer. For one thing, there is no more smoking in the dining room. But as far as kitchen culture, there is still a smoking gun of indiscretion.

Despite the reality of more women working as chefs and in management, many women unfortunately still face an overly permissive work environment, with flexible rules and free-wheeling attitudes — far from the typical controlled cubicle forest with Poland water coolers and Keurig coffee makers.

Today, most mid-sized and larger companies have scrupulously designed harassment policies drafted by experienced labor lawyers. Smaller mom-and-pop shops and privately owned cafes — the bulk of restaurants —don’t have the same resources at their fingertips. But even an elaborated policy doesn’t always translate to action and therein lies part of the problem. Transgressions occur, but tacit acceptance of impermissible behavior trumps the written rules.

The food industry has implicitly upheld a code of silence. According to the Equal Employment Opportunity Commission, there are more sexual harassment claims filed in the restaurant industry than any other industry. A 2014 study showed that 66% of female and more than half of male restaurant employees reported having been sexually harassed by managers, and that 80% of women and 70% of men working in the restaurant industry reported sexual harassment by co-workers. And this doesn’t include harassment from customers who interpret table-side friendliness as more than just that.

Considering the scale of our problem — there are millions of people working in our industry — and the fact that only a fraction of claims are ever reported, the magnitude of the issue is alarming, to say the least. When Anthony Bourdain penned “Kitchen Confidential” more than a decade ago, we were all amused and only a little surprised by the sex, drugs and rock-and-roll mentality of the restaurant world. Then appeared a series of explosive restaurant reality TV shows displaying the Paleolithic fire and organized frenzy of kitchens.

Most viewers smiled, found it entertaining and wanted to see more. We failed to notice that this media portrayal, as luscious as it was, glossed over a far seedier reality. The dirty little secret of harassment — a small step past the yelling and intimidation that we loved — was lying just under the surface. What’s more, it was often the norm in high-profile operations. The harassment volcano, however, is erupting.

The lava flow of incidents and accusations has begun to incinerate an assortment of celebrated culinary industry names and wannabes. In the last few months, award-winning, well-known chefs and restaurateurs John Besh, Mario Batali, Todd English, Ken Friedman and Johnny Luzzini were accused of participating in, permitting and even fostering an environment of aggressive sexual behavior in their restaurants. I am 1000% sure that there are dozens and dozens of chefs, managers and owners who won’t be sleeping any time soon as they wait for the epidemic of harassment claims to arrive at their doors.

So how do we begin to confront the problems that run rampant in the restaurant industry? The indiscretions themselves are bad, but the issue is just as much the code of silence. If every company had a see something, say something, do something attitude, wouldn’t this help? Are we scared of repercussions or retaliation? Are we hesitant because of unclear intent or degree of infringement? Or are we simply apathetic and don’t want to make a big deal out of it or get involved?

The remedy to this pandemic begins with communication, enforcement and, ultimately the most important, culture. And this starts from the top. It is the owner, CEO, general manager or chef who sets the work culture — the day-to-day behavioral norms that govern how employees act and perform their jobs. The second most important factor is the emphasis placed on compliance.

Often, it’s the smallest, most trivial seeming issue that can create the biggest ripple effect of problems. That’s why strict compliance with a company’s sexual harassment policy is crucial. How do we talk to each other in the heat of the dinner rush? How can a harmless touch be misinterpreted? Do we realize jokes can have misunderstanding attached? Do we create a positive work environment? All of these questions must be taken seriously.

It is the owner, CEO, general manager or chef who sets the work culture — the day-to-day behavioral norms that govern how employees act and perform their jobs.

Moreover, every business should have a clear harassment policy, written in a tone and style that everyone can understand. At staff employee meetings, it must be proactively communicated and even role played if necessary. There must be a clear set of paths to report violations — whether it’s a toll-free phone number to call or text to a third party; a designated on site person or manager; or even, at the very least, an anonymous internal comment box to mention that a problem exists.

We know that often there are three sides to a story, and sadly, some accusations arise for other motives and are not always true. There are no perfect systems and no perfect industries. But, in a business like ours where people of all races, nationalities, backgrounds, sexual preferences and ages spend long hours working in a high pressure environment, selling a pleasurable experience sometimes fueled by alcohol, boundaries can blur and situations arise. In the end, a positive culture with a zero-tolerance policy and proactive procedures will go a long way to reducing this problem.

And starting to remedy the sexual harassment problem can be the start of better times in our industry. As for the waitress from 25 years ago, maybe a defined policy with clear paths of reporting would still not have saved her. Behavioral norms often are a reflection of the times in which they occur. But for all who incur similar situations in the future, I’m hoping there is a light of optimism at the end of the tunnel.

