Bar Operations | KRG Hospitality

April 13, 2022by David Klemt David Klemt No Comments

Leadership Facepalm, Part Two

Leadership Facepalm, Part Two

by David Klemt

In a stunning example of tone-deafness and callousness, a franchisee executive sent an email that led to severe consequences.

And no, I’m not talking about the termination of the offending exec. That, in my opinion, was well deserved.

In this instance, the email has led to mass resignations and damage to a global restaurant chain’s reputation. What’s more, the negative impact to the brand’s reputation comes from consumers and employees.

Of course, I’m talking about the now-infamous Applebee’s “gas prices” email.

The Email: Labor

Let’s just jump right into the email, because…wow.

“Most of our employee base and potential employee base lives paycheck to paycheck,” writes the executive. “Any increase gas prices cuts into their disposable income.”

This could have been an excellent example of awareness and perhaps even empathy. In the context of this email, it’s appalling.

Why? Mainly because this executive appears to be celebrating the fact that Applebee’s employees, at least those who work for this franchisee, are barely earning a living wage.

“As inflation continues to climb and gas prices continue to go up, that means more hours employees will need to work to maintain their current level of living,” continues the author.

In this exec’s view, this franchisee is “no longer competing with the government when it comes to hiring.” He cites stimulus payments and boosted unemployment support have run out. Therefore, he reasons that people will be forced to return to the workforce.

The author further points to competitors increasing wages to recruit and retain employees. This, he figures, is untenable and some will have to close their doors. So, the labor pool will fill up and this franchisee will benefit.

The Email: Wages

Some of what I’ve laid out above is accurate. According to some estimates, about two-thirds of Americans live paycheck to paycheck.

Additionally, it’s accurate to state that some employees will seek more hours to combat the effects of rising costs. Further, yes, the labor market is turbulent and challenging.

And, unfortunately, some independent operators are facing incredibly difficult decisions. To recruit and retain, they’ll need to be competitive and raise their wages. To pay for that, they’ll need to raise prices, passing on rising costs to customers. In some instances, for some operators, that will prove unsustainable.

However, an executive in this industry shouldn’t be delighted about any of this. And they certainly shouldn’t see it as an opportunity to potentially pay employees even less.

You see, the author of this email suggests that the franchisee can bring in new workers “at a lower wage to decrease our labor (when able).”

He then recommends monitoring employee morale to ensure that the Applebee’s operated by this franchisee is their “employer of choice.”

For me, however, the most eyeroll-inducing line is this: “Most importantly, have the culture and environment that will attract people.”

Images of printouts of the email reveal that at least a handful of recipients agreed. “Great message Sir! [sic]” reads one response. Another paints the email as “Words of wisdom.”

Clearly, the culture and environment are unhealthy.

The Consequences

Before I proceed, know this: I’m not going to name the author. It’s not remotely difficult to find the author’s name if you feel the need.

However, I will name the franchisee that finally fired him. American Franchise Capital reportedly owns more than 120 Applebee’s and Taco Bell locations in nine states.

So, to be clear, this executive didn’t work for Applebee’s directly. In fact, Applebee’s has disavowed the former executive and the email.

In the interest of clarity, it’s possible the author worked for Apple Central LLC, owned by American Franchise Capital.

As far as fallout, it was swift. According to reports, consequences were realized immediately. A Kansas franchise manager was shown the emails, printed them out for staff to discover, and comped the meals of everyone at the location. Then, he quit and the staff walked out.

Per reporting, four other Applebee’s managers quit, as did several employees. The location remained closed for at least the following day.

If reports are accurate, Applebee’s lost five managers, nearly a dozen employees, and sales from a location for at least two days. That’s just the localized fallout.

Applebee’s, of course, is distancing the company from the former executive. However, that’s not going to stanch the reputational bleeding and turnover.

As we know, a significant percentage of consumers want to know their dollars and support are going to companies that align with their values. The same is true of employees; they want to work for companies with values they can get behind.

A Final Thought

This now-infamous email was sent March 9. Just two weeks later, it was circulated and went viral. The author, gleeful about being able to hire employees “at a lower wage,” was fired before the end of March.

I’ve seen several takes on this situation, and I’ve read some accompanying leadership advice. One in particular caught my attention.

Unfortunately, it’s not because I thought it was great advice: Be cautious about what you send via blast emails.

I’m not saying one shouldn’t be careful about what they send out in emails—that’s good advice. However, that’s not the lesson I’ve learned from this situation.

Personally, I see this as a lesson in emotional intelligence, relationship intelligence, brand culture, and work environment.

At least two companies, one with annual sales in the billions of dollars, another in the hundreds of millions, have had their reputations tarnished. The fault may not lie with Applebee’s but they’ll be dealing with the consequences regardless.

If an operator is going to learn anything about being cautious, it’s this: Be cautious when hiring those in leadership positions. Be cautious about those with whom you enter into partnerships. And be careful about how you view those who work for you.

