 The New Orleans Culinary and Hospitality Institute (NOCHI) presents Cooking for a Cause, a fundraising extravaganza in the name of food. Starting September 7, running through September 21, the online auction event will offer culinary packages like private cooking classes, weekend getaways and dinner parties, hosted by the biggest names in the New Orleans Culinary Industry. Bid on private cooking classes with Chef Alon Shaya, The Chase Family, Chef Susan Spicer, Poppy Tooker and Ti Martin. Gourmet getaways include stays at the Hotel Saint Vincent, Four Seasons New Orleans and a weekend with Dickie Brennan and Friends.  For more details on Cooking for a Cause, visit their website. All graphics courtesy of New Orleans Culinary and Hospitality Institute.
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Fall specials have arrived on menus at all Ruby Slipper locations. The popular brunch cafe serves brunch all day long, across seven locations in the Greater New Orleans area, and restaurants in Baton Rouge, the Gulf Coast Alabama and Florida region.  Fall inspired flavors like Abita Braised Beef Benedict (above) sit on the menu along side Apple Pie Seasonal Beignets, Apple Pie Cheesecake Stuffed French Toast and Red Velvet Pancakes. Visit their website to learn more about their locations and special menu offerings.
 Now through August 28, all teachers will receive a 10% discount on their order with their school ID. Visit their website for more information, and to check out their locations and menus.
New National Restaurant Association survey finds the economy is disrupting service across the industry
Running a restaurant right now is a daily turn at Jenga®, with operators carefully pulling from the foundation of their operating plans to prop up new supports in a changing economy. The costs of goods restaurateurs need most have continued to accelerate, and according to a new survey released today by the National Restaurant Association, 46% of operators say business conditions are worse now than they were three months ago. This finding follows a prior survey in which 43% of operators said they think conditions will worsen in the next six months, which was the highest level of pessimism since 2008. “Running a restaurant is a balancing act requiring adaptation and innovation, two areas where restaurateurs excel,” said Michelle Korsmo, President & CEO of the National Restaurant Association. “And while operators are more pessimistic about the economy, they are working hard to continue to provide quality and value for customers. Serving great food, providing exceptional service, and creating a memorable experience remains the foundation of every restaurant.” Findings from the new survey highlight how current economic conditions are disrupting the industry. Soaring costs are limiting restaurant operations Approximately 95% of a restaurant’s sales dollars go to food, labor, and operating costs — all of which are increasing each month. While wholesale food prices have increased 16.3% in the last 12 months, menu prices have only risen 7.6% in the same period and only 16% of operators report adding fees or surcharges to customer checks. The result: Profits are suffering. 85% of operators say their restaurant is less profitable than it was in 2019. • In the new survey, 88% of operators said their total food and beverage costs are higher than 2019 and across the board, many other costs are up. o 65% of operators say their total occupancy costs are higher than 2019 o 80% of operators say their total utility costs are higher than 2019 o 94% of operators say their other operating costs (supplies, G&A, etc.) are higher than 2019 “Consumers are watching prices rise faster in grocery stores than they are in restaurants and see an increased value in spending their food dollars in restaurants. However, the moderate menu price increases aren’t balancing the surging input costs and this is forcing operators to cut hours, change their menus, postpone expansions, and reduce third-party delivery,” said Korsmo. Pandemic debt has come due, and operators can’t pay During the first two years of the pandemic, 65% of restaurants took on new loan debt to adjust business models and continue operating. According to the new survey, the loans were a mix of forgivable government loans, government disaster loans, and private-sector loans. • Paycheck Protection Program (PPP) loans were the most common — taken on by 59% of operators. • 48% of operators took on an Economic