DA Targets Restaurants, LA report, and more!!

If I opine with my truthy truth about the Worker Protection Unit created by Manhattan DA Alvin Bragg, I may get disbarred for conduct unbecoming, so I’ll try to keep it cool. If you haven’t heard, Bragg has created a legal SWAT team to crack down on employers who “steal” wages from employees. Restaurants are the main targets and are now in his crosshairs because of course, NYC restaurant owners have nothing better to do than scheme to take tips from their employees.

So now Manhattan restaurant owners are public enemy #1 in the eyes of our DA? Perhaps Alvin should redirect his prosecutorial zeal and create a crack legal team to combat unscrupulous attorneys who sue restaurants for millions for spelling errors and innocent mistakes made trying to comply with the mind busting wage and hour and tipping laws.  Or how about a million other things that need attention in this city rather than busting our chops more than they already get busted every day. And don’t you have a yuuuge trial coming up soon? Focus Alvin, and leave the restaurant owners the hell alone.

Do our Dearly Elected even realize that NYC restaurateurs are JetBluing out of town because it’s so hard to do business here? That we are ditching NYC and heading to Miami, Nashville, Vegas and Charlotte where they roll out the champagne carpet for us?  The Mayor, the DA, the City Council, the Albany pols and the money behind them all need to recognize and step the F up and stop taking our bars and restaurants for granted. The city needs to start showing us some love or the exodus of talented hospitality people will continue and the NYC restaurant scene will lose its luster and cache and our reputation as one of the dining capitals of the world will be yesterday’s news.

Deep breath and moving on. Let’s redirect our flow and discuss how restaurateurs and bar people are giving more meaningful thought to their careers and reconsidering what it is to be a hospitality owner these days. It’s an exciting and changing time in the industry and we have to make sure we are being clear-eyed about the current state of affairs and that we are prepared to take advantage of the fair winds when they blow our way.

By now, we have all come to grips with the reality that the romantic days of settling down with the perfect little neighborhood gem or two, grinding for 5-10 years and then retiring to the North Fork to fish and float are over. Covid and the shallow employee pool and dwindling profit margins beat that shit right out of us and forced us to reassess how we do business.

We figured out that we need to be thinking more broadly about our opportunities and that we need to build hospitality groups that can readily morph and expand. Now, it’s not all brick and mortar as we consider licensing and management deals, fast casual and QSR concepts, franchises, food tech, product endorsements, development deals, content creation and more when we are building the modern hospitality group. A lot to consider, so planning is key.

A friend who was at Per Se for many years told me that they always asked “What do we do when things go right?” before embarking on a new venture. They were smart to plan for success, but that’s not always the case. I have seen too many restaurateurs neglect to prepare themselves for the “hospitality fame” that ensues if they crush it and their spot blows up. And because they are fuzzy about what they want to do next, they can’t always parlay the success into a winning next venture.

And when the developers, landlords, hoteliers and investor types come a-callin’ with heady offers and deals of the century, you will be knee deep in the shit as you deal with the stress of your success.  If don’t have an idea of the road ahead, you may not have the bandwidth to analyze and seize the good opportunities and you could end up either missing the great ones or taking on a lemon and getting derailed.

You don’t have to be an MBA to plan a few steps ahead. Not all paths are the same but there are many proven ones, so read the websites of the biggies (Jose Andres, JG, Major Food) and check out their portfolios and learn about how they made it happen and study their successes and failures and then chart out your own.

Do you want to be a group that owns different concepts and brands or do you want to build one strong centerpiece and expand it in different ways?  Do you want to get into CPG’s and onto the shelves of Wholefoods and Wegman’s?  Do you want to be on tv and deal with the complexities of fame or would you prefer to stay your under-the-radar cool self? Will making content make you content?

If you plan for success with each new venture and consider how you will leverage your gravitas into the next deal, you will build a profitable hospitality group and you will command respect and you will get the best deals and you will prosper and you will find peace and plenty of perch on the Peconic.

HL Lowers Lease Review Fees
by David Helbraun

We have been talking to our clients recently about the lease negotiation process in the hospitality industry – and we hear you when you tell us that it has gotten too damn expensive and too damn long. We know that you rely on accurate budgets and timelines during the startup process, and we want to help keep things in check.  So, I have returned to leading the real estate group and we’re going back to the old school ways of negotiating and – for certain leases – we will offer a cap on our legal fees.

By old school, I mean that instead of endless emails, our real estate lawyers will pick up the phone more, create issues lists and talk it out with the parties to get deals done. And by circumventing the time consuming and money burning redline wars that landlords and their lawyers can’t seem to quit, we intend to make the lease negotiation process more efficient and less expensive for everyone.

Please reach out if you have any questions to [email protected]

The Worker Protection Unit Gears Up
By Lee Jacobs

In the hospitality industry in New York, when you mess with someone’s income it will almost always result in you being the subject of an audit or sued by a lecherous plaintiff’s attorney. And now, here’s Manhattan DA Alvin Bragg jumping on the pile.

Mr. Bragg and his office have created what they are calling the Workers Protection Unit, run by the DA’s office and designed to criminalize and prosecute any employer who commits wage theft or otherwise harass their employees.  And, of course, the hospitality industry will be the target of many of these investigations. So people, let’s clean up our act and make sure that we are doing everything in our power to be operating withing compliance of the law.