If you aren’t seeing those who choose to work for you as people worthy of your respect, as human beings, your brand’s culture is poisoned.

Image: Daria Nepriakhina on Unsplash

Close-up shot of person texting on phone in a restaurant

April 12, 2022by David Klemt David Klemt No Comments

Leadership Facepalm: Don’t Do This

Leadership Facepalm: Don’t Do This

by David Klemt

Here’s a hot take on the employer-employee dynamic: Don’t text staff at 3:00 in the morning demanding they come in on their day off.

In fact, let’s compress this piece of advice. Don’t text staff at 3:00 in the morning.

Really, I shouldn’t have to explain the myriad reasons that doing so isn’t acceptable. However, a post on Reddit shows that this topic needs addressing.

Are You Serious?

Yes, I’m using a Reddit post as an example of what not to do. And yes, I’m going to assume the post is legitimate for the purposes of education.

Owners, operators, and members of leadership teams need to lead. Micromanaging, assuming staff is at their beck and call, and domineering behavior only lead to high turnover.

A high staff churn rate is costly, and not just financially. Yes, it costs thousands of dollars to replace a single member of staff. However, immediate financial costs shouldn’t be the only concern.

Churning through staff also damages a restaurant, bar, hotel, or owner’s reputation. Should they become known as a bad employer—word gets around quickly in this industry—and eventually an operator won’t be able to hire rock star talent.

Over time, they’ll only draw in workers that chase away their guests. After that, the operator will be closing the doors.

“You Need to Be a Team Player”

Interestingly, the Reddit post that’s inspiring this article isn’t brand new. The post in question is about six months old.

But these days, with the shift in the employee-employer dynamic that’s taking place, stories of “epic” or “savage” quitting garner attention.

Again, there are myriad reasons people are drawn to these stories. Rather than read through those, let’s take a look at this quitting story.

A bartender took to Reddit (again, I’m assuming this is a fact) to share texts from his (former) manager. The timestamp on the first text? 2:59 in the morning.

“I need you to come in from 11a-10p today,” starts the text. The reason? Only one bartender is on the schedule for an event that day.

In response, the bartender says, “No thank you,” stating it’s their day off. And then the manager makes a demand using a term that gets thrown around far too much when some people in a position of authority don’t get the response they want (in my opinion).

The bartender is told they need to be a “team player,” and that “it isn’t all about you.” On a positive note, the manager does then say “please” and asks the bartender to come in.

Putting their cards on the table, the bartender says they’ve had a few drinks and don’t want to work an eleven-hour shift with a hangover. Personally, I don’t think the manager was due that explanation but okay.

This doesn’t sit well with the manager, who now attempts to police the bartender’s personal time. According to the texts, the bartender needs “to stay ready for work.” This is apparently because “getting too drunk is not a good look if you can’t stay prepared.”

“Fed Up with You”

After a few more texts back and forth, the manager fast-tracks this situation’s escalation. The bartender is told that they’re going to talk about the bartender’s “attitude” when they “come in Sunday.”

Well, it’s highly unlikely that conversation ever took place. According to screengrabs of the texts, the bartender replies, “No we’re not.” They then proceed to remind the manager that “dozens” of places are hiring bartenders. They’re happy to go work for one of those businesses.

Unsurprisingly, the manager attempts to backpedal. They say that the bartender is making a rash decision “because you’re drunk” and will regret it the next day. That approach doesn’t work.

Now, there’s one sentence that suggests to me, if this situation is real, that the owner needs to address this manager. Or, if this manager is the owner of the business, that they need to work on developing leadership skills.

That line? “I’m fed up with you.”

Sure, they could mean they’re fed up with them in this instance. However, the line follows the bartender saying that their are several other places they can find work instead.

My interpretation is that at a minimum, these two have a problem with one another. Worst case, this manager isn’t doing the owner (or themselves) any favors with their “leadership” style.

Just…Don’t Do This

Please, please, please, don’t text or call staff at 3:00 in the morning. There are perhaps a tiny handful of reasons to ignore this advice. As I see it, those reasons all involve emergencies.

And no, being short-staffed for an event the following morning is not an emergency worthy of texting or calling an employee to cover a shift so late at night/early in the morning.

There are several leadership and scheduling solutions that can prevent this type of situation. In this particular instance, since the bartender was “fed up with” this manager, they were going to quit sooner or later.

Which brings me to my first point: Operators need to know what their leaders are doing. How are they treating staff? How does the staff perceive the leadership teams?

Secondly, how do the operator and other leaders perceive one another? Is everything running smoothly or is one “leader” not really leading?

And finally, scheduling technology. These days, there’s really no excuse for many kinds of scheduling problems. Several scheduling apps integrate well with popular restaurant, bar, and hotel POS systems.

For example, HotSchedules gives staff the ability to give away, swap, and pick up shifts. Another example is OpenSimSim, which provides an open shift invite feature. Staff can also set their profiles to auto-accept shifts as they become available.