On Monday, January 22 at 10:00am, Stephen Zagor will be moderating a Sexual Harassment panel at ICE. The panel will feature leaders from the hospitality industry as well as labor issue specialists, including Susan Spikes, Executive Vice President of Operations at Hill Country Hospitality, Kutina Ruhumbika, HR Director of Barteca, labor attorney Carolyn Richmond, Elizabeth Ortiz, Director of Talent and Culture for Sofitel Luxury Hotels and Resorts, and Psychotherapist and Executive Coach Jonathan Albert. To register, email Stephen at szagor@ice.edu and include your name, phone number and the number of seats desired.

Interested in studying with Stephen? Click here to learn more about ICE’s Restaurant & Culinary Management program.

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Culture

Here's a Pro Tip for Restaurant Owners: Keep Tipping

ohoadmin — Fri, 03 Nov 2017 17:00:42 +0000

Here's a Pro Tip for Restaurant Owners: Keep Tipping ohoadmin Fri, 11/03/2017 - 13:00 November 3, 2017

By Steve Zagor - Instructor, Restaurant & Culinary Management

These days, we’re seeing more news on the abolition of tips. You might wonder: what’s the consensus on tipping? I have a little tip for you. We won’t be ending tipping in the U.S. anytime soon. We have a better chance of seeing Mickey Mouse star in a new movie. Here’s why.

Recently, the no tip experiment – yes, it’s still in the test tube phase – was spotlighted in a “60 Minutes” interview with Danny Meyer, whose Union Square Hospitality Group (USHG) claims fame to a formidable roster of top full-service restaurants and the fast casual Shake Shack. Meyer is also the Pied Piper of the no-tipping movement, and as such he eloquently spreads the gospel of no tipping and the equalization of the wages between cooks and wait staff. Meyer has commented that it’s an important human value-based decision, but that the road will be long before it becomes commonplace.

Photo by Kevin Curtis

What Meyer failed to mention, which was recently revealed in a Grub Street article, is that the no-tipping policy has jolted Meyer’s company with major staff turnover from hourlies to senior managers, drops in sales and lower morale — a secret that everyone in the industry in NYC has known for some time. USHG has even stopped implementing the no-tipping policy in further restaurants until they figure out its effects.

Don’t forget: plenty of others in the business are not in favor of changing the tipping status quo. Mom and pop café owners in Anytown, USA couldn’t care less about no tips. They prefer the current method. Some notable owners who ended tips have gone back to tipping — the public just couldn’t be convinced that eliminating tips and nudging up menu prices costs the customer about the same.

To the customer, it looks bad when your competitor down the street hasn’t changed — suddenly the lower prices, even with tipping, appear to be a bargain. What’s more, the business owner faces potential staff losses in the form of those front-of-the-house stars who earn less and leave.

At the same time, as though choreographed with the “60 Minutes” interview, a lawsuit was filed accusing many notable restaurateurs, including Danny Meyer, David Chang and others, of colluding vis-à-vis the no-tip movement to gouge the public with obscene price increases. But that doesn’t seem to have a basis in reality.

One legal expert I spoke to said it’s never been illegal to raise prices for any reason. We’ve paid more to eat because of the Malaysian locusts, the sunspots, the alleged Martian landing and El Niño. A criminal conspiracy among disparate restaurant businesses is not likely. Still, whether they should do away with tipping begs another question.

Tipping isn’t inherently a good or bad thing. A separate issue is whether, as practiced, it’s fair to all employees or if it helps to perpetuate an inequitable caste system among the staff. Or is it just simply unwieldy to use and account for?

The bottom line is that in poll after poll, only a small percentage of the general dining public is in favor of abolishing this long-standing behavior. Many find the perceived higher prices that result from non-tipping and the loss of control of server compensation to be displeasing. And, right now in particular, when month after month table-dining restaurants are seeing fewer customers and casual chains are closing hundreds of outlets, what we don’t need is a new reason to upset the public and make them stay away.

Our industry is going through a major reshaping. Not only are costs increasing and competition is outrageous in all styles of dining, but the leading opposition force may also be our big comfy couch at home. At night we cocoon, wrapping up in our sweats and hoodies, and order a meal kit, an Uber food delivery, a virtual restaurant takeout or soon maybe a drone-delivered pizza soaring through the window of the car or house. Even at lunch we are eating out less at table-service restaurants — takes too long and costs too much. It’s not the millennial style. Give them a locally sourced fast casual hummus sandwich and all will be fine.

So what does it all mean? Is no tips a niche idea that will never gain traction? We all know that long-standing behaviors are not easy to change — stayed on a diet lately or kept a New Year’s resolution?

Education helps some, but if you believe the behavioral scientists and gastrophysicists, we humans are much more emotionally driven than intellectually — especially when it comes to the whole experience of eating, which is as emotionally charged as it gets. One scientific study said that the habit of eating is as addictive as what we actually eat, if not more.