Injury Disaster Loan (EIDL) issued by the U.S. Small Business Administration or lending partner. • 31% took on a private-sector loan from a bank, credit card or other entity. “For many operators who received EIDL loans, the deferment period for payment will soon end and it will be an overwhelming challenge for a majority of them to begin repayment right now,” said Korsmo. “According to our latest survey, of the operators who have not begun loan repayment, only 23% say they will be able to make principal and interest payments. Another 46% expect to be able to pay the principal, but not 30 months of accrued interest.” Restaurants are slowly adding jobs to get back to pre-pandemic employment levels A strong majority of restaurants are still actively seeking to fill positions — even as they face building headwinds of a slowing economy. Despite adding 74,000 jobs in July, in the new survey, 65% of operators report not having enough employees to support customer demand and 84% of operators say they will likely hire additional employees during the next six months. • 19% of fullservice operators say their restaurant is currently more than 20% below necessary staffing levels. • 21% of limited-service operators say their restaurant is more than 20% below required staffing levels. • 81% of operators say their restaurant currently has job openings that are difficult to fill. “Diners choose restaurants for the hospitality and experiences they get at our tables, and we hire talented people to create that atmosphere. While many industries are beginning to slow their hiring, ours continues to rebuild our workforce. The restaurant industry has good-paying jobs available at every experience level for people from every background. And these jobs provide the skills necessary to be successful in any career, and in life,” said Korsmo. The National Restaurant Association Research Group conducted the new operator survey of 4,200 restaurant operators July 14- Aug. 5, 2022. Find a report of key findings here. Restoring depreciation, amortization to interest expense calculation gives operators financial flexibility.
The number of challenges restaurants are struggling with continues to grow. If it’s not inflation, supply chain disruptions, or the labor shortage, restaurants now are grappling with gaining access to capital and the cost of debt financing. A bipartisan manufacturing bill in Congress that aims to change the U.S. tax code could change that. Introduced by Sen. Roy Blunt (R-MO) and Reps. Joseph Morelle (D-NY) and Adrian Smith (R-NE), the Permanently Preserving America’s Investment in Manufacturing Act (S. 1077/H.R. 5371) would restore depreciation and amortization to the calculation for capping business interest expenses. Depreciation is the reduction in value of an asset over time. Amortization is a process used to lower the value of a loan or asset over a specified period of time. Prior to 2022, the total amount of interest a business could deduct in a given year was limited to 30% of its “earnings before interest, taxes, depreciation, and amortization (EBITDA). Beginning this year however, the maximum interest deduction was scaled back when depreciation and amortization were no longer allowed to be factored into the calculation. In other words, what once was EBITDA became “earnings before interest and taxes” or EBIT. That change had a disproportionate impact on restaurants, which were often required to take out loans to finance large capital investments in their facilities and equipment. In fact, the Coalition for America’s Interest released a report(Opens in a new window) showing that businesses affected by the shift to the EBIT-based limitation, will on average see nearly a three-fold increase in incremental tax obligations. Returning depreciation and amortization to the formula would allow for restaurant owners to invest money back into their businesses to expand operations, finance equipment and refurbishing expenses, and rebuild their workforce. It would also help the U.S. compete on the global stage. Due to the current EBIT standard, the U.S. is seen as an outlier among its peers in the Organisation for Economic Co-operation and Development (OECD). The Association strongly supports the bill and will lead a webinar “Depreciation & Amortization: How Congress Could Help Restaurants Expand & Rebuild” on August 31 at p.m. Central. Register here. Expansion of the Net Investment Income Tax would generate $252 million over the next decade.