7shifts and Schedulefly can also help fill shifts. And like HotSchedules and OpenSimSim, leaders can message groups and individuals, and vice versa.

Perhaps the biggest takeaway here is this: The maxim, “People don’t leave jobs, they leave managers,” is accurate. Leaders need to respect their team members and their personal time.

Image: Alex Ware on Unsplash

United States Capitol Building dome in greyscale

April 7, 2022by David Klemt David Klemt No Comments

House Votes to Replenish RRF

House Votes to Replenish RRF

by David Klemt

Eleven months after the closure of the Restaurant Revitalization Fund application portal, Congress has voted on RRF replenishment.

Earlier today, the House voted “yes” on $42 billion for the RRF via the Relief for Restaurants and Other Hard Hit Small Businesses Act of 2022 (HR 3807).

To clarify, the intent is that funds go to original applicants who were left out when the portal closed.

Neither the $1.7 trillion Build Back Better Act nor the $1.5 trillion omnibus spending bill passed in March included the RRF Replenishment Act.

So, this news is obviously fantastic. However, it’s also long overdue.

We’ve waited nearly 11 months for movement on relief for our ravaged industry. In comparison to the hospitality industry, the legislative process often moves at a glacial pace.

For obvious reasons, the long delay in replenishing the RRF has been devastating.

Nearly a month ago, I wrote and published “Congress is Abandoning Us.” Some considered the article harsh, others agreed with what I wrote.

To be clear, I stand by what I said after ten months of inaction. However, I’m relieved—cautiously—that the House proved their support for our industry today.

$55 Billion Lifeline

In its current form, the House bill would provide $42 billion. This is the amount believed to be enough to award grants to the original applicants from May of 2021.

Additionally, there’s another $13 billion for businesses in other hard-hit industries. So, the House bill provides a total of $55 billion in relief.

Per bill co-author Rep. Earl Blumenauer (D-OR), those who applied last year for the first (and only) round of RRF relief won’t have to re-apply.

Rep. Blumenauer reportedly told Nation’s Restaurant News that “[t]he independent restaurant is the foundation of a livable community.”

Continuing, Rep. Blumenauer told NRN, “We need to have these institutions to provide a foundation for our neighborhoods.”

As far as the source of the $55 billion, the money is supposed to come from funds recovered from 2020 and 2021 pandemic relief programs. This includes billions of dollars stolen through fraudulent relief program claims.

In an effort to combat further fraud and show the public that the funds are indeed going to the correct recipients, the SBA will be required to be transparent about its process.

As it stands, grant recipients will need to spend the funds on eligible uses by March 11, 2023.

Bittersweet

While this is huge news for our industry, it’s somewhat difficult to let go of my frustration fully. The RRF portal opened May 3, 2021. It closed just 21 days later, shutting out an estimated 177,000 grant applicants.

In June of last year, Sens. Kyrsten Sinema (D-AZ) and Roger Wicker (R-MS), and Reps. Earl Blumenauer (D-PA) and Brian Fitzpatrick (R-PA) introduced a bill to replenish the RRF.

That was followed in July by the ENTREE Act, introduced by Rep. Blaine Luetkemeyer (R-MO).

Then, in August, Sen. Rand Paul (R-KY) objected to a unanimous consent motion to fund the RRF. Essentially, after that occurred, it was crickets.

As stated above, when the Build Back Better Act was passed in November, relief for our industry was nowhere to be found.

Given all of this, and the fact that the bill must now go before senators for debate and a vote, I find myself still uneasy about the fate of the RRF.

We often say hope isn’t a strategy. However, I hope our senators do the right thing and pass the relief our industry so desperately needs and deserves.

Image: Joshua Sukoff on Unsplash

April 6, 2022by David Klemt David Klemt No Comments

XDar Vodka Resumes Ukraine Production

XDar Vodka Resumes Production in Ukraine

by David Klemt

Over the past several weeks, the people of Ukraine have shown the world their resilience, tenacity, and refusal to submit to Russia.

The sovereign European nation has endured attacks and atrocities that began on February 24 of this year. Nearly six weeks since the invasion, Ukraine has resisted and repelled the vaunted Russian military.

There’s no end in sight. The world is learning daily about the atrocities and possible war crimes being perpetrated in Ukraine.

Because of this, any good news coming from Ukraine is welcome.

“Gift of Grain”

Incredibly, Ukrainian distiller XDar Vodka is resuming production. The brand, whose name translates to “gift of grain,” is reopening their distillery.

Now, this is all no small feat: XDar Vodka’s distillery is in the Cherkassy region of Ukraine. So, when I say XDar Vodka is a Ukrainian product, I mean they distill their spirits in Ukraine.

This wheat vodka is made using the region’s artesian water. Impressively, the result is a clean vodka that scored 92 points in the 2016 Ultimate Spirits Challenge.

Further, XDar Vodka flies in the face of the “definition” of vodka. Supposedly, vodka is meant to be odorless, colorless, and flavorless. Not XDar.

