Sabor y Lucha: The Challenges Facing Hispanic Restaurant Owners Today
It is no secret that Hispanic-owned restaurants add a rich flavor of diverse customs, traditions and culture to the American restaurant scene. However, these restaurants face a unique set of challenges that often go unrecognized. From navigating cultural barriers and accessing capital to weathering economic storms and addressing labor shortages, Hispanic restaurateurs face tough challenges while demonstrating remarkable resilience in their pursuit of success.
Some of the challenges facing Hispanic-owned restaurant owners include:
1. Language and Cultural Barriers:
While Hispanic culture is celebrated in the culinary world, language and cultural differences can still present challenges in business operations. Negotiating contracts, navigating legal requirements, and communicating effectively with suppliers and government agencies can be more difficult for those whose first language is not English.
2. Access to Capital:
Securing funding remains a significant hurdle for many Hispanic entrepreneurs, including restaurant owners. Traditional lending institutions may be hesitant to invest in businesses owned by minorities, leading to a higher rejection rate for loan applications. Limited access to capital can hinder expansion plans, marketing efforts, and the ability to weather economic downturns.
3. Labor Shortages
The restaurant industry has been grappling with labor shortages in recent years, but Hispanic-owned restaurants can be particularly vulnerable. Many rely on a network of family and friends for staffing, which can limit their pool of potential employees. Additionally, concerns about immigration enforcement can create a climate of fear and uncertainty, making it harder to attract and retain workers.
4. Economic Disparity:
Hispanic communities have been disproportionately affected by economic downturns, and restaurants are often the first to feel the impact. Lower disposable income in these communities can translate to fewer customers and lower sales. The COVID-19 pandemic exacerbated these challenges, forcing many Hispanic-owned restaurants to close their doors permanently.
5. Discrimination and Bias:
Despite the growing popularity of Hispanic foods, implicit bias and discrimination can still affect restaurant owners. They may face challenges in securing favorable leases, accessing prime locations, or receiving fair treatment from suppliers and vendors.
Overcoming Challenges:
Despite these obstacles, Hispanic restaurant owners continue to thrive, driven by their passion, resilience, and entrepreneurial spirit. Along with support from local Hispanic communities, business owners like Rocio and Jeff Johnson of SalesHEAD Services are working tirelessly to reach Hispanic owners to help level the playing field.
Rosie Moreno-Johnson -SalesHEAD Services
“We are uniquely positioned to provide Hispanic business owners with education, support and services to help their businesses thrive financially,” says Rocio. Born in Mexico City, Rocio (Rosie) moved to the US as a child but continues to practice her Mexican traditions and customs. “Speaking both English and Spanish fluently, I am able to work with our owners in whatever language they are most comfortable, and I have lived many of the challenges our customers are facing such as working with family, dealing with immigration issues and learning how the US legal and tax system affects business”.
“After sixteen years of Human Resource experience, I agreed to join my husband’s business, SalesHEAD Services. At the time, SalesHEAD was a POS System and Merchant Services provider. Now, we provide financial services including Bookkeeping, Payroll, Tax, Merchant Services and POS Systems to Hispanic-owned business”. “Together, we are a powerful combo and are living our passion by providing owners with the support and services necessary to ensure their continued success and growth!”
Mind Games & Menus
Unpacking the Psychology of Dual Pricing for Restaurant Owners
Dual pricing, the practice of charging different prices for cash versus credit card payments, has become increasingly common in the restaurant industry. While it's often presented as a way for businesses to offset credit card processing fees, the psychological impact on consumers can be complex and nuanced.
The Power of Framing
How dual pricing is presented can significantly influence customer perception. Restaurants often frame it as a surcharge for credit card use or a discount for cash payments. Research suggests that loss aversion – the tendency to feel the pain of a loss more strongly than the pleasure of a gain – makes surcharges feel more punitive than discounts feel rewarding. Thus, framing dual pricing as a cash discount might be more palatable to consumers.
The anchoring effect also comes into play. When diners see the higher credit card price first, it acts as an anchor, making the cash discount seem more significant and enticing.
Fairness & Transparency
Transparency is crucial when it comes to dual pricing. Clear and upfront disclosure of the policy is essential to avoid feelings of deception or unfairness. When customers feel like they're being tricked, it can damage the restaurant's reputation and customer loyalty.