Might it be the same with tipping? Is the habit more addicting? For boomers, it sure is, and for Generation Z, it’s quite likely. There’s a chance that millennials and beyond who prefer electronics and less social interaction are more easily changed, but it will be a while before they dominate the dining landscape. Maybe Danny will be right — the parade will ultimately follow him.

However, I’m not betting on it — not just yet. I’ll still keep my tip calculator and that nice feeling I get when I leave a larger-than-usual tip as a reward for a job well done and an experience enjoyed. I like that perceived control.

Interested in learning to run your own food business? Click here to learn more about ICE’s Restaurant & Culinary Management program.

Business of Food Tourism, Travel & Hospitality Management Restaurant Management

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Mind Over Mouth: Why All the Details Count

ohoadmin — Fri, 04 Aug 2017 11:30:54 +0000

Mind Over Mouth: Why All the Details Count ohoadmin Fri, 08/04/2017 - 07:30 August 4, 2017

By Steve Zagor - Instructor, Restaurant & Culinary Management

I was recently invited to dinner at a long-standing restaurant on the Long Island waterfront. It was 7:30 p.m. on a Saturday and the restaurant was half empty. What’s more, the service was slow. I was hungry.

Eight of us were seated at a round table not far from the restrooms. An occasional whiff of pine-scented cleaning fluid swirled by our seats. My new table acquaintances droned on with their unabridged life stories.

Enter my chicken Parmesan — at last there was some relief, or so I thought. It was massive: an inch-thick alien creature that totally enveloped the extra large platter. I thought animals like this were extinct eons ago. Without my touching, tomato sauce oozed over the edges of the plate in a lava-like flow and onto the white tablecloth, like blood from a wound staining a hospital sheet.

Wedged on top of the beast loomed a towering pile of cheese-soaked ziti, perched like a yellow-capped mountain range on the plains. There were pounds of food on the plate. Only Joey Chestnut, the Nathan’s Hot Dog champ, might have had the fortitude to finish this dish. The whole experience — the pine scent, the huge portion, the sloppy presentation, the long wait, the boring guests — equaled a big turnoff. I lost my appetite.

While the restaurant can’t control my dinner companions, they can do something about the rest.

This is not just for restaurants. In the food product world our desire to eat is similarly affected — it’s the packaging; the title titillation or name of the product; the room lighting and location on the shelf; the color of the label; the font; the logo.

It’s the price; the ambient room noise or music; the noise the package makes; the sound the food makes in your mouth; the scent of the room where the food is sold; and much more. In our minds, we “eat” the package — it’s a direct link to the product inside. Our minds control our mouths.

And don’t forget our own individual preferences. Each customer has a lifetime collection of stimuli and experiences that affect our judgements and make us unique. Spicy to me may be mild to you. Exciting to me maybe routine for others.

Nowadays, competition in the food industry is scary. Hundreds of restaurant seats go unfilled and thousands of artisanal food products go unsold. If food producers only looked at the full picture, they would fare better. Study after study tells us that taste and food appreciation is only partially from the tongue — the rest comes from various stimuli affecting our minds.

It’s called the science of gastrophysics, and it’s important for your customer’s taste buds and for your bottom line. Though this is not new science, it’s often overlooked. We hear of menu psychology and scent stimulation, but we focus on what we know —the food — without a full appreciation of the vast array of other things that equally affect success.

Each time we serve or sell food, we create an emotional bond with the purchaser. The better we are at controlling the brain brattle — the many incitements that rattle our brains causing us to judge, appreciate and react — the more likely we are to succeed. Walt Disney was known for over-managing the customer experience. In his opinion, no detail was too small. Maybe we should consider his perspective more seriously when our product doesn’t fly off the shelves or our seats go unfilled.

None of our group from that Saturday night will return to that restaurant on the waterfront. Despite the great chef and the picturesque location, the experience didn’t click. Regardless of how tasty my massive chicken Parmesan was, the other stimuli turned me off completely. Just another case of mind over mouth.

Interested in learning to run your own food business? Click here to learn more about ICE's Restaurant & Culinary Management program.

Business of Food Restaurants

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Business of Food

Why a Culinary or Hospitality Education Will Make Your Career Path Smoother

ohoadmin — Mon, 22 May 2017 21:00:58 +0000

Why a Culinary or Hospitality Education Will Make Your Career Path Smoother ohoadmin Mon, 05/22/2017 - 17:00 (And Get You Farther, Faster) May 22, 2017

By Steve Zagor - Instructor, Restaurant & Culinary Management

Why should I get a culinary or hospitality education? Can’t I just get a job and learn the business while I work? What a great question and one that should be asked. I hear this almost weekly. As a dean and instructor at ICE, I often meet dreamers who are navigating the very intense process of looking down a long, unpaved and rocky road to the future, evaluating what can only be termed a “seismic” career change.