Instead, tasting notes include wet sand, floral notes, vanilla, cotton candy, burnt sugar, and a touch of sweetness.

And yes, XDar does have distribution in North America via Liquorum Imports, Inc. In addition, XDar can be purchased through Royal Wine Merchants.

Those who want to try XDar Vodka as well as support this tenacious Ukrainian brand can also place orders through Drizly.

Bittersweet Anniversary

2022 marks XDar’s 20th anniversary. Obviously, this is bittersweet for the brand and its 4,400 employees.

To that point, XDar stopped production when Russia attacked Ukraine. However, the distillery continued to pay its workers.

“The people at XDar are committed to their employees,” says Natalya Kolosok of Liquorum Imports, Inc. “They are some of the strongest people in the world.”

Now, the brand is resuming production. According to the distillery, XDar is doing so safely. According to a statement from Kolosok, this is in part due to the desires of the distillery’s team.

“The employees, while grateful for the assistance, don’t just want a check, they want purpose,” says Kolosok. “They want to work, which is why, as safely as possible, XDar opened up their facility to resume production.”

That’s resilience. That’s tenacity. And those characteristics exemplify the people of Ukraine.

Images provided by KLG Public Relations

New Orleans, Louisiana, architecture in the French Quarter

April 5, 2022by David Klemt David Klemt No Comments

TOTC Launches New Philanthropic Committee

TOTC Launches New Philanthropic Committee

by David Klemt

Continuing their growth and commitment to supporting the spirits and hospitality industries, Tales of the Cocktail announces a new committee.

Formerly known as the Grants Committee, this committee will act as an advisory board to TOTC Foundation. In this capacity, the new Philanthropy & Development Committee will guide decisions regarding the TOTCF’s portfolio of philanthropic endeavors.

In launching the Philanthropy & Development Committee, the TOTCF is responding directly to the needs of the spirits community.

Commitment to Philanthropy

Supporting the industry is a TOTCF cornerstone. This commitment was supercharged when the Solomon Group and Neal Bodenheimer, Jr. took over in 2018.

Upon purchasing the rights, the Solomon family and Bodenheimer, Jr. transformed TOTC into a non-profit. Since then, the organization has developed ways to benefit New Orleans and the spirits and hospitality industries.

One major avenue of support came by way of the TOTCF Grants Committee. Their mission was straightforward and lofty: “to support nascent or existing programs, non-profit organizations, and individuals developing a specific project that will impact the global hospitality community present day and beyond.”

In selecting recipients, the Grants Committee reviewed submissions. Recipients needed to support the TOTCF’s core pillars with a focus on diversity, representation, and inclusivity: Advancement, education, and support.

One such recipient that exemplifies the Grant Committee’s work is Turning Tables. From their website:

“Turning Tables advocates for equity in the hospitality industry by providing mentorship, educational tools, and platforms for exposure in a system of support for the black and brown communities of New Orleans.”

New Name, Bigger Mission

To be clear, the Philanthropy & Development Committee is still offering grants. However, the past two years saw the expansion of the Grants Committee’s mission.

In addition to grants, the committee:

provided direct relief to industry professionals;
entered into more non-profit partnerships;
boosted the number of Beyond the Bar activations;
engaged in advocacy and policy efforts;
and expanded mental health and wellness capabilities.

Given the evolution of the committee’s work, transforming to the Philanthropy & Development Committee better communicates the mission.

“I’m really excited about this new era of the committee,” says Philanthropy & Development Committee co-chair Kellie Thorn. “While grant-giving will still be a focus, we will now have the opportunity to diversify the way that we serve the drinks community as well as continue to provide thoughtful insight to the Foundation about our industry.”

Continental Drift and Drift Kitchen owner Eric Bennett co-chairs the committee alongside consultant and educator Thorn. The eleven current committee members are:

Tiffanie Barriere
Chris Cabrera
Claudia Cabrera
Samuel Jimenez
Nandini Khaund
Yisell Muxo
Lisa Nguyen
Chris Patino
Vivian Pei
Kelsey Ramage
Morgan Schick

To learn more about the Philanthropy & Development Committee, click here.

Image: Aya Salman on Unsplash

April 4, 2022by David Klemt David Klemt No Comments

5 Books to Read this Month: April 2022

5 Books to Read this Month: April 2022

by David Klemt

This month’s engaging and informative book selections will help you develop next-level culinary, beverage and marketing skills throughout 2022.

To review February’s book recommendations, click here.

Let’s jump in!

My America: Recipes from a Young Black Chef

This book is scheduled to be released on May 17 of this year. I anticipate this cookbook by Chef Kwame Onwuachi, which includes 125 recipes, to come flying off the shelves. In addition to more than 100 recipes, Chef Onwuachi connects his personal journey to food, culture, and places. Pre-order My America now!