However, even with transparency, the perception of fairness can vary. Some consumers view dual pricing as a reasonable way for businesses to recoup costs, while others see it as a discriminatory practice that penalizes those who prefer to pay with credit.
Dream BIG
〰️
Dream BIG 〰️
The Menu as a Psychological Tool
Menu design can subtly influence customer choices regarding dual pricing. For instance, highlighting the cash discount price prominently or placing it next to the credit card price can draw attention to the potential savings. Some restaurants even use decoy pricing, listing an overpriced item to make other options seem more reasonable in comparison.
Consumer Segments & Payment Preferences
Different consumers react to dual pricing in different ways. Price-sensitive diners might be more inclined to pay with cash to take advantage of the discount, while others may not be bothered by the surcharge and prefer the convenience of credit.
Payment preferences also play a role. Some customers simply prefer to use credit cards for rewards or budgeting purposes and might be willing to pay the extra fee.
The Psychology of Discounts
Discounts, even small ones, hold a strong psychological appeal. The thrill of getting a deal can trigger a sense of satisfaction and encourage consumers to spend more. The "zero cost effect”, where a free item or discount feels particularly valuable, can be leveraged with cash discounts.
The Impact on Restaurant Reputation
Dual pricing can be a double-edged sword for restaurants. When implemented transparently and fairly, it can be seen as a cost-saving measure that benefits both the business and cash-paying customers. However, if it's perceived as manipulative or discriminatory, it can backfire, leading to negative reviews, decreased customer loyalty, and even boycotts.
In Conclusion
The psychology of dual pricing in restaurants is a fascinating field with implications for both businesses and consumers. By understanding these psychological factors, restaurants can make informed decisions about how to implement dual pricing in a way that maximizes benefits while minimizing potential drawbacks. Ultimately, the key is transparency, fairness, and a focus on providing value to customers.
OUR TEAM
Jeff and Rosie Johnson have been helping independent restaurant owners build wealth from their businesses for years by providing financial services such as Bookkeeping, Payroll and Tax as well as Merchant Services and Point-of-Sale Technology.
Managing Restaurant Inventory for Greater Profitability
The primary difference between cash and restaurant inventory is that one is kept locked in a safe (or a bank account) and the other is sitting on your walk-in and storeroom shelves.
Here's another difference: cash can be used to pay bills, buy more product or pay your staff. Not so with inventory. The only way to turn inventory into cash is to sell it. But if you have more product on the shelf than you can sell before your next cash need, you could find yourself scrambling to make payroll or time-sensitive obligations.
Restaurant operators continually seek the right amount of inventory to carry. Too little and they risk running out of one or more key products. Too much and they tie up their valuable cash and run the risk of higher food cost through spoilage and waste. Here are a few key insights to help keep your inventory levels accurate through proper restaurant inventory management.
Well managed restaurants typically carry 5-7 days of food in inventory, enough to safely get them through until the next delivery, with a “little” cushion built in. They do so by establishing proper build-to par levels. Order amounts are based upon the difference between what they have on hand and what is needed to "build up to" the designated par level. This is considered one of the most critical best practices in restaurant operations for maintaining proper inventory.
Many RestaurantOwner.com members manage their purchasing and par levels by using a product ordering tool often referred to as an Order Guide.
While every restaurant inventory management process is different - both in types of products and how much they use - it's typical to get more frequent deliveries (2-5 times a week) for perishables such as produce, dairy, meat and seafood, whereas some refrigerated, canned and dry goods need only be delivered once or twice a week.
Designated order frequency, with specific days of the week for delivery, is essential to setting proper par levels. For example, many restaurants set a twice a week order frequency for broad-line suppliers. Orders are placed on Mondays and Thursdays for Tuesday and Friday delivery, respectively. Par levels are set based upon anticipated usage between deliveries.
Past order history is the best indicator of anticipated usage.To determine usage, calculate the total number of purchases over the last 6 - 8 weeks for each product you carry, then divide that by the number of days within the period (6-week = 42 days, 8-week = 56 days). This will result in the average daily usage for each product. Set your par based upon past usage and an acceptable cushion to get you through in case of a delivery shortage.
Most vendors, especially broad-line distributors, can provide you with a descending case report for a specific time period.
Setting proper par levels is good business. It takes the guesswork out of purchasing and enables your entire staff, not just managers, to participate in the restaurant inventory purchasing process.
