Tip Pooling Update, Cash Back Dining and The Cannolo
17 Min Read By MRM Staff
In this edition of MRM News Bites, we feature two legal rulings affecting restaurants, harnessing restaurant technology, as well as news from Rich Products, NCR, Koomi and Uber Eats, Restaurant Revolution Technologies, Rakuten and Rewards Network, Cheesecake Factory, The ONE Group Hospitality, Paytronix, Waddington NorthAmerica and Voodoo Doughnut.
Latest Legal News
The U.S. Department of Labor announced a proposed rule for tip provisions of the Fair Labor Standards Act (FLSA) implementing provisions of the Consolidated Appropriations Act of 2018 (CAA). The proposal would also codify existing Wage and Hour Division (WHD) guidance into a rule.
The CAA prohibits employers from keeping employees' tips. During the development of those provisions, the Department provided technical assistance to Members of Congress. The Department's proposed rule would allow employers who do not take a tip credit to establish a tip pool to be shared between workers who receive tips and are paid the full minimum wage and employees that do not traditionally receive tips, such as dishwashers and cooks.
The proposed rule would not impact regulations providing that employers who take a tip credit may only have a tip pool among traditionally tipped employees. An employer may take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (currently $2.13 per hour) and the federal minimum wage. Establishments utilizing a tip credit may only have a tip pool among traditionally tipped employees.
Additionally, the proposed rule reflects the Department's guidance that an employer may take a tip credit for any amount of time an employee in a tipped occupation performs related non-tipped duties with tipped duties. For the employer to use the tip credit, the employee must perform non-tipped duties contemporaneous with, or within a reasonable time immediately before or after, performing the tipped duties. The proposed regulation also addresses which non-tipped duties are related to a tip-producing occupation.
"The proposed rule shows the Department's commitment to ensure that employees' tips are not stolen," said Wage and Hour Administrator Cheryl Stanton. "This proposal offers a clear pathway for both employers and employees to legally operate a tip pool. The Department is also seeking to add further guidelines in order to complement congressional action and solidify current guidance with the benefit of public input through notice and comment rulemaking."
This NPRM is available for review and public comment for 60 days. The Department encourages interested parties to submit comments on the proposed rule. The NPRM, along with the procedures for submitting comments, can be found at the WHD's Proposed Rule website.
In other legal news, the Supreme Court issued an order saying it would not hear Domino's appeal of a lower-court order regarding website accessiblity.
Harnessing Restaurant Technology
The National Restaurant Association, in partnership with Technomic, released its survey results on the state of technology and its impact on the off-premises channel in the restaurant industry. The study, "Harnessing Technology to Drive Off-Premises Sales," examines the key factors driving the growth of off-site consumption and explores how operators are using technology to drive and manage off-premises sales. The research, developed exclusively for the National Restaurant Association, is based on a study of a nationally representative sample of foodservice consumers and restaurant operators.
Customers are most receptive to consumer-facing technologies such as drive-thru enhancements, order accuracy tracking, and frictionless mobile ordering.
"The restaurant industry is constantly changing and technology's role in it continues to become more critical," said Hudson Riehle, Senior Vice President, Research and Knowledge Group, National Restaurant Association. "Now in our centennial year, we are seeing the industry change and adapt faster than ever before in response to the macro-environmental factors driving consumer behavior. In today's on-demand world, off-premises capabilities are more important than ever to keep restaurants aligned with the wants and needs of its customers. We're excited to continue to guide restaurants through these developments as we navigate the tech-forward future ahead."
As consumer lifestyles' are continuously driven by the convenience and speed of online and app-based ordering in other industries, approximately 60 percent of restaurant occasions are now off-premises across all forms, including drive-thru, takeout, and delivery. Customers are most receptive to consumer-facing technologies such as drive-thru enhancements, order accuracy tracking, and frictionless mobile ordering. Key areas of growth include:
- 92 percent of consumers use drive-thru at least once a month.
- 34 percent of consumers utilize delivery more often than a year ago.
- 79 percent of consumers use restaurant delivery (53 percent use third-party) at least once a month.