Paddy Drinks: The World of Modern Irish Whiskey Cocktails

Jack McGarry, Sean Muldoon, and Jillian Vose are back with their latest Dead Rabbit book. The trio’s latest release, Paddy Drinks, shares Irish whiskey drink recipes you’ll find on the actual Dead Rabbit menu. However, that’s just one portion of this informative book. Inside are whiskey flavor wheels, tasting notes, illustrations depicting whiskey production, and more. And if that’s not enough for you, David Wondrich provides the foreword.

Founder Brand: Turn Your Story Into Your Competitive Advantage

In Founder Brand, Dave Gerhardt explains why your brand’s story is one of the most valuable assets you own as an entrepreneur.

From the Amazon listing: “This is a tactical guidebook that first shows you how to tell your story, then how to put your story to use as a marketing strategy. You’ll learn how social media provides a bridge between you and your customers, the platforms that are appropriate for your business, and how to measure results to truly determine value.”

Finding Mezcal: A Journey into the Liquid Soul of Mexico

You don’t have to be a veteran bartender or spirits expert to know that mezcal continues to rise in popularity. Written by Ron Cooper, founder of artisanal mezcal brand Del Maguey, Finding Mezcal includes 40 cocktail recipes from bartenders and chefs; photographs; Cooper’s own artwork; and much more.

Bar Hacks: Developing The Fundamentals for an Epic Bar

Industry expert and KRG Hospitality president Doug Radkey wrote this informative and conversational book. This is the perfect read for aspiring or seasoned bar, pub, lounge, or even restaurant owners, operators, and managers looking for that competitive edge in operations. If you’re looking for both fundamental and in-depth planning methods, strategies, and industry focused insight to either start or grow a scalable, sustainable, memorable, profitable, and consistent venue in today’s cut-throat industry, Bar Hacks is written just for you

Image: Mikołaj on Unsplash

Stay Weird neon sign with purple background

April 1, 2022by David Klemt David Klemt No Comments

Stand Out with Weird Holidays: April 2022

Stand Out with Weird Holidays: April 2022

by David Klemt

Want to stand out from from other restaurants and bars in your area? Then commit to keeping it weird.

Several “holidays” are set against every date on the calendar, and April is no exception. These holidays range from mainstream to “weird.”

Pay attention to the latter to raise eyebrows, carve out a niche for your restaurant or bar, and attract more guests. Why do what everyone else is already doing?

Of course, you shouldn’t try to celebrate every holiday, weird or otherwise. And this month’s list in no way includes every odd holiday.

Focus on the days that are authentic to your brand; resonate with your guests; and help you grab attention on social media.

For last month’s list, click here.

April 1: National One Cent Day

Please, please, please tell me you’re not going to indulge in an April Fool’s Day “prank” today. Instead, consider—if your jurisdiction will allow it—getting rid of dead stock for a penny with a purchase of a food and/or beverage item. You won’t get rich doing it but you also won’t be sitting on stock that’s just taking up space.

April 2: National Handmade Day

An easy riff on “handmade” is “housemade.” So, on this crafty holiday you can easily promote the housemade items on your menu. Make your own bitters? Promote it. Craft your own sauces? Let the world know.

April 6: National Tartan Day

No, it’s not “weird” to wear tartan. And no, it isn’t weird to celebrate anything and everything Scottish. However, this isn’t exactly the best-known holiday, so we’re including it on this list.

This is an easy one: Encourage your guests to wear tartan, take photos, and post it on social media (tagging your business, of course). Create a promo highlighting a Scottish whisky and/or gin and you’ve got a winner.

April 13: National Make Lunch Count Day

It’s fairly easy to celebrate and program on this holiday. The entire point of this day is to make lunch the best meal. Operators, you should know exactly what to do to execute a promo for this holiday.

April 15: National Take A Wild Guess Day

Who among us hasn’t taken a wild guess for a prize? We all know how this works: A jar or a convertible (why not, right?) is filled with jelly beans, gumballs, etc. People guess how many of said item are in said container. The person who guesses the closest wins a prize.

April 19: National Hanging Out Day

Talk about the perfect day to encourage your guests to spend a morning, afternoon, evening or night at your business with their friends. This holiday can be as simple as coming up with a few F&B promotions that will keep butts in seats for a while.

April 23: National German Beer

Hey, can you guess how you should celebrate this day? Hint: The clue is in the name.

April 24: National Pet Parents Day

If you allow dogs and other pets inside your venue or on the patio, this is the time to celebrate pet parents. Just remember when creating your promo that you need to include pet-safe F&B items.

April 27: National Tell a Story Day

As an operator, you know the importance of telling a story. Whether that story is that of your brand’s, a brand you feature, or a food or beverage item, it’s a powerful engagement technique. So, you can use this holiday to tell your brand’s story or encourage your guests to engage by telling their own stories. In fact, this is a great day to help facilitate connections between guests.

April 30: National Sense of Smell Day

Experts estimate that anywhere from 70 to 90 percent of taste is smell. Creating a promotion focusing on our sense of smell can be complicated but the payoff can be huge. So, activate your reps and see how they can help you show your guests the power of their sense of smell.