Some may have MBAs or JDs with significant experience and incomes in other fields. A few may have families with kids at home. Others might be reentering the business world after a hiatus. And there are also those who are entering the work world for the very first time. Though they come from different places, they have similar a goal: a career in culinary or hotels.

So let’s examine the above question and see if there is an easy answer. News media and blogs continually publish stories about the shortage of talented people in our industries. Restaurants and hotels have an unquenchable thirst for talent in both front-of-house and back-of-house.

It seems like a no-brainer: find a conveniently located restaurant or hotel, get a job and then begin the learning process under the supervision of a current business operator. This may be doable. You may encounter a few slammed doors before one opens to accept you — after all, you have little or no experience. But eventually, someone will probably hire you.

Now what? You will be in an entry level job focused on hourly or daily tasks at hand. Sure, you will be learning, but your knowledge horizon will be narrow and opportunities for bigger perspective far off. The larger, more important question should be where are you being taught and who is teaching you.

More likely than not, you’ll be learning in a local operation from someone who has come up in the business one step at a time and just knows his/her way of doing it. In some cases, there may be a few company procedures to help in daily operations, but the reality is: you will learn someone’s current knowledge, not necessarily the best or only way, but someone’s way. Not to mention, your hoped-for mentor has little or no time to train, viewing you as somewhat of a burden. Why care?

Further, should you care if your place of employment is doing great? In short: YES. Definitely, you should care a lot. Most operators of individual restaurants, local hotels and small business groups do not know how to operate with maximum efficiency. They don’t know all of the small things that can make a giant difference between marginal and profitable — not to mention, they aren’t necessarily aware of the newest technology and key industry issues.

Many managers in small hotels and food businesses have a singular approach. In fact, often these people don’t know what they don’t know. Learning the right way as well as alternate ways to operate is vitally important to succeed in businesses that at best are competitive and at worst, complicated, multifaceted, but seemingly easy.

Here’s another secret. Learning how to cook and how a kitchen works is a valuable asset, but knowing how to run the full business with all its operational controls, labor issues, purchasing systems, financial aspects, new technologies, marketing and social media opportunities, etc. will be a major advantage when compared to your competitor who began as a restaurant prep cook or hotel desk clerk and worked upward for years in an environment with limited exposure.

In the end, to be a success, whether as a business owner or a senior manager/chef for someone else, making a profit will be the key. Several well-known guest chefs who recently visited ICE told our classes that they wished they knew more of the business side when they started out.

So, are culinary and hospitality programs the answer? In many cases, the answer is yes. It’s an opportunity to learn the best approaches from experienced pros whose only job is to teach. Plus, a school provides a network of contacts and expertise you can call on long after you leave. It’s like having a personal group of mentors who will be there to give advice and shadow you as long as needed.

Is school always the answer? Not for everyone. It’s not inexpensive. Personal financial situations may make it challenging as an option. And, there is the question, “Why should I spend thousands on an education when I will be earning a small salary after graduation?”

The answer is: if you view the education as your entry for a job, that’s not why you enroll. You go to school for a career not just a job. The first job isn’t the end game. It’s a valuable step on the ladder. Now, you might be thinking: he’s an educator. Of course he thinks school is a great route. Yes, that’s true, but I’m also a former owner/operator of multiple food businesses and have consulted and mentored many others. I’ve learned through experience how many opportunities are squandered by surprisingly well-known businesses. In many of these situations, just a bit more knowledge could make things better.

Whether you choose formal education, practical experience or a combination of both, there is no assurance you will succeed. There are many other factors that influence success, and not everyone’s goals are the same. Hopefully with your learned ability and knowledge, the first job will be a quick step. What is learned in formal education should make that rocky road smoother and your speed faster to get to where you want to go.

Interested in learning more about ICE's Restaurant & Culinary Management program? Click here for more information.

Restaurant Management Tourism, Travel & Hospitality Management Career Paths

The New Law That May Make Your Burger Even More Expensive

ohoadmin — Wed, 11 Jan 2017 17:00:35 +0000

The New Law That May Make Your Burger Even More Expensive ohoadmin Wed, 01/11/2017 - 12:00 January 11, 2017

By Steve Zagor - Instructor, Restaurant & Culinary Management

Picture this: You’re a new sous chef clocking 55 hours a week and bringing in $40,000 per year. Suddenly, as of January 1, 2017, abracadabra! You’ve magically found yourself with an additional $450 per week (approximately $23,000 per year) in your pocket. Holy Wolfgang Puck! Did you just win the lottery? Were you an heir of a distant aunt who just died?