With 78 percent of restaurant operators considering off-premises programs a strategic priority, restaurant brands are investing big in technology, but are struggling to keep up with changing consumer expectations. Operators need to consider the increased standard of convenience in other industries and adapt accordingly when implementing off-premises solutions. Key investment statistics include:
- 74 percent of companies are investing in off-premises programs but none of the top 5 investments include customer-facing technology.
- 43 percent of delivery users place orders via restaurant apps while only 18 percent of operators offer mobile ordering via their own app.
- 66 percent of operators offer delivery through a third-party service and 55 percent offer delivery through internal staff.
The future of off-premises is far-reaching. Consumer receptiveness to enhanced restaurant technology extends both inside and outside the operation, and technology is becoming more commonplace. Key areas of emerging technology include:
- 22 percent of consumers used kiosk ordering last year and 11 percent used voice assistant ordering.
- If available, 69 percent of consumers would use vehicles with built-in heating trays to keep food warm and 41 percent would use autonomous delivery.
- 44 percent of restaurant operators who offer voice ordering, and 50 percent who offer location intelligence to target new customers based on their position, say it has a large positive impact on their business.
For further information on "Harnessing Technology to Drive Off-Premises Sales," click here.
Changing of the Guard at Rich Products
Rich Products announced an executive leadership transition – one that activates the company’s decade-long succession plan. Effective January 1, 2020, long-time Chief Executive Officer (CEO) Bill Gisel will become executive vice chair of Rich Holdings, Inc. – the holding company for all Rich family business enterprises, including food, logistics, sports, travel, dining and theatre.
With that move, current Rich Products President and Chief Operating Officer (COO) Richard Ferranti will be promoted, succeeding Gisel as the company’s new CEO and becoming the leader of Rich’s $4 billion global food business.
“No associate has greater individual influence over the success of our global business than the chief executive officer,” said Bob Rich, Jr., chairman, Rich Products. “For more than a decade, Bill Gisel has worked closely with Mindy Rich and me to chart the right course for the eventual succession of our company’s CEO. During that time, Richard Ferranti emerged as a trusted leader; one with tremendous energy and passion for our business, our customers and our associates.”
Ferranti steps into the CEO role after his promotion to company president in April of 2018. Together with Gisel and the company’s executive team, he’s led the growth of Rich’s global footprint, which spans six continents, operating in more than 100 countries and 40 manufacturing facilities around the world.
As Ferranti prepares to step into his new position, he shares his perspective on what sets Rich’s apart.
“As a global organization, one of Rich’s greatest differentiators is our customer-focused, Act Local, Be Global strategy. That means leveraging our global footprint to provide our customers with expert insight and guidance in the places we work every day,” Ferranti remarked. “With great momentum, we will continue to focus on those who fuel our business: our customers and our people. Bill has provided perhaps the greatest example of executive leadership at the highest level. I’m incredibly humbled and grateful to be named the next CEO of this extraordinary family-owned business.”
Succession planning is a key part of Rich’s long-term business strategy and an area where Rich’s has devoted time, energy and focus for decades. Company leaders note that CEO succession discussions started well before Gisel was appointed to his role in 2006 and were frequent throughout his tenure.
“Proactive succession planning is essential to the sustainability and growth of any organization,” said Mindy Rich, vice chair, Rich Products. “At Rich’s, it’s even more critical, as it’s directly linked to our family mandate of achieving long-term success as a family-owned business. With this leadership team backed by a talented group of associates around the world, there’s no limit to what we can achieve together.”
Ferranti and Gisel have jointly designed a detailed transition plan which they are implementing over the balance of 2019. “Our objective is to effect a seamless transition that reinforces our current momentum and strategic focus,” Gisel commented. After the January 1 transition date, Gisel will focus on corporate strategy, long term growth and organizational excellence for the broad-based Rich’s enterprise.
Rich’s, poised to celebrate its 75th anniversary in 2020, is known for its focus on customers, associates and communities.
Gisel joined Rich’s in 1982 as the company’s first General Counsel. During his tenure, he’s served in wide ranging key leadership roles, including spearheading the company’s international expansion and ultimate transformation into a global entity. In 1996, he became president and COO and was named CEO in 2006. Under his tenure, Rich’s has more than quadrupled in size, while continuing to expand globally.