Image: Dan Parlante on Unsplash

People toasting with a variety of cocktails

March 30, 2022by David Klemt David Klemt No Comments

Prepare for the New Rules of Hospitality

Prepare for the New Rules of Hospitality

by David Klemt

Guests are returning to bars, restaurants, and hotels, so you need to prepare now for the new rules of hospitality.

If you’re wondering what those rules are, wonder no more. We have a number of articles addressing them, some of which are here, here, and here.

Phil Wills, owner and partner of the Spirits in Motion and Bar Rescue alum, also has some thoughts. In fact, Wills shared his approach to what he identifies as the new rules of hospitality last week.

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A post shared by Phil Wills (@phil_i_am11)

During Bar & Restaurant Expo 2022, Wills presented “The New Rules of Hospitality: What a Post-pandemic Consumer Wants.”

Below, you’ll find what Wills has to say about hospitality in 2022 and beyond in three categories.

Hospitality

Wills kicked off his session with a simple question: How do you define “hospitality”? And yes, he put attendees on the spot, asking them for their answers.

It’s always at least a bit amusing that even the most outgoing operator gets shy in a conference setting. I’ve never seen so many people suddenly need to check their phones, shoes, or the ceiling tiles as when they’re asked to participate in a class or education session.

For Wills, the definition is “making a guest feel welcome, as though they’re in your home.”

Obviously, the answer is different for everyone. As Wills says, the key is considering how you and your brand define hospitality. If that seems easier said than done, Wills has some tips, presented in the context of a guest visit.

First, guests take in the sights, sounds, and smells of your space. They also consume your menu items, and converse with your staff, their party, and other guests.

Look at your business through the eyes of your guests. Now, this can be a difficult exercise, particularly if you spend a lot of time in your restaurant, bar or hotel.

So, ask team members to do the same and provide feedback. We take for granted what our spaces, food, and drinks look like.

To improve the guest experience, pay attention to ticket times and F&B consistency. This will reduce recovery incidents and phrases.

Finally, Wills recommends engaging with guests (if that’s what they want). However, he also suggests facilitating connections between guests.

Interestingly, Wills also says, “Regulars are old money. You want to get that new money.” Then, you want to convert that new money into old money. Rinse, repeat.

Training

As relates to training, Wills categorizes new hires in two ways: toll takers and moneymakers.

Toll takers take a toll on your business. They cost you money, and if they don’t receive the proper training they can chase guests away.

So, you’ll need to spend time and money to convert toll takers into moneymakers.

Speaking strictly in a technical sense, training needs to provide team members with the knowledge and tools to become moneymakers. To accomplish this, Wills has three keys to making training stick:

Don’t make training too easy. If training is easy, team members won’t retain what they’re taught. Challenge your staff.
Vary your training. There are a number of training methods at your disposal. Use multiple methods to engage your staff. Wills suggests combining shift work, book work, and tests, at a minimum.
Turn training into a competition. At this point, we’re gamifying just about anything. So, Wills recommends the platform 1Huddle to gamify your training.

Labor

Simply put, Wills says we need to find new ways to make this industry exciting to new hires.

According to the National Restaurant Association, we’re still seeing significant job losses in hospitality, foodservice, and lodging and accommodation.

In fact, we’re down 14 percent when it comes to full-service restaurant jobs. For bars and taverns, the number is 25 percent.

For Wills, offering incentives, mental health breaks, and even cash bonuses for staying in role for a number of months can draw the attention of new workers.

However, he also has another interesting idea: making people smile. On average, according to Will’s research, people smile 20 times each day. He wants to find ways to make people smile 20 times during a single visit to a restaurant or bar.

Now, Wills admits he’s still working on how to accomplish this lofty goal. I believe a key component is creating a working environment that inspires team members to smile 20 times per shift.

Image: Kelly Sikkema on Unsplash

March 29, 2022by David Klemt David Klemt No Comments

The Leasing Game: Terms & Conditions

The Leasing Game: Terms & Conditions

by David Klemt

Understanding the ins and outs of the leasing game means knowing the meaning of several legal and industry terms.

Winning at this game also requires a deep understanding of everything that’s in your lease agreement.

I addressed the importance of negotiating your lease (and more) yesterday. Today, let’s go over the terms you need to know.

A Warning

Before I run down a list of terms (as in phrases), let’s go over other terms you need to understand.

Namely, the terms for which you negotiated before you signed your lease. Let me reiterate: You know all of this before you sign your lease.

Do not sign anything unless you understand every word of every sentence in every paragraph on every page. If that seems overwhelming, pay a lease agreement attorney to analyze and advise you on a lease. It’s worth the spend, and please do this before you sign anything.

Why a lease agreement or real estate attorney? Because a lease agreement is a legal document. You don’t sign legal documents without knowing what’s in them.

Some Context

Based on the number of hospitality professionals that descended on Las Vegas last week, trade shows and conferences are back in full force.

