Event Recap: Restaurant
Earlier this month, our team headed to Chicago to host our Restaurant CFO Bootcamp. There, we spent three days connecting with industry colleagues on the trends and issues currently top of mind among restaurant executives. A number of ongoing challenges, like an evolving labor market and increasing restaurant valuations across all segments, remain pertinent, but a few particularly timely issues rose to the top. What are some highlights that stood out during our time in the Windy City?
1.Unclaimed property & gift cards
With the holiday season quickly approaching, restaurant executives are brushing up on the rules associated with gift cards. Regulations governing escheatment compliance can vary significantly among states, particularly pertaining to definition of gift cards/certificates, filing due dates, variant dormancy periods, and even between reloadable and non-reloadable cards. With state-specific statutes extending back as far as 30 years in some cases and even further in other cases — understanding the rules can be tricky. Restaurants most susceptible to escheatment exposure include those operating across state lines without a gift card policy in place and little to no escheat compliance. Moreover, online gift card sales add complexity, as a restaurant can be subject to unclaimed property regulations in many states where they do not operate if they track purchaser name and address information via online purchases.
Some states require restaurant companies to turn over funds received on a gift card purchase once the card hits a dormancy period as determined by the state, at which point those funds are classified as unclaimed property. Typically, this period of dormancy ranges between three and five years. Other states may offer exemptions but only if certain conditions are satisfied, including, but not limited to, (a) gift cards are redeemable only for merchandise; (b) there are no expiration provisions; (c) there are no dormancy or inactivity fees unless provided for in statute or regulation, etc.
2.Pending legislation affecting the industry
We blogged recently about the uncertain future of the FICA tip credit benefit, and it remains a hot topic among restaurant executives. David Koenig, Vice President of the National Restaurant Association, gave a presentation outlining the organization’s work to educate lawmakers on the benefits of keeping this tax benefit. He also discussed a number of potential impacts on the industry as a result of other pieces of pending wage-related legislation, including higher hourly minimum wages as well as a proposed Department of Labor rule to more than double the salary threshold determining which employees are eligible for overtime pay. These potential regulatory changes could significantly affect restaurants’ labor costs and tax liabilities.
3. Shifting EMV liability
As of October 1st, liability for any credit card fraud taking place will now fall on the least EMV-compliant party, whether that be the merchant or card issuer. To avoid this liability, face-to-face retailers and restaurants need to have in place new point-of-sale terminals capable of reading and processing EMV transactions. We blogged this summer on the implications of this new standard
and interestingly, a survey conducted last month ahead of the deadline found that only 27 percent of U.S. retailers expected to be EMV-ready
before the liability shifted, with even lower readiness rates among small businesses.
4. Employee management practices
Fostering a workplace that encourages employee productivity is critically important for restaurants, since they rely on employee service to drive customer loyalty. However, many employers fail to prioritize their employee management practices, and could be making potentially costly mistakes. We discussed a few best practices, including:
- Establishing firm – but fair – workplace policies and rules
- Creating thorough and accurate handbooks and communication, and ensuring each employee receives and reviews
- Conducting due diligence to identify potential personnel problems during the hiring process
- Implementing a productive coaching process and having policies in place for confronting potential problems and disciplining employees, if necessary
- Promptly and properly investigating any employee misconduct
If you missed us at CFO Bootcamp, or if you have any questions, contact
your BDO Restaurant professional. And be sure to keep up with the Restaurant practice’s latest thoughts by following us on Twitter at @BDORestaurant.