Ferranti rose up the ranks of Rich’s after joining the company in 1986. Early in his tenure, he worked in a series of sales and marketing roles, each serving to expand his knowledge and responsibility across Rich’s global footprint. In 1997, he became president of the company’s International Business Group, and then president of its North America Business Group, before his promotion to COO in 2012.
NCR Aloha Essentials' All-in-One Subscription Solution
NCR Corporation NCR Aloha Essentials just got easier to purchase. The core subscription includes the best features of its signature NCR Aloha platform – fixed and mobile restaurant POS capabilities, payments, mobile alerts, advanced reporting, takeout functionality and centralized site management – plus hardware and support services, all for one monthly fee. Additionally, restaurants can choose from a variety of add-on capabilities that further increase consumer engagement, enable off-premise digital channels and drive brand loyalty.
“We recently opened our first U.S.-based location, Hutong in New York City, and needed a flexible, adaptable solution that could provide our global company and oversea owners with immediate visibility into operations,” said Aqua Restaurant Group. “With NCR Aloha Essentials, it was all there. It is a turnkey solution that has everything we were looking for.”
Key functionality includes:
- Direct integration with third-party delivery marketplaces to increase restaurant revenue and customer satisfaction
- Cloud-enabled mobile alerts and reporting, enabling managers and owners to monitor performance anywhere and anytime
- Mobile POS and conversational ordering, which helps servers reduce order inaccuracies and increase table turn
- Cloud EMV and point-to-point encryption solution to reduce liability from potential chargebacks
- Cloud-enabled system configuration, which allows updates like menu changes to be managed centrally and pushed to all sites automatically
- Built to keep restaurants up and running even when the internet is down
- Pre-built, thoroughly tested APIs, which provide seamless integration with any existing point systems as needed
“Restaurants are an extremely competitive business, and that’s only accelerating in the digital-first era,” said Brian Dugan, senior vice president and general manager of NCR Hospitality. “With Aloha Essentials, NCR gives restaurants robust yet easy-to-use tools in a single, simplified package to run your operations, so you can focus on great food and customer experiences.”
Koomi Teams with Uber Eats
Koomi POS is teaming with Uber Eats as one of the only direct integrations available for independent quick-service restaurants and chains.
‘’Uber Eats and Koomi’s partnership is now able to alleviate a lot of the headaches that restaurants face by accepting digital orders,’’ said Kevin Conabree, Koomi’s Co-Founder, ‘’Typically, all digital orders come in through a separate tablet and are then entered manually into the POS system, increasing human error and longer waits for physical customers. Now, all of this is automated through Koomi’s POS system so that cashiers can now prioritize their POS system for their physical line-up and increase their full margins.’’
‘’Being fully cloud-based, this allows restaurants to not only inject these orders into the kitchen, but actually pushes the items and pricing from their admin panel back into their Uber Eats admin panel, eliminating any discrepancies in bridging their digital and physical orders. Overall, Koomi already decreases order times by about 30 percent versus any other POS system, but we’re seeing an even bigger increase in the amount of orders a quick-service restaurant can take during their rush now that Uber Eats is integrated.’’
Revolution Adds Connect
Restaurant Revolution Technologies (Revolution) today officially announced Connect, a new product that provides premium marketplace menu pricing while inserting delivery orders placed on commonly used marketplaces directly into the restaurant POS.
Connect offers two tiers: Gold and Platinum Connect. Gold Connect offers direct-to-POS order submission thereby removing the need for tablets at restaurant locations. In addition to the direct-to-POS order submission, Platinum Connect also offers an automated menu-sync that pushes menu changes and updates made within the restaurant POS system and back out to the delivery marketplace applications for easy menu management.
Additionally, because most off-premise customers are not as price sensitive when paying for convenience, Connect is capable of establishing premium pricing within the marketplace menus creating additional margin for the restaurant enterprise.