Moreover, it provides consistency and repeatability – the most important part of the guest experience.
Contact Jeff or Rosie today for more tips on restaurant inventory management and ask about accessing the inventory management forms and tools!
Thanks to our friends at RestaurantOwner.com for providing this insightful article and please visit them with the above link.
“Inventory is only an asset when it’s moving, otherwise, it’s a liability.”
Bookkeeping Basics for Start-ups & Small Businesses
Bookkeeping is a crucial aspect of running a small business, as it helps you track your income and expenses, make informed financial decisions, and ensure compliance with tax regulations. Here's a basic guide to get you started:
STEP 1: Choose an Accounting Method
An accounting method refers to the set of rules and procedures a company uses to record, measure, and report its financial transactions. The choice of accounting method influences how a company recognizes revenues and expenses, which in turn affects the financial statements and ultimately, the tax liability.
There are two main accounting methods:
Cash Basis Accounting:
Revenues are recognized when cash is received.
Expenses are recognized when cash is paid.
Simpler and easier to understand, often used by small businesses or individuals.
Accrual Basis Accounting:
Revenues are recognized when earned, regardless of when payment is received.
Expenses are recognized when incurred, regardless of when payment is made.
Provides a more accurate picture of a company's financial performance, often used by larger businesses.
The choice between cash and accrual accounting depends on several factors, including the size and nature of the business, industry regulations, and tax requirements. Generally Accepted Accounting Principles (GAAP) require accrual accounting for most businesses, while the Internal Revenue Service (IRS) allows smaller businesses to use cash accounting.
STEP 2: Set Up a Chart of Accounts
A Chart of Accounts (COA) is a comprehensive list of all the financial accounts used by a business to categorize and track its financial transactions. It serves as an organized index of these accounts, allowing for efficient recording and reporting of financial data.
The COA is typically organized into five main categories, mirroring the structure of financial statements:
Assets: Resources owned by the business, such as cash, inventory, equipment, and accounts receivable.
Liabilities: Debts or obligations owed by the business, such as accounts payable, loans, and accrued expenses.
Equity: The owner's investment in the business, including retained earnings and owner's capital.
Revenues: Income generated from the business's activities, such as sales, service fees, and interest earned.
Expenses: Costs incurred in operating the business, such as rent, salaries, utilities, and advertising.
Each account within these categories is assigned a unique number or code for easy identification and reference. This systematic structure enables businesses to track every financial transaction accurately, ensuring that debits and credits are properly balanced.
The COA is essential for generating financial reports like the balance sheet, income statement, and cash flow statement. These reports provide valuable insights into the business's financial performance and position, aiding in decision-making and financial planning.
STEP 3: Track Income and Expenses:
Tracking income and expenses is critical to running a successful small business. And to do this accurately, open a separate business checking account! If you are serious about your business, this is not optional. Mixing personal and business funds makes it nearly impossible to get a true picture of your business’s financial health. Additionally, it makes for a lot of extra work at tax time. So don’t mix your money. Open that business checking account right now!
Email Me for Help with a Business Checking Account Schedule Call for Help with Your Business Checking Account
So back to tracking income and expenses. There are several ways to handle recordkeeping including pen and paper, spreadsheets or utilizing any of the accounting software in the market Quickbooks, Freshbooks, Xero are but a few of the options and their starter plans are normally in the $20 to $35 per month range.
Income
When recording your business’s income, capture all sales, payments received, and any other source of revenue. Some businesses have distinct sources of revenue that they wish to track separately. An example would be a landscape company that performs work for residential customers as well as commercial customers. Since these are two distinct groups of customers, it can be very helpful to keep your revenue segmented (as well as your expenses) so that you can track profitability on each. Refer back to the Chart of Accounts to accomplish this and simply create a Residential Sales Revenue Account and a Commercial Sales Revenue Account, and don’t forget to do the same for expenses if and where possible.
Expenses
Record all purchases, payments made, and other business-related costs. Since you will likely have more expense transactions than income transactions, you have to be diligent here. Keep all receipts and invoices and utilize software tools whenever possible. Accounting software such as Quickbooks (and others) enables you to quickly scan receipts back to the software. If you don’t use these tools, then make sure you get those expenses on paper or in a spreadsheet at least once per week so you don’t risk forgetting what it is that you purchased.