In an effort to offset costs for climate and social spending, Congress is considering expanding the NIIT. Established under the Healthcare and Education Reconciliation Act of 2010 (but in effect since 2013), the NIIT is 3.8% for 2022. Though not part of the Inflation Reduction Act of 2022, the tax proposal was considered in July 2022 as part of an an effort to generate $252M from one million small and family-owned businesses. Such a move would have forced some restaurants that are still recovering from COVID-19—and now struggling with inflation, supply chain disruptions, and a labor shortage—to close. Currently, the NIIT applies to “passive income,” such as rental property or stock dividends. Some members of Congress would like to extend the NIIT so that it applies to “active income” earned by individuals and families who run their own businesses. Specifically, the increase would be imposed on what are considered “pass-through” businesses, including partnerships, LLCs, sole proprietorships, or S-Corp. entities earning more than $400,000 a year or $500,000 for joint filers. Small and family-owned restaurants would be greatly affected. While it’s likely that the NIIT expansion tax increase will not advance in year-end legislation, a very real possibility exists that Congress could legislate for the tax increase down the road. In fact, raising taxes by expanding the NIIT is a popular idea in Congress. Just last year, the House passed legislation that would have expanded the NIIT beginning in 2022, but the measure did not become law. The Association will continue to monitor Congress’ efforts to increase taxes that threaten restaurants’ ability to survive in already challenging times. Thousands of foodservice professionals will gather for annual regional tradeshow.
The Louisiana Restaurant Association’s (LRA) premier foodservice event, The LRA Showcase, takes place August 6-7, 2022 at the New Orleans Morial Convention Center, Halls I-J, with thousands of attendees registered. The Showcase is open to foodservice industry professionals from 10 a.m. to 5 p.m. on Saturday and Sunday. The Showcase is a must for restaurant owners, managers and buyers; hotel food and beverage directors and many others. “It’s the only place in Louisiana and along the Gulf Coast to gain insightful industry knowledge and save valuable time by shopping hundreds of companies under one roof,” said Stan Harris, President & CEO of the LRA. The LRA Showcase is the largest, most comprehensive industry event in the Gulf South region. Companies will be featuring a wide range of industry-focused products and services. It will deliver an environment where exhibitors can promote their products, services and supplies, and attendees can attend educational sessions and network among their peers. The Opening Ceremony Saturday morning, August 6, at 9:45 a.m. in the Hall I lobby will feature special guest National Restaurant Association Chair Lance Trenary, and will kick off 69 years of bringing together restaurateurs and suppliers for the ultimate shopping and learning experience. Trenary is the President and CEO of Golden Corral Corporation, a nearly 2 billion dollar organization comprised of 35,000 employees and almost 200 franchise entities that operate 460 of the system’s 500 restaurants across 42 states. The Showcase features the popular Kitchen Counter area presented by Republic National Distributing Company, where express presentations will be made both days of the Showcase and will cover emerging trends, best business practices, and professional development. Timely sessions of note include:
See the full lineup at https://www.lra.org/speaker-series.html The 2022 LRA Showcase will once again be the venue for the Great American Seafood Cook-Off (GASCO), celebrating 15 years in conjunction with the LRA Showcase. GASCO is produced by the Louisiana Seafood Promotion & Marketing Board (LSPMB) and the Louisiana Office of Tourism. On August 6, 14 chefs from across the nation will compete, using domestic seafood from their home states, vying for the title of King or Queen of American Seafood. In June, Chef Amanda Cusey of The Villa Harlequin in Lake Charles was crowned Queen of Louisiana Seafood during the Louisiana Seafood Cook-Off. She will be representing Louisiana this year at GASCO. This year’s judges for the competition include Louisiana native Chef Joh Folse, who owns Restaurant R’evolution inside the Royal Sonesta Hotel. Also included is James Briscione is a chef, author, and Food Network personality. He is a featured chef on the new Food Network Kitchen app offering live and on demand cooking classes. Hosts are Gerald Gruenig