“Restaurant enterprises can now profitably participate in the delivery marketplaces without introducing tablets that requires manual labor to manage. Connect inserts orders placed on popular delivery marketplaces directly into the POS shoring up operational inefficiencies, reducing errors, reallocating labor and creating a better experience for customers,” said Revolution CEO Brad Duea. “The two biggest off-premise headaches restaurant enterprises face in dealing with the marketplaces are the management of delivery tablets and the challenging marketplace economics. Connect solves both challenges.”
Connect is the latest product offering from Revolution that has continued to innovate and provide products and services to restaurants to solve for the enormous off-premise opportunity as well as streamline operations and provide the best overall experience for customers. Revolution’s flagship product, Order One, is a unified omni-channel ordering platform that incorporates all customer orders, whether they were placed via web, mobile, social, phone, text, kiosk or chat, directly into the restaurant’s point of sale (POS) system for optimal efficiency. Order One is an innovative leader in the digital ordering space and includes the following features:
- A fully branded presentation of menus with real-time updates based on menu item availability.
- Monitoring of submitted orders from start to finish and providing order management protection. If there’s a problem, such as credit card processing failures, Order One, along with its live issue monitoring and order resolution team, will troubleshoot in real-time and ensure customer satisfaction.
- Capturing customer data for a comprehensive look at all ordering channels and necessary data to drive revenue and make crucial business decisions.
- Group ordering capabilities to have a group order managed, submitted and paid for by a single payer or multiple payers.
- Chat ordering capabilities for customers to receive chat assistance on an online or mobile order, and to connect to the same live agent for further assistance.
- Repeat ordering capabilities for customers to quickly repeat previously placed or favorited orders at a click of a button for fast and easy reordering.
- Social media login and sharing capabilities for customers to easily sync and login via social media accounts and directly share menu items, favorites and other content across social platforms.
- Third-party integrations including POS, loyalty programs, native mobile apps, gift cards / stored-value, self-serve kiosks, payment processing, marketing and analytics tools.
Rakuten and Rewards Network are teaming up for Rakuten Dining, a new partnership program offering consumers an introductory 5 percent Cash Back on dining at more than 10,000 restaurants nationwide. Available on the Rakuten app, Rakuten Dining offers Rakuten members a seamless way to earn Cash Back for dining out at their favorite restaurants.
Rakuten members can start earning 5 percent Cash Back today when they dine at participating restaurants nationwide. Members simply link a personal credit or debit card in the Rakuten app and then use the same card to pay when they dine at a participating restaurant. Cash Back accrues automatically in Rakuten and is awarded on a quarterly basis to members.
Rakuten Dining is the newest addition to Rakuten’s commitment to delivering rewards for everyday purchases, whether online, in-store or on-demand services – all via the app. The new Dining program brings together Rewards Network’s extensive directory of restaurants and Rakuten In Store Network to offer Cash Back on dining experiences. Having this resource available on mobile devices allows consumers to easily search restaurants when deciding where to eat and earn even more rewards whenever and wherever they are.
“To achieve our goal of offering members Cash Back on more everyday experiences like eating out with the family, it was only natural to partner with Rewards Network. This collaboration will drive more visits to restaurants and create immediate scale for Rakuten Dining and our everyday rewards program,” said Amit Patel, CEO of Rakuten Americas and Rakuten Rewards. “Our members will be thrilled to start earning Cash Back on an incredible variety of dining experiences at restaurants across the country.”
“We are thrilled to add Rakuten to our roster of national loyalty partners as the addition of their 13 million membership base will immediately help drive more diners to our network of restaurants,” said Ed Eger, CEO of Rewards Network. “Restaurants are embracing digital loyalty programs because they enhance dining frequency, grow revenue and create additional marketing opportunities to activate diners. Partnering with Rakuten instantly creates more awareness for our restaurants and gives Rakuten members great new ways to earn rewards in their everyday lives.”
The Rewards Network platform features verified reviews from enrolled members that help diners locate and choose restaurants they will love, adding a unique dimension to digital loyalty. Verified reviews are an invaluable sales driver for network restaurants, as confirmed in a recent study in which 84 percent of consumers said that they trust online reviews as much as personal recommendations.