As it turns out, you have just benefitted from an amendment to the New York Wage Order that raises the New York exempt level (that is, exempt from overtime) from $35,100 to $42,900. This means that anyone being paid less than $42,900 per year in 2017, whether salaried or hourly, is entitled to overtime pay of time-and-a-half for every hour worked over 40 per week. The new law stands to affect restaurant workers at every level, from dishwashers to sous chefs to managers. Diners can expect to feel the impact too.

To clarify, this is a New York State regulation. The federal government passed a similar regulation that would have increased the exempt threshold to $47,500. However, at the last second, an enlightened federal judge froze the implementation of that rule.

Nevertheless, by 2019, the New York threshold is scheduled to climb to a whopping $58,500 — way ahead of the proposed federal figure. Again, this means that anyone paid less than $58,500 will be eligible for overtime. That is a whopping 67% increase from the 2016 base. If you are a floor manager or sous chef, don’t run out and put a down payment on a beach-front condo in Costa Rica just yet.

Do you think a restaurant owner will pay this increase? Not likely.

Instead, what may happen is a reduction in hours, so the overtime burden will decrease or even disappear. Otherwise, if the distance to the new base from current salary is minimal, the base salary will be raised to $42,900 — a nice extra stipend, but probably only enough for a cabana rental in South Florida. That’s one side. Now let’s look at it from the restaurant’s perspective.

First off, it’s likely that most owners haven’t even heard of this new law. Unless they are a member of a trade association and regularly read their bulletins, they’re probably blissfully in the dark. That is, until they are discovered to be noncompliant and fined tons of back penalties and taxes. Next, if our restaurant owner is paying salaries at the old $35,100 threshold, one option is to increase those salaries to $42,900. That’s a 33% increase.

If more than one salaried employee falls into this range, the total increase could be financially unsustainable. The only other option is to reduce hours. Then, the issue becomes: Who will do the work? The answer: wage-earning employees. Either way, this could be a big labor cost burden on the restaurant. Combine this with highly publicized minimum wage increases and the changing tip landscape, and the new labor world will be oppressive.

So who benefits in this equation? For starters, the state — with higher payroll taxes from higher wages plus the penalties from non-compliers. The restaurant owners? Not likely; just another challenge for a business model that is already on the ropes. The guests, then? Definitely not.

Who is going to pay for these extra labor costs? You got it: the diner. If you thought burgers were getting expensive last year, get ready for even pricier patties. This change is just one of multiple wage increases occurring in 2017 and 2018. Buckle your seat belts, diners, there is more to come.

Want to take a deeper dive into food business studies? Click here for more information on ICE's Restaurant & Culinary Management program.

Restaurant Management Tourism, Travel & Hospitality Management

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86 All NYC Restaurants?

ohoadmin — Tue, 08 Nov 2016 14:00:08 +0000

86 All NYC Restaurants? ohoadmin Tue, 11/08/2016 - 09:00 Not So Fast November 8, 2016

By Steve Zagor - Instructor, Restaurant & Culinary Management

“Is New York Too Expensive for Restaurateurs?” read the recent New York Times headline. What’s going on here? Are we about to experience a restaurant Armageddon? To read recent well-written and thoughtful stories in The New York Times and New York Post about the extremely challenging New York business environment for new and existing restaurants, one would think we are on the threshold of a cataclysmic event. Will our lives be mostly composed of delivered meal kits and food courts?

Well, skyrocketing rents are very problematic; the new labor laws and wage and hour policies are challenging; food and ingredient costs are never a bargain; and burdensome laws and regulations targeting food businesses appear in an endless stream.

Each of these is a serious issue on its own. Now add doing business in New York City with its unique issues and sprinkle in intense competition from the most restaurants per capita anywhere in the United States. The result makes you wonder why anyone would be in this business. Let’s open a dry cleaning business – it must be easier.

But wait. Is this the whole picture? Maybe there is still one hugely important critical piece missing from the story and it could tilt the balance between feast and famine: Do most owner/operators really know how to run their businesses? To be a popular chef or even a restaurant owner doesn’t necessarily mean someone really knows the “how-tos” of the business of restaurants. After all, in calm or even choppy waters, the restaurant business is challenging but doable.

Yet when the economic storms roll in, if you don’t really know the operating side of restaurants, there is no surviving. Read between the lines – all of the forces mentioned above (rents, higher wages, new laws and competition) are forces imposed from outside, tossing operators around like a ship in a storm. What’s missing here is what is going on inside the ship.

Does the captain know what he/she is doing? I was recently shown a space by a woman who is an experienced restaurant GM and budding restaurateur. It was a closed, fully built restaurant on a busy street on the Upper East Side of Manhattan. It could seat 40 guests plus a handful more at the tiny bar. She was in love with the space; it had the bones to become the cute café she had always dreamed of; it looked great and had a low investment and easy conversion; she even lived nearby.

