Equal pay effects and other lessons from day’s panels

FoodBizNJ: The Business of Restaurants

Marilou Halvorsen, president of the New Jersey Restaurant & Hospitality Association, talks with an attendee after speaking on the Legislative Update: Labor and Workforce panel during FoodBizNJ.-(PHOTOS BY AARON HOUSTON)

Restaurant operators could be found in violation of New Jersey’s Equal Pay Act without deliberately acting in a discriminatory fashion.

Restaurant operators could be found in violation of New Jersey’s Equal Pay Act without deliberately acting in a discriminatory fashion.

That was one of the takeaways from the Legislative Update panel at NJBIZ’s April 24 FoodBizNJ event in Somerset.

“[Breaking this law] does not require an intention to treat people in a discriminatory way,” said the panel’s moderator, Gary S. Young, partner at Scarinci Hollenbeck. “What you all need to do is take a look at your pay policies, your job descriptions, your handbooks, because it’s going to have implications for each and every one of them.”

The Equal Pay Act, intended to strengthen protections against discrimination, is one of a few items that have recently come down the legislative pipeline spelling out new rules for restaurant owners.

The panel also included New Jersey Restaurant & Hospitality Association President Marilou Halvorsen, Cape May Brewing Co. Founder Ryan Krill and New Jersey Farm Bureau President Ryck Suydam.

Young, who is general counsel to the NJRHA, said employers should review pay structures and handbooks to ensure they’re complying with the Equal Pay Act, which takes effect July 1.

One significant change under the law: Employees who feel they’ve been discriminated against can go back six years for damages.

“It’s a watershed change,” Young said. “I urge you all to take a proper look to make sure you’re doing everything you can [to address] wage disparities. I can say to you that a failure in this area could result in a failure of the business altogether.”

Another new law affecting the restaurants is the Paid Sick Leave Act, which mandates one hour of paid sick time for every 30 hours worked up to a total of five days. It applies to all businesses with one or more employees. The law started as a municipal ordinance in Jersey City and then New Brunswick.

“When the New Brunswick ordinance came up, the mayor reached out to me saying, ‘What do we need to do to make it work?’” Halvorsen recalled. “So we talked about it and we got what we needed [in the bill] — blackout dates, strong notification of time needed, how the time is taken, rate of pay. Things that just allow businesses to maintain.”

Halvorsen said when Sen. Loretta Weinberg, D-37th District, approached her seeking support for a statewide Paid Sick Leave Act, she told her that as long as the concerns of the restaurant industry were taken into account, she would support the bill.

“It’s the right thing to do, and that’s what you call compromise which, unfortunately, you don’t see too much,” said Halvorsen.

Young surmised that the state bill was a good thing to avoid complications for business owners.

“What if you’re an operator and you operate in 10 different locations, three of which have the [paid sick leave] ordinance and seven don’t? It becomes a nightmare for businesses to try to comply,” he said.

Beyond politics, other panels discussed the ins and outs of successful franchising and food and beverage trends to consider.

Franchise Business: The Secret Sauce to Success

The trifecta for success in the franchise space is a keen knowledge of three things: your brand, finances, and the limitations or your location. That’s according to Marce Zuchovicki, business coach and founder at virtual bookkeeping service Jalima & Associates.

Brand knowledge and understanding is important for both franchisees and franchisors — the former, to decide what business is right for someone to franchise, and the latter, to impart your brand authentically on any franchisee.

John Helm, a franchisee with 15 Jersey Mike’s sub shop locations throughout New Jersey and Pennsylvania, provided some suggestions for what to consider before buying a franchise.

“Does the brand align with your values?” he asked. “Does it align with your beliefs? What are the people like at the top? I know the first thing that brought me to Jersey Mike’s, it wasn’t the people — I took a bite of the No. 9 [sandwich] and it was unbelievable — but when I met them, I was instantly attracted to who they were as people, their passion about their brand.”

From a franchisor’s perspective, knowing your brand also includes knowing who you want to trust with your business model.

“[With the Franchise Disclosure Document] you’re laying out your business model; you’re describing your footprints,” said panel moderator Beth Stearns, who chairs the retail and restaurant law practice group at McNelly & Goldstein. “You’re showing financial information and talking about the brand. You’re also putting a lot of information to your franchisees that are very helpful for them to make their decisions.”

Zuchovicki suggested franchisors keep track of their own finances, rather than relying on CPAs to run their books.

“If you’re a franchisor and you have to record your sales report, you know exactly what your return on investment is, what is the cost of goods sold, what the expenses are,” she said. “When you allow someone else to manage your finances, you really don’t know how much you have.”

Zuchovicki said this contributes to a perception by the business owners that there isn’t access to capital when they’re looking to grow.

“Access to capital is always available,” she said. “We live in a capitalist society. People are always wanting to invest or lend. But the reason people don’t [think they] have access to capital is because they’re not organized correctly, because people use their CPAs to manage their books rather than them having access to exactly what they’re doing and how they’re spending.”

In terms of location, a knowledge of traffic metrics — cars driving by, or foot traffic — will help guide location selection and sales goals thereafter.

“It’s a partnership between the franchisor and the franchisee,” explained Stearns. “It’s not only where you’re going to be in the shopping center, it’s whether you can enter a nontraditional location like airports, strip centers and universities. Can you make it in one of those locations?”

Restaurants and Beverage: Trends and Challenges

Attracting millennials is far from a new goal, but it’s a premier driving force in today’s food trends.

Sourcing locally and making a visually appealing end product to providing creature comforts and appeal to millennials was advice repeated often during a panel on beverage trends.

“We all need to offer more, an experience to everyone,” said Jeanne Cretella, president at Landmark Hospitality. “A lot of our millennials are living in apartments that are [tiny]. So they come into a restaurant and they look at it as an extension of their home.”

James Priest, founder at The Referend Bier Blendery, spoke about how to represent the care and time that goes into a product.

“Every time you’re spending $18 per pound for local blood oranges instead of whatever the normal price is [for nonlocal], when you’re making those fundamentally more expensive value judgements because you care about supporting local or having whole unfrozen fruit in season, those are important things [to represent],” said Priest.

Priest’s Blendery is one of only three beer producers in the country that relies exclusively on wild fermentation. Whereas other beer might take two weeks to brew and get out the door, his takes an average of 10 and a half to 12 months.

“A lot of our costs are because of the time of rented space and utilities. It’s a question of being able to adequately convey the lengths that you’re going through with your product,” Priest said.

Other panelists discussed the need to produce a visually compelling end product in a time when many people, not just millennials, are constantly snapping photos on their phones to share with friends.

“It’s not just throwing up a picture on Instagram, it’s taking the moment to assess. How do I want this to be visually pleasing? Sometimes it’s not, it’s just flat. I’ve started reading photography books to start to create my palate of my brand,” said Juice Basin founder Regine Flimlin.

The panel also addressed the food delivery service trend and how it isn’t necessarily sustainable for small a la