Rakuten Dining is available now only on the Rakuten app for iOS devices and coming soon for Android devices.
Cheesecake Factory Closes Acquistions
The Cheesecake Factory Incorporated closed the acquisitions of North Italia and Fox Restaurant Concepts (“FRC”), including Flower Child.
The transactions were completed for $308 million in consideration at closing, including $12 million earmarked for customary post-closing adjustments. An additional $45 million will be due ratably over the next four years, and the FRC transaction also includes an earn-out provision based on the financial performance of the FRC brands outside of North Italia and Flower Child. The Company previously invested $88 million in the North Italia and Flower Child concepts over the last three years in anticipation of their purchase.
North Italia turns a modern lens on Italian cooking in the upscale, casual-dining segment. All dishes are handmade from scratch daily. The concept currently has 21 locations in ten states and Washington D.C. North Italia’s operations will be located at The Cheesecake Factory Incorporated’s corporate headquarters in Calabasas Hills, California to help scale the concept nationally.
FRC was founded by Sam Fox, a 10-time James Beard Award semifinalist for Restaurateur of the Year, New York Times best-selling cookbook author and recently named one of the 50 most influential people in the restaurant industry by Nation’s Restaurant News for the fifth consecutive year. FRC currently operates 47 restaurants across 8 states and Washington D.C. Each restaurant is individually designed to provide guests with a one-of-a-kind dining experience that will leave a lasting impression. FRC will operate as an independent subsidiary and continue to be led by Fox from FRC’s headquarters in Phoenix, Arizona.
KGA Completes Kona Grill Purchase
The ONE Group Hospitality, Inc. and Kona Grill Acquisition, LLC (“KGA”), its wholly owned subsidiary (collectively, “The ONE Group”), announced KGA has completed the purchase of substantially all the assets of Kona Grill, Inc. and its affiliated entities (collectively, “Kona Grill”). Kona Grill is expected to add $100 million in annual revenue, and to be immediately accretive to Consolidated Adjusted EBITDA. The ONE Group also increased its 2019 financial targets to account for the acquisition.
“We are pleased to complete the acquisition of Kona Grill and welcome 2,000 new team members and associates to The ONE Group family. We have added an excellent brand to our restaurant portfolio, with 24 high performing domestic restaurants and one international franchised restaurant located in attractive markets. Over the next twelve months, we intend to integrate Kona Grill by leveraging our corporate infrastructure, our bar-business knowledge and unique VIBE dining program, to elevate the brand experience and drive improved top line performance to create long-term shareholder value,” said Emanuel “Manny” Hilario, President and CEO of The ONE Group.
“We currently anticipate Kona Grill contributing approximately $23 to $24 million in revenue and over $1 million in Adjusted EBITDA to our consolidated results in the fourth quarter of 2019. We expect Kona Grill to be immediately accretive to Consolidated Adjusted EBITDA, to add approximately $100 million in annualized food and beverage sales and to be accretive to earnings per diluted share once fully integrated. Most importantly, our preliminary 2020 expectation is to deliver significant growth by generating between $23 and $25 million in Consolidated Adjusted EBITDA,” concluded Hilario.
Paytronix Makes Upgrades
Paytronix Systems, Inc.,rolled out a series of upgrades to the Paytronix Rewards Platform at the PXUX 2019.The interactive conference provides a forum whereby brands can provide feedback, share their experiences and deliver input on future product direction.
“This year’s PXUX was full of exceptional presentations from clients like Primanti Brothers, Jimmy John’s, National Coney Island, Mendocino Farms, and MFA Break Time,” said Andrew Robbins, president, Paytronix Systems, Inc. “Our clients are doing remarkable things with the platform – the high-impact results, growth, and brand enhancements are amazing.”
While digital ordering is a significant business opportunity for the restaurant industry, brands are challenged to capture order and customer information and incorporate it into their overall business operations. Paytronix Order & Delivery helps them integrate this information with existing loyalty programs and POS data so that they can leverage the full potential of their off-premise business.