KRG Hospitality attended the 2022 Bar & Restaurant Expo, formerly the Nightclub & Bar Show.

Friends of KRG, Invictus Hospitality (IH), presented a handful of sessions during the show. One of these was “Understanding the Leasing Game & How to Get Ahead.”

As I wrote yesterday, IH principal Homan Taghdiri hosted the informative session. He shared a wealth of knowledge every operator, new or veteran, should know.

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The first bit of information was this: Know that you have the right to negotiate your lease. If someone tells you otherwise, they’re lying or they don’t know what they’re talking about.

As for the second piece of advice, see the section above this one.

Know These Terms

In this context, “terms” means words and phrases. Below is a list of terms that Taghdiri addressed during his session.

Note that I’m not sharing definitions, I’m sharing recommendations from Taghdiri’s session.

Tenant. This is you—individually—if you don’t have a business or other properties for a landlord to go after (sue).
Guarantor. You can negotiate the removal of your personal guarantee. As an example, Taghdiri suggested a clause stipulating if you pay on time for ten years, your personal guarantee is removed. After all, you’ve proven yourself for a decade.
Security deposit. Again, you should be rewarded for proving yourself and your concept. Negotiate a security deposit burn-off, like a month of security deposit removed from every year of the agreement.
Use of space. You need to know the following: current and future use(s) of the space; exclusive and competitive uses; obtaining conditional use permits and licenses. Bake in the ability to pivot, adjust, or modify your agreement. The pandemic exposed how important it is to understand use of space in several markets.
Force majeure. Another element exposed by the pandemic. Including a pandemic specifically as a valid force majeure trigger is a smart move on the tenant’s part.

Moving into the Space

Are you building the space out or is the landlord? Is it a combination of both?

Who’s responsible for delays? Is the landlord responsible for upgrades or refreshes over time?

You need to negotiate for and understand the following:

Premises delivery. When do you get the space? What’s the scope of work that the landlord must complete for delivery of the space? Is there a tenant already in the space? If so, when are they leaving? What if they don’t leave on time?
Landlord’s obligations. Is the landlord responsible for the HVAC, mechanical, electrical, and/or plumbing systems? Are they responsible for the roof on the building, the windows, and maintaining ADA compliance? Who’s responsible for the common areas, such as the parking lot and the lot’s lighting? As an example, how often are they required to repair, refresh, or resurface the parking lot?
Insurance requirements. You need to know what coverage, deductibles, and exclusions you’re agreeing to before you sign your lease. Taghdiri recommends asking for the proposed insurance clause and sending it to your insurance provider. If you can’t afford their insurance requirements, you can’t afford the space and need to walk away.
Miscellaneous. What are the security requirements for the space you’re occupying? For example, if you’re a nightclub, the landlord may stipulate how many security personnel must be working on certain days during specific hours of operation. Speaking of which, what days are you required to be open? What’s the minimum number of hours you must operate each day of the week? Should you find yourself in a shopping center with anchors, what happens if an anchor leaves? Are you required to address sound abatement?

Avoid Pitfalls

Understand the following before you sign anything:

Nobody can force you to sign a lease. Since there’s no such thing as a standard lease, you don’t have to accept whatever the landlord offers. If you don’t like the terms, don’t sign the lease.
Remember, a lease agreement is a legal document. Fully review and understand the terms. Never sign anything blindly.
Brokers aren’t “bad” but they’re not necessarily putting your needs before their own interests. If you’re going to work with a broker, find the right one for you.
Just like you need to find the right broker if you go that route, you need the right legal representation. Legal fees are worth it to understand your lease agreement. Just make sure you’re going to the right person to review it and give you advice.*

Combined with a willingness to negotiate (and walk away if you can’t get the terms you want), an understanding of the terms on this page will put you ahead of the competition. Happy space hunting.

*The information contained in this article does not represent legal or financial advice from any representative of KRG Hospitality, Invictus Hospitality, Bar & Restaurant Expo, or Questex.

Image: BP Miller on Unsplash

March 28, 2022by David Klemt David Klemt No Comments

This is How You Win When Leasing

This is How You Win When Leasing

by David Klemt

At this year’s Bar & Restaurant Expo, the Invictus Hospitality team tackled a crucial step of any project: The lease.

Invictus (IH), friends of KRG Hospitality, know a thing or two when it comes to leasing a space. Principal Homan Taghdiri is a tenacious negotiator.

Case in point, an Invictus project in Orlando that opened during the pandemic. The space was owned by the city, which can certainly complicate matters. Taghdiri sunk his teeth in and refused to let go—for seven months. That’s crocodile or Komodo dragon patience.

The result? Favorable terms and massive cost savings.

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Taghdiri presented “Understanding the Leasing Game & How to Get Ahead” at Bar & Restaurant Expo 2022. You know this show by its former name, Nightclub & Bar.

Knowing that when Taghdiri smells blood in the leasing water he’ll clamp down and death roll until he gets his way, I attended his session.