Here are four things to be on the lookout for when it comes to tip pool compliance in the hospitality industry in New York:

1. Fair distribution of tips: Employers must ensure that all tips are distributed fairly among all eligible employees. New York defines tip eligible persons as only those that are customer facing in traditional roles, like servers, bartenders, and other front-of-house staff.  Those tips must be distributed fairly and equitably and never be shared with back-of-house employees, such as cooks and dishwashers, who do not typically receive tips, and which the law specifically excludes. Employers must also ensure that they do not take a share of the tips for themselves, as this is illegal under New York law.
2. Accurate record-keeping: Employers must maintain accurate records of all tips received and distributed among employees. This includes keeping detailed records of tips received by each employee, the amount of tips distributed to each employee, and any deductions made from tips, such as credit card processing fees. Accurate record-keeping is important for ensuring compliance with tip pool regulations and for defending against any legal challenges.
3. Tip Credit Compliance:  The tip credit allows employers to pay tipped employees less than the minimum wage as long as the employees’ tips bring their total compensation up to at least the minimum wage. Only those employees who meet the 80/20/30 rule requirements can have a tip credit taken against their hourly wage (and participate in the pool itself). To that end, employers must ensure that tipped employees spend no more than 20% of their shift (and/or no more than 2 hours of particular workday) performing duties that do not directly generate tips, such as cleaning or stocking.
4. Proper training and education: Employers must provide proper training and education to all employees about tip pool regulations and their rights and responsibilities under the law. This includes informing employees about the rules for sharing tips, the importance of accurate record-keeping, and how to report any violations of tip pool regulations. Employers must also be prepared to answer questions from employees and to provide support in the event of any disputes or legal challenges.  What does this mean?  Have up-to-date and compliant handbooks, tip pooling/sharing agreements and training materials.

Proper tip pool compliance is crucial for the hospitality industry in New York to ensure fair compensation for all employees. By keeping an eye out for fair distribution of tips, accurate record-keeping, and proper training and education, and actively monitoring and auditing your pools to make sure they are functioning as intended, employers can help ensure that they are in compliance with tip pool regulations and avoid very costly legal challenges or negative publicity.
Lee and his team will be discussing these topics and more in a special HR Confidential webinar on April 26 at 11am. Please join us by registering here!

Fraser Feeds the Industry

Our good friend and client, John Fraser (Iris, La Marchande, North Fork Table, Edition Hotels) has unveiled a cool new concept he’s calling The Industry Table.  It’s novel in that John is inviting industry folks to dine at his restaurants, not at a minimal discount but at cost! If you are an industry person and you make a reservation at a JF restaurant, there will be no markup on the food (you pay for the booze).  It’s John’s way of improving access to restaurants for those who work in it while also strengthening and giving back to the hospitality community.

Read more about it here: https://www.jfrestaurants.com/industry-table/

L.A. Report
By Eddie Navarette

Currently, LA restaurant owners are far from optimistic. The continuing rain has caused a significant impact to our patio-driven restaurants and increased food costs and gas bills (up 300%!) continue to be a challenge. Open market State Full Liquor licenses have stabilized from last year to $150k on average.

For trends, we continue to see a lot of QSR concepts popping up with remote commissary kitchens. Organic wines remain a driver of many wine lists and mocktails have also been hot in the LA restaurant scene.

Like our friends in NYC, LA is also in limbo with its outdoor dining program. We anticipate that the city will treat our outdoor structures as permanent and that they will need to be built to code.  Currently, many operators are challenged with leaving their substandard patio structures in place until the city releases a final outdoor dining policy.

Eddie Navarette and his consulting company, FE Design and Consulting, work with many, many LA operators.
fedesignandconsulting.com

Other Webinars You Won’t Want to Miss!

Why You Should Form A Management/Payroll Company
Hosted by: Lee Jacobs & Andrew Fine
April 17, 2023, 11am-12pm

Confused about the differences between joint liability and joint employer status? Do you have multiple locations and share employees? Is your payroll spread across different entities? Do you have a manager (or other high-level employee) performing duties for multiple entities, but is only being paid by one? If so, then you must attend this webinar, where we will discuss the reasons for forming a management and/or payroll master company.

HR Confidential: Waitstaff Lawsuits Are on the Rise! New Variants are on the Loose
Hosted by: Lee Jacobs, Chloe Brownstein & Claudia Santaly
April 26, 2023, 11am-12:30pm

You are cordially invited to a special meeting of HR Confidential, where Lee and his team will discuss the staggering number of waitstaff lawsuits and the new variants (see what I did there) that are on the rise.  During this webinar, we will focus on three of the areas we are seeing with greater regularity, all dealing with employee wages: (1) misclassification (independent contractor vs. traditional employee; exempt vs. non-exempt from overtime); (2) frequency of pay (weekly pay for manual laborers); and (3) blended overtime.

How to Protect and Monetize Your Brand
Hosted by: Hamutal Lieberman & David Helbraun
May 15, 2023, 11am-12pm

Join our Trademark Group for tips, tricks and guidance on how you can both protect and monetize your hospitality brand. A brand is not just a cute name – it can actually make you money, and the greater its value, the more important it is that you make sure your brand is fully protected. We will be discussing how to develop a brand that you can own and protect, and then the ways that you can further exploit it to make money.

As Jerry and the Boys like to say: On the bank’s green edge it will grow, grow, grow.

Here’s to growing and thriving together!

Take care,

David