Integrated with the high-speed guest engagement platform, Paytronix Order & Delivery offers the most comprehensive loyalty functionality available in any online ordering flow, including: single sign on, open dollar discounts, easy bundling discounts, multiple rewards in a single check, reward balance display, easy registration flow, reward from points flow, and gift card redemption.
Loyalty marketing continues to evolve into an insightful combination of art and science that enables brands to deliver one-to-one customer engagement. Paytronix has added the following new features that help streamline day-to-day outreach for loyalty managers.
One-to-One Promotions – Powered by AI, the system enables marketers to set parameters and then let the machine do the heavy lifting, resulting in massive effectiveness improvements over standard campaigns. Guests convert faster and more often with messages delivered on the right channel, at the right time, with just the right offer.
- Campaign Builder – With the ability to set recurring campaigns and easy list upload, setting up new campaigns is a snap.
- Email Builder – The drag-and-drop email design tool speeds up the email creation process and includes both dynamic and social content.
- Multi-use Coupons – Enables new customer acquisition, attribution, and becomes an overall enrollment booster.
- SMS Enrollment at the POS – Facilitates the capture of new loyalty members at the point of purchase by pushing out an SMS text to enroll from the POS.
- Native Mobile Integration to Monkey Media – Now restaurant brands can offer both online ordering and a catering program in the same app. This native integration makes it super convenient for guests to earn and redeem catering loyalty currency.
Blaze Hot Containers
Waddington NorthAmerica (WNA), a Novolex™ brand, introduced of Blaze™, hot food containers designed to make takeout and deliveries better than ever.
The containers come in a variety of sizes and styles, with convenient hinged or two-piece options perfect for carryout or delivery. The easy tear-away hinge allows for a less-cluttered dining experience, and the two-piece option offers a common lid that fits the various base sizes. All of the packaging can be recycled where facilities exist.
The offer also includes three sizes of Contours™ Blaze™ catering trays with our patented EZ-Release™ tab system offer solutions for larger quantities of food – hot or cold – to be delivered to events of any kind. The patented technology gives Blaze catering trays the ability to provide the same food preservation capabilities and delivery experience.
“We’ve engineered Blaze hot food containers to ensure customers enjoy their meals at home as much as they do at a restaurant,” said Jennifer Heller, Vice President of Marketing for WNA. “This is an ideal solution for restaurants and caterers alike.”
Made with patent-pending technology, Blaze containers come with one-, two- or three-compartment bases. Construction of the containers offers a variety of benefits, including:
- Superior ventilation: Because vent holes are located on the sides, they are not blocked even when the packaging is stacked, allowing steam to escape and keeping food at its best for longer.
- Family stacking: Every size can be easily stacked, with no need to worry about tipping over or spills.
- Snap-tight anti-fog lids: These lids stay on tight and secure, resisting leaks even on bumpy rides.
- Customization options: The special lid design provides space for customized embossing, providing a cost-effective way to increase brand awareness by adding logo or brand name.
- High-quality performance: Made in the USA, Blaze containers are microwave safe and maintain stability and structure even under the hottest conditions. They are engineered to ensure exceptional quality and performance for a variety of foods.
“With Americans seeking more carryout choices ranging from appetizers to entrees, Blaze offers an innovative way to get meals to customers exactly
Introducing The Cannolo
oodoo Doughnut introduces The Cannolo, top photo. Two years in the making and offered in three different flavors, The Cannolo Doughnut is created with a raised yeast doughnut, swirled and fired to perfection, and filled with a variety of cream cheese flavors.The Cannolo currently features three cream cheese flavors – pumpkin, almond and raspberry – and is available today at participating Voodoo Doughnut locations as a permanent menu item.
“We are excited to offer our customers something new and unique, as part of their Voodoo Doughnut experience. Voodoo customers have come to expect innovative flavors and products from us, and The Cannolo Doughnut gives us the opportunity to exceed their expectations and further develop our menu,” said Chris Schultz, Voodoo Doughnut CEO.
The new product offering is part of Voodoo Doughnut’s plan to expand its footprint, and offer menu items that give customers more product choices when they visit Voodoo. Voodoo plans to open three new locations in the coming months, supporting its long-term plan to open stores in select new markets around the country.