Then I saw the rent — it was astronomical. It required strong, seven-figure sales to survive just the landlord. If she had signed, she might have lasted a year. She would have been working for the landlord, not herself. It would have been just the beginning of not knowing how.

As a former owner/operator myself and a long-time consultant and educator, I have had the incredible opportunity to see behind the curtain of some of the most respected and famous chefs and operators in America. I also have an army of students who, after learning the “how-tos,” have gone on to work at major and minor food businesses only to discover that many restaurants survive on magic and luck.

Words like recipes (knowing the true production cost of products), retailing (understanding the true purpose of your business), yields (how much is left to serve after trim and cooking), Q Factor (cost of the “free” items like bread basket, ketchup, mustard, etc.), and purchasing strategy (proper buying and receiving procedures) are unknown. I can name numerous celebrity chefs whose business acumen either doesn’t exist or is pushed to the side in the name of creativity. This doesn’t include those who play with the cash, and keep loose systems and accountability so as not to get caught.

This is not to say that the new wage laws, tip rules, rents, etc., aren’t major challenges. They definitely are. One celebrity chef recently noted in The New York Times that the way we operate now will not be the way we operate in the future.

Still, it’s amazing the number of operators and chefs I have seen who appear successful but are really marginally profitable or not profitable at all. Some don’t even know how much they make. They are simply marketers hoping that “volume covers all sins.”

When the going gets rough, it’s easy to look outside and blame everything else but yourself – especially when you may not know better. Is proper culinary education helpful? It certainly could be. In the words of a student who came to ICE already the owner of a successful restaurant, “After I graduated, I put to use what I learned and made a lot more money with no more effort.” But maybe more knowledge will definitely help some. It won’t relieve the pains of a bad lease signed too quickly.

But managing costs and maximizing revenues all present opportunities for change. It’s just knowing how. Are NYC restaurants in a challenging time? Definitely. The way we have operated in the past will probably not be the way of the future. Being a great operator will require knowing how to run a successful business.

Want to study restaurant & culinary management at ICE? Click here for more info.

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The Tipping Point

ohoadmin — Fri, 18 Sep 2015 16:19:59 +0000

The Tipping Point ohoadmin Fri, 09/18/2015 - 12:19 Wage Spikes, Menu Prices and the New Restaurant Economy September 18, 2015

By Steve Zagor - Instructor, Restaurant & Culinary Management

“As Minimum Wages Rise, Restaurants Say No to Tips, Yes to Higher Prices,” reads the New York Times headline. I experienced this seismic change firsthand on a trip to St. Louis. My son and I stopped for an impromptu lunch at a very modest neighborhood café (see: worn upholstery, paper menus and general shabby charm). Only two other tables were occupied during prime lunch service, and one look at the extravagant menu prices had me wondering if we were in for a taste of highway robbery.

Photo Credit: Lea Latumahina

I ran down my typical checklist. Was the restaurant an alum of Diners, Drive-Ins and Dives? Was it a farm-to-table, locally sourced, organic, natural, gluten-free, green, Slow Foods-endorsed, celebrity chef-fueled find? Nope. None of the above.

Discomfort swelled inside me like a cheese soufflé rising in a too-small cup. Finally, I saw a small note between the burger of the day and the Caesar salad stating, “all prices include basic gratuity.” Even with this knowledge in hand, my son—a generous tipper, but business minded—struggled to digest the high prices. I tried to explain that we would likely pay the same in the end, but then, I couldn’t quite be sure.

My consultant mind started poking holes in that argument: Was this just another crafty restaurant gimmick? Who would benefit from the extra money? What do the words “basic gratuity” even mean? Am I still supposed to leave a few dollars extra on top of the charge, or am I cheap if I don’t? And finally, what if I hadn’t seen the discreet menu note about tip included and left my usual 20%?

Suddenly, a simple meal had turned into a complex puzzle. Is this the dawn of a new restaurant reality? It’s not a simple answer. With new laws promoting wage hikes—ultimately up to $15.00/hr. or more—restaurants are shouldering an incredible spike in operation costs.

At the same time, states are doing away with the tip credit. That’s the loophole in the minimum wage system that permits tipped employees to receive hourly pay that is only a small percentage of the minimum wage because the balance is made up by tip income.

Put simply, these two reforms mean that waitstaff will be paid a straight hourly rate based on the new minimum wage. Sure, this protects workers from the occasional slow shift, but it may ultimately result in lower overall income. Eliminating tips and instituting a flat hourly pay rate also marks the end of the historic wage gap between lower paid kitchen workers and higher paid waitstaff.