of KLFY-TV’s Passe Partout and Acadiana Eats morning shows in Lafayette, and former King of Louisiana Seafood and restaurateur in Monroe, Chef Cory Bahr, who has appeared on the Food Network programs, Food Network Star and Chopped. “Having GASCO as part of the LRA Showcase demonstrates our industry’s commitment to promoting not only Gulf seafood, but all domestic seafood, as a center of the plate staple in Louisiana and beyond,” added Harris. The GASCO is open to the public, and tickets are $10 and can be purchased at the door of Hall J. Opening ceremonies begin at 11:30 a.m., and closing ceremonies will be at 4:30 p.m. Proceeds benefit the LRA Education Foundation. PLEASE NOTE: While the GASCO is open to the public, the LRA Showcase is for foodservice industry professionals at least 18 years of age only. Security personnel will be onsite to monitor event barriers. Registered Showcase attendees will be allowed access to both events. Sunday, August 7, the LRA will host the very first Big Easy Bartender’s Bash. Nine bartenders from restaurants across Louisiana will compete for a grand prize of $1,000 by creating their very own Jameson Irish Whiskey cocktail, sponsored by Republic National Distributing Company. Thank you to the 2022 LRA Showcase Sponsors: Republic National Distributing Company; Pan American Life Insurance Group; Ecolab; Toast; UnitedHealth Group; Johnson, Yacoubian & Paysse; New Orleans Roast; Auto-Chlor System; Sysco; Fisher Phillips; Safety National; Melchiode Marks King LLC; QED Hospitality. -30- The Louisiana Restaurant Association is one of the largest business organizations in the state, representing restaurant operations and related businesses. The restaurant industry in Louisiana is one the state’s largest private employers, providing jobs to more than 216,600 residents. Restaurants in Louisiana are expected to generate sales of $9 billion in 2018. Get up-to-date news about the LRA and the restaurant industry from www.lra.org. For two and a half years, the restaurant industry has taken blow after blow, knocking it down, but not out. Every month, increasingly powerful blows in the form of higher costs push more and more owners to consider closing their doors.
For this reason, the National Restaurant Association cannot support the Inflation Reduction Act of 2022 in its current form. This bill provides no relief for restaurants. Instead, it will likely raise prices for our supply chain partners, costs that will eventually pass down to local restaurants. “The Inflation Reduction Act has laudable goals, but the current version is a net negative for local restaurants,” said Sean Kennedy, executive vice president for Public Affairs at the National Restaurant Association. “Passage of this bill will likely lead to higher supply costs for restaurants already struggling to weather the economic storms. For restaurants hoping for a pandemic lifeline from Washington, this bill falls very short.” Amid the current economic environment, the Inflation Reduction Act of 2022 creates a new $313 billion Corporate Alternative Minimum Tax (CAMT). According to the Joint Committee on Taxation, manufacturers and wholesalers will be responsible for paying 59% of the $313 billion. This will likely impact manufacturers and producers of poultry, meat, frozen food, soft drinks, and alcohol, as well as their distribution partners, all of whom directly or indirectly provide products to the nation’s restaurants. These partners will likely have to pass on many of these costs to restaurant owners. The National Restaurant Association believes lawmakers can still make changes that will directly ease inflationary pressures:
“We overcame the legislative odds to get RRF passed into law, so it’s very disappointing to hear that some of that money is sitting in SBA’s accounts. The Association supports SBA’s efforts to be good stewards of taxpayer dollars, but Congress set aside $28.6 billion to support the industry and restaurants should receive that full amount,” said Kennedy. The restaurant industry is still struggling to rebuild from the impacts of the pandemic. It has still not recovered 728,000 jobs lost in the initial government shutdowns. Added to the stress of wholesale food costs and falling consumer economic confidence, operators are growing more pessimistic about the economic outlook. Learn more about the state of the restaurant industry in the Economist’s Notebook. The annual Louisiana Restaurant Association General Membership Meeting will be held, Sunday, August 7, 2022, upon adjournment of the LRA Board of Directors meeting at 10:30 a.m. at the New Orleans Morial Convention Center, Room 294.