Before we dive in, know this: If we disagreed with the IH approach to leases, we wouldn’t share their tips. The information below would cost, as Taghdiri points out, about $2,000 coming from an attorney.

Of course, neither KRG Hospitality nor Invictus Hospitality is providing legal or financial advice in this article. I’m just passing along information, as IH was doing during their session.

Leasing Dos and Don’ts

If you take nothing else from this article and Taghdiri’s session, make it this tip: Do negotiate your lease.

“You have to negotiate your lease,” says Taghdiri. “It is a must.”

Not you should. Not you can. You must negotiate your lease. Neither of us can emphasize this enough.

In fact, it’s your right to do so. Which brings us to our first leasing don’t. Do not believe anyone who says you can’t negotiate a lease.

“Anyone who tells you that you can’t negotiate your lease is lying to you,” says Taghdiri.

And if they’re not lying, they just don’t know what they’re talking about. Either way, don’t listen to them. Walk or run away.

Also, do your due diligence. Knowing what you’re getting into before signing is on you. Taghdiri recommends you ask the following before signing anything:

What generation is the space? Is it brand-new? It’s first generation. Did the first tenant leave? It’s second-generation, and so on.
Is the space totally empty?
Does it have space allocated for gas, electric, etc.?

Ideally, you’ll find a second-, third- of fourth-generation bar or restaurant space. Why? They can provide massive cost savings to you.

Do fight for the terms that are important to you. These include amount of the lease, the length of the lease, and any incentives.

However, don’t over-negotiate your lease. Do put yourself in the landlord’s position. They’ve invested significant capital developing the space and they need an ROI. Pick your most important terms and negotiate them. You risk a landlord walking away from a deal if you negotiate every single item and make things difficult.

Lease Types

So, you’ve found your perfect space. Do you know which type of lease you want? Not certain which is right for you?

No problem, because Taghdiri broke them down during his session.

Standard. This is the easiest to explain because it doesn’t exist. A particular landlord may have “standard” lease, but their isn’t one that spans the industry.
Full service gross is the easiest of the actual leases. Everything is negotiated and clear in the lease, and you simply pay the agreed-upon amount.
Triple net is the opposite of the FSG lease. You pay your base rent. Then, your landlord passes on operational costs to you, which you also pay.
Percentage Rent. Basically, this is a hybrid lease. You pay base rent plus a percentage of sales. For example, you may pay natural breakpoint on top of base rent. This type of lease can be beneficial to newer businesses. However, some landlords do not like percentage rent leases.
Modified gross is, basically, any lease that isn’t an FSG. This is the most common lease, and it’s most easily explained as a modified FSG.

First-time operators or owners entering an unproven market will likely want to first focus on modified gross or percentage rent leases. However, FSGs are certainly attractive.

Length of Lease

Landing on a lease amount that you can live with is only part of the battle. Far too many people overlook the length of their lease, focusing too hard on the amount.

So, let’s take a look at some crucial factors you need to consider before signing anything.

Base Term. Let’s say you’ve invested several million dollars into your project. It’s sort of hard to imagine paying that investment off in two years, isn’t it? So, a two-year lease probably isn’t ideal. Give yourself the time you most reasonably need to open your doors and make money. Again, don’t focus solely on the amount of the lease.
Option Periods. Taghdiri explains term options thusly: “Jump into the pool safely before knowing what’s in it.” The real-world example is easy enough to understand. Agree to a three-year lease but bake one or two (or more, if you want or can) five-year renewal options into the agreement. Doing so means that you can trigger the renewal prior to the term’s conclusion. In other words, the landlord won’t be able to (easily) kick you out if you want to keep leasing the space. Just be aware that your landlord will likely also want to bake new terms into the agreement along with the renewal options.
Early Termination Rights. When it comes to this element, Taghdiri explains that this may be limited to longer-term (ten years or more) leases. Essentially, it’s what it sounds like. You should be confident in your concept before you even get to the lease stage. However, it’s not a bad idea to have an early exit plan in mind. So, you may be able to sign up for a long-term lease but bake in an 18- or a 24-month termination clause. Just remember that if you don’t exercise this agreed-upon right within the timeframe, you’ll be responsible for the original term of the agreement.

The Million-Dollar Question

You likely have a burning question searing itself into your brain right now. It’s a common question: “How much rent should I pay?”

There are a few ways to approach a satisfactory answer. The bullshit answer is, “Whatever you can afford for the space you really want.”

That’s the first step toward blowing a budget, blowing out already razor-thin margins, and skyrocketing costs.

One way to approach the how-much question is due diligence and comparables. What are the comps in your selected area? What are people paying in the neighborhood? What’s best for your business, and is that identified in your pro forma?

That said, Taghdiri did present a general lease amount rule. Try to keep your rent at 11 percent of gross sales, or less. Ten percent is even better, obviously. Anything less than that and you’re a master negotiator.

Image: Randy Laybourne on Unsplash