Photo Credit: Jun Seita

Just thinking about this, I’m already sweating. Will the strategy to eliminate tipping work? At present, Seattle has been the most visible test case for these new initiatives. For several months now, restaurant operators have tried different strategies—increasing menu prices, eliminating tipping, including a compulsory labor or service charge in the bill. Some have even tried adding an administrative fee.

Clearly there is no one solution. In the end, it’s customers who will be footing the bill. What’s more, these reforms will trickle down and affect every business that utilizes low-cost labor, from retail to health care and beyond. So how are things going in Seattle? Well, it’s still early, and the full $15 wage is yet to come. Many operators are waiting to make changes until they see how others fare.

But some marginally successful restaurants have already tanked. Labor costs that were 30–33% of sales are now more than 40%, devouring most or all the profit. To cope, some owners are considering shorter hours or reducing staff. A few plan to mechanize and cut jobs. As for the guests, some refuse to pay the additional charges. Remember, perception in the restaurant business is huge.

If something looks expensive to a diner, it is expensive. No thoughtfully worded explanation can overcome the emotion of high cost. Even I—an educated industry expert—succumbed to shock and confusion at that café in St. Louis. Some more successful and well-run restaurants are making it work, largely because they absorb part of the increased costs while guests pick up the rest via new menu prices.

In the long term, I’m curious to see if those who benefit from higher wages will actually take more money home. They may just see those wages eaten up by the higher prices of the very products they produce—and those they buy themselves. For when they go out to eat, they too will spend more.

As the old saying goes—a rising tide lifts all boats. Personally, I’m also curious to see if the owners of those boats end up with enough money to gas up and go for a joy ride. For now, the jury’s out, but I’ll be keeping a watchful eye on the situation. The buying power of a $15.00 minimum wage population may help the overall economy, and it would be terrific if everyone made a living wage.

Widespread reform is no substitute for opportunity, ambition and growth. Maybe this is just a transitional phase. Maybe consumers like my son and I will get used to the sticker shock—that is, until the next government initiative turns the industry upside down.

Eager to master the business side of the food industry? Click here to learn how you can study with Steve and other leading restaurant consultants at ICE.

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Business of Food

On Restaurants and Rent

ohoadmin — Mon, 06 Jul 2015 15:22:55 +0000

On Restaurants and Rent ohoadmin Mon, 07/06/2015 - 11:22 July 6, 2015

By Steve Zagor - Instructor, Restaurant & Culinary Management

Once again, the headline reads: “Well-Known Neighborhood Café Closes Due to Escalating Rents.” We hear it about the iconic temples of gastronomy like Danny Meyer’s Union Square Café. The local bistro where you proposed to your wife. Or maybe it’s—worst of all—that little neighborhood coffee shop that always remembered your order. In fact, last year Zagat reported twice as many restaurant closings as openings—the first time that has happened since 2007—due in large part to rising rents.

As a consultant, I’m privy to insider information about these kinds of restaurant woes. I recently received a call from an owner of a long-established East Village restaurant whose lease expired after 15 years. She was forced to sign a short-term, interim lease to see if she could afford the huge rent increase. “It’s better than closing or moving,” she said. But is this really the whole story? Who is right? Who to believe? First, like apartment tenants, most restaurant operators don’t really love their landlords. The word landlord alone is Scrooge-like, conjuring up images of medieval kings and indentured servants. What do they do for you? They give you the keys to the door, and then you pay them monthly. A necessary evil at best.

What's more, many landlords don’t understand the financial stresses and inner workings of a restaurant. They see lines out the door and customers in seats, so they assume the owners are trucking bundles of cash to the bank. The tougher the landlord, the more they want a piece. Hence, the rent goes up, and when the restaurateur balks, a FOR RENT sign appears with no regard for personal relationships or loyalty. On the other hand, some landlords value the reliability of a long-term tenant with a consistent, sustainable rent—better that than testing the waters of a new, unknown occupant. In short, much of my consulting career looks like that of a marriage counselor, as I attempt to breed an understanding between operators and landlords. The real truth, however, is that these closings may be due to more than just rising rents. Maybe, just maybe, that old restaurant ain’t what it used to be. If a café has occupied a single location for many years, the neighborhood may have evolved with new and different diners—not to mention new establishments competing for those customers. Perhaps that ten-year-old concept has grown stale, the celebrity chef is no longer in the kitchen or the operator has grown tired and complacent. Not to mention that it’s far easier to get media buzz when you’re the new kid on the block. All these elements can cause declining sales and lagging profits. When it comes to public failure, citing an increase in rent lets a restaurateur hang on to his or her dignity, while often, the real reasons remain hidden.