STEP 4: Reconcile Bank Accounts
We should all know this one but many of us today prefer to simply check our banking app each day to make sure we have money. Although this may work for your personal account, your business account is too important to risk any mishaps. When you get your monthly statement, sit down and take a few minutes to review your deposits and make sure they line up with your expected sales revenue categories. If you accept credit and debit card payments, you will also need to pull your processing statement monthly.
From an expense standpoint, go through each transaction on your checking statement and make sure you have captured every expense into whatever financial system you are using (pen/paper, spreadsheet, software). And don’t forget any credit cards that you may use for business expenses. Grab those credit card statements and check each transaction as well against your accounting system.
STEP 5. Generate Financial Reports
Business financial reports are formal documents that summarize a company's financial performance and position over a specific period. These reports provide essential information for both internal and external stakeholders, including managers, investors, creditors, and regulatory authorities.
There are three main types of financial reports:
Income Statement (Profit and Loss Statement):
Summarizes a company's revenues and expenses over a specific period (e.g., monthly, quarterly or annually).
Shows the net income or loss, which indicates the profitability of the business.
Helps assess the company's ability to generate profits and its operating efficiency.
Balance Sheet:
Provides a snapshot of a company's financial position at a specific point in time.
Lists assets (what the company owns), liabilities (what the company owes), and equity (the owner's investment).
Helps assess the company's financial health, solvency, and liquidity.
Cash Flow Statement:
Tracks the flow of cash in and out of a company during a specific period.
Classifies cash flows into operating, investing, and financing activities.
Helps assess the company's ability to generate cash, meet its financial obligations, and invest in growth.
STEP 6: Consider Professional Help
If bookkeeping becomes overwhelming, consider hiring a bookkeeper or accountant.
They can ensure accuracy, provide insights, and handle complex tax requirements.
And you can always Book a Call with SalesHEAD Services for more helpful information, advice on bookkeeping, payroll, business and personal tax as well as merchant services.
For further information and detailed guidance, you can consult resources like:
NerdWallet: https://www.nerdwallet.com/article/small-business/small-business-bookkeeping
Forbes Advisor: https://www.forbes.com/advisor/business/small-business-bookkeeping/
By following these steps and utilizing available resources, you can establish a solid bookkeeping foundation for your small business.
BIG OLD HAIRY MISTAKE #1 TO AVOID AT START-UP
Approximately 50,000 new restaurants will open in the US this year. That’s about 137 new concepts opening their doors each day!! Historically, about 60% of these restaurants will fail in their first year. That means six out of ten will close their doors within 12 months. With the health of our business riding on the restaurant industry, our primary ‘reason for being’ is to help owners become wildly successful by providing financial services and technologies to manage and grow their money.
With years of working with both new and established restaurants, we believe we have “seen it all”. Strong concepts with highly skilled entrepreneurs can fail just as easily as a front-yard lemonade stand while a burger and shake drive-through joint can take off like a bat out of hell. Looking back on our experience, we have found that there are several things that successful restaurants tend to do better than those who struggle and we wanted to share that insight here.
BIG OLD HAIRY MISTAKE # 1 that RESTAURANT START-UPs MUST AVOID
Good owners can wait tables, work the line, wash dishes, deal with vendors, do the books and competently hire and train staff. But just because you can do these things well, doesn't mean you should. Oh no, you may say, we are a start-up and money is tight, we have to wear a lot of different hats! And we say, of course you do, but only to the extent necessary to ensure that your process and procedures are sound. Your number one job as a restaurant owner is to create and maintain a vision for success and that, my friend, will be covered in another article.
As the owner, you need to develop your restaurant concept so it can run perfectly well without you, because you will want to take a vacation, be able to care for family members, or even get sick yourself from time to time. That means you need to develop operating procedures for every aspect of the restaurant and document them so that others can step into these roles as needed. And do it before opening, even before selecting your location.
Just to be clear, BIG OLD HAIRY Mistake # 1 is…
Failing to Document Your Operational Systems and Procedures Before Opening
Why so early? Well, those operating procedures will help you figure out how much space you need to run your restaurant, how many employees you'll need to hire and how you'll train them, and what equipment you'll need to install. You'll want to know all of this when you are putting together your financial projections and your buildout budget, as well as when you start hunting for real estate.
Take the time to map out all these details early and it will save you a great deal of scrambling later, as well as protect you from making expensive mistakes in designing and equipping your operation.