Presented by Patrick Gros, CPA
Patrick is a CPA, and the principle of his own firm with notable restaurants as clients. He is also a restaurateur and owner of Bienvenue on Hickory, which provides him a level of knowledge and depth beyond what you may expect from a CPA. Restaurant accounting is an ongoing challenge. To operate your restaurant at its maximum to measure revenues, expenses, and profitability, all restaurant owners and operators should have solid accounting practices in place. The key reasons being to measure the key financial indicators of a restaurant’s operations, including, but not limited to, segments of revenue (food, beer, liquor, and wine), cost of goods sold, total labor costs, and various indirect costs (credit card fees, rent, insurance, supplies, etc.). Next to the food and beverages quality, service, and atmosphere, accounting practices are critical. It provides the measurement of the success of operations, as well as provides indicators to the operators of what needs to be addressed and corrected to be profitable at the operations in place. Pandemic Programs to Aid Small Businesses Outside of the normal accounting practices, we have been provided many opportunities through the CARES Act and additional government programs with the Internal Revenue Service (IRS) and the Small Business Administration (SBA). These programs include, but are not limited to the Payroll Protection Program (PPP) loans, Employee Retention Tax Credits (ERTC) and Economic Injury Disaster Loans (EIDLs). Payroll Protection Program – Forgiveness Underway For those who obtained PPP loans, most companies have reached the deadline to submit forgiveness, or are reaching the deadline soon. When submitting forgiveness, consideration and coordination should be made as to the payroll wages used to obtained 100 percent forgiveness, as compared to wages used for ERTC. The guidelines require that at least 60 percent of the amount equal to the loan funds be spent on payroll. If you have enough non-payroll eligible expenses to submit to cover the funds spent for the remaining 40 percent of the loan amount, this will allow you to use more payroll for ERTC. The same wages submitted for PPP loan forgiveness cannot be used for ERTC calculations if the company qualifies for these credits that given quarter. No double dipping! Employee Retention Tax Credit – Many are unaware they are eligible The IRS has provided the Employee Retention Tax Credit (ERTC) as a refundable tax credit against certain employment taxes. For 2020, the tax credit is equal to 50 percent of the qualified wages (and certain health plan costs) an eligible employer pays for employees after March 12, 2020, and before January 1, 2021. In addition, the eligible employer can qualify for a tax credit equal to 70 percent of qualified wages (and certain health plan costs) paid for an eligible employee per quarter from January 1, 2021, through September 30, 2021. These credits can be obtained by calculating the qualified tax credits and amending the applicable quarterly 941 reports to get a refund. Certain restrictions apply for eligible employees (certain relatives, owners greater than 50 percent, etc.). Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and 2021 and experience either:
The credit applies to qualified wages (including certain health plan expenses) paid during this period or any calendar quarter in which operations were suspended. In addition, the employer must have less than 100 full-time employees in 2020 and less than 500 employees in 2021 to qualify for the ERTC. ERTC and Restaurant Start Up during Pandemic The IRS has provided for a special situation for start-up businesses during the ERTC time periods noted above. Furthermore, there are additional calculation that may apply for those companies that don’t qualify for the above noted eligibility requirements. You should contact your Certified Public Accountant for specific information on these special circumstances. How to Perform a Cost Segregation Study Many companies are not aware of the benefits provided by performing a Cost Segregation Study on real property that is purchased and owned by your company. This tax planning tool allows entities that deal with building, purchasing, expanding, or remodeling real estate properties to accelerate the depreciation deductions of the assets and defer federal and state income taxes. A Cost Segregation study is designed to break down the various components of a structure into useful lives of 5, 7, 15 and 39 depreciable assets. When moving asset costs from 39 years (typically depreciation life of a commercial building) to 5, 7 and 15 years of its useful lives, depreciation expense is significantly accelerated to be deducted sooner, creating significant tax savings for the taxpayer. In addition, consideration needs to be made that the 5, 7 and 15 year asset currently qualify for bonus depreciation, which in most cases can be deducted 100 percent in the year of acquisition. Gros recommends that a qualified professional be retained to perform the Cost Segregation Study and issue a report providing documentation on the asset classification, in event that the company’s tax return is audited by the IRS. This information is for educational purposes only. You should consult with your Certified Public Accountant for more specifics on the benefits of the ERTC and of a Cost Segregation Study for your company and particular situation. |
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