That isn’t to say that it isn’t a challenge to keep a restaurant running for more than 10 years. Like an old car, after years of use, operators may need a major cash investment to fix up the place. Kitchen equipment falls apart, carpets stain, compressors burn out—in short, too many miles on the old business. Combine that sizeable investment with higher rents, and it may be a better financial decision to just open a new restaurant. The short version of the story is that any food business owner will say rent is a contemptuous expense. We blame the landlord, the competition, the neighbors, even the weather—there is plenty of blame to go around. Yet, too many times the real solution is hidden in the old saying, “The fault is not in our stars but in ourselves.” It takes a lot of luck to make a new restaurant a success. It takes experience, skill, and hard work—an incredible amount of hard work—to keep that success going for the long run.

Ready to be a restaurant insider? Click here to learn about ICE's Culinary Management program.

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The Truth Ģ��Ƶ Bed Bugs: Proactive Policies for Hospitality Professionals

ohoadmin — Wed, 15 Oct 2014 18:36:02 +0000

The Truth Ģ��Ƶ Bed Bugs: Proactive Policies for Hospitality Professionals ohoadmin Wed, 10/15/2014 - 14:36 October 15, 2014

By Steve Zagor - Instructor, Restaurant & Culinary Management

I write about this almost unwillingly; I’m scratching just thinking about these minuscule monsters. What am I talking about? Bed bugs! Three years ago my son and I brought home these tiny, unwanted terrorists from one of several hotels we stayed in during a five-day college visit road trip. Before we knew what had happened, they advanced in a multi-frontal attack, occupying two bedrooms and plotting to overtake as much territory as possible.

To win this war, we had to enlist a coalition of ghostly fighters in grey hazmat suits, the latest chemical warfare and a trusty, bug-sniffing beagle named Roscoe. Eventually we won the battle, but it was a grueling two-week experience that we have never forgotten. As many New Yorkers already know, bed bugs are everywhere—subway cars, offices, department stores, movie theatres, everywhere. But of all the places they hide, hotels—with their never-ending flow of new overnight guests—are one of the most likely places for the little creatures to hop a ride to your home on your clothes or bags.

Credit: Jason Kuffer

Yet, as a hospitality professional, my initial disgust quickly turned to curiosity—and the data I found was shocking. According to the Bed Bug Registry, not only is New York City the bed bug capital of America, but the list of affected hotels encompasses everything from Economy Inns to $700+ per night luxury suites. Not only are these little critters a customer service issue, but they are also a public relations nightmare for any hotel unlucky enough to be under attack. So what’s a hotel to do? It’s basically impossible to prevent bed bugs from entering, given that travelers are an easy transport mode for the creatures.

That leaves proactive initiatives as the best course of action, specifically in two areas: Inspect to Protect and Damage Control. Since complete prevention is impossible, the next best thing is to minimize the potential problems with early detection, otherwise known as Inspect to Protect. Many hotels have “Bed Bug Action Plans” that combine monthly pest control inspections by an outside exterminator with an ongoing training of all employees—not just housekeeping staff—on how to spot signs of an infestation. In one case, a hotel was cited as offering monetary rewards to any employee who spots signs of bugs. (That said, employees could also be the source of the problem. Regular inspection of staff locker rooms, break areas and hallways should be part of any hotel’s action plan.)

Credit: Andrew Rennie

If you do spot an infestation, the next step is Damage Control: a response plan for those times when a guest spots the infestation first. This may include moving the guest to another room, refunding the room charge, and a scripted apology (both verbally and in writing to the affected guest). Tantamount to these customer service efforts, the room should be inspected immediately and taken out of service until the problem is under control. Moreover, the complaint should be recorded and documented. Whenever bed bugs are spotted, the pest management company should be called immediately. Bed boards, mattresses, box springs and furniture must be either properly treated or correctly disposed of. The rooms that adjoin the affected room on both sides, as well as above and below the room, should also be inspected. In 48 to 72 hours, the room should then be re-inspected. If all is clear, the room can promptly be returned to service. But in 14 days time, and then again in 28 days time, the room should be re-treated to proactively eliminate any lingering bugs that might have hatched since the first visit.

Credit: Johnny Vulkan

If a guest writes about the hotel bed bug incident on a social media profile, a review site such as TripAdvisor or elsewhere, the hotel management or public relations team should respond as quickly as possible, in an effort to minimize the concern. Communicating the proactive measures taken by the hotel is an excellent way to mitigate any issues that may arise. Be advised, these sorts of online comments may be difficult to detect before growing out of control. That is why the use of a real-time net browsing system to spot comments about your business is a highly effective way to maximize damage control. There is no easy solution to the bed bug problem. As a guest, I have no interest in potentially inviting these critters back into my home, but as professional, I know that these infestations are an ongoing problem regardless of the cleanliness or prestige of a given hotel. Luckily, for both hotel management and their customers, enacting proactive, vigilant screening and response processes can help minimize experiences like mine in the future.

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