We know that creating systems and processes is typically the last thing an owner wants to do. And we have watched countless restaurants open their doors without even a single recipe written down! Believe me, it happens all the time. But remember, with a 60% failure rate in year one, why take the risk? And if you are betting your and your family’s financial futures on this venture, how can you justify not doing everything possible to mitigate the enormous risks you're taking?
In case you are not yet convinced, let us share some of the enormous benefits systems and procedures provide to your restaurant business and how these systems will drive profit to your business and create wealth for you and your family!
Core Benefits of Systems & Procedures
Consistency = Predictable Quality: Detailed checklists and procedures help ensure that every dish, drink, and customer interaction meets your standards. This builds customer trust and loyalty, leading to repeat business and positive word-of-mouth.
Efficiency = Cost Savings: Clear processes eliminate wasted time, redundant work, and errors. Efficient kitchens reduce food waste, and streamlined ordering prevents costly overstocking. Every dollar saved goes towards your bottom line.
Training = Reduced Onboarding Time: Documented procedures make it much easier to train new staff. This minimizes training costs, avoids onboarding delays, and protects your restaurant's quality even when facing turnover.
Accountability = Fewer Mistakes: When everyone knows the 'right way' to do things, mistakes and misunderstandings decrease. This cuts down on costly remaking of food or drinks, and prevents dissatisfied customers!
Scalability = Easier Expansion: Well-defined systems create a blueprint for growth. You can easily replicate your success in new locations and train franchisees, all while maintaining the quality that made you successful in the first place.
How These Benefits Impact Profit
Increased Revenue: A combination of satisfied customers, efficient service, and consistent food and drink quality allows you to handle higher order volumes and potentially even increase prices over time!
Cost Control: Minimizing waste, streamlining operations, and reducing errors directly save money and increase profit margins.
Reduced Staffing Costs: Effective systems make staff more self-reliant during busy shifts, allowing you to manage with a leaner team without sacrificing service.
Protection Against Risk: Procedures for food safety, sanitation, and cash handling reduce the risk of health code fines, lawsuits, or negative publicity that can severely damage a new business.
It is always tough to get started, so here are some key areas that you should focus on when working on your systems and procedures:
Recipes and Food Preparation: Precise recipes and portion controls ensure every item meets expectations and costs are controlled.
Ordering and Inventory: Systems for tracking ingredients and supplies prevent costly spoilage and stock-outs that can disrupt service.
Customer Service: Outlined greeting standards, complaint handling procedures, and steps for building relationships create a memorable and positive dining experience.
Financial Management: Procedures for sales reporting, cash handling, and accounting ensure accurate tracking and protect your business from financial problems.
And a few final tips for implementing your new-found commitment to creating a wildly successful restaurant!
Document EVERYTHING: Don't just rely on memory - write it down, from prep to plating instructions to closing procedures.
Simplicity is Key: Procedures should be clear and easy for staff to understand and follow.
Flexibility: Be open to adjusting your systems as needed. As you gain experience, you'll discover ways to refine.
Involve Your Staff: Get their feedback on procedures during the creation process for better buy-in and practicality.
Want some help deep-diving into various systems and procedures? SalesHEAD has numerous system templates, tools and training available to help you in your journey including
Kitchen Management Restaurant Checklists Menu Costing Recipe Management System
Prime Cost Tracking Templates Labor Scheduling Cashier/Server Checkout Procedures And more…
Sign Up for our Weekly Restaurant Tips or Contact Us for More Information
We will continue to bring you the BIG OLD HAIRY Mistakes to avoid in our upcoming weekly issue as well as other informative topics about building highly successful restaurant businesses!
Please sign up below to ensure you don’t miss it!
Jeff Johnson, Founder & Chief SalesHEAD at SalesHEAD Services has been helping restaurant owners turn their operations into thriving businesses for years by providing financial services, advice and leading-edge point-of-sale technology.
George McLaughlin & Michael Ball: A Made from Scratch Biscuit Experience
On the Local Leaders Podcast last month, we had the honor of talking with George McLaughlin and Mike Ball of Vicious Biscuit, a South Carolina company poised for growth.
In this episode, George and Mike discuss building leaders, creating a biscuit experience, growth plans and much more.
Check out our clip from the podcast below!
For the full podcast version and to choose your favorite podcasting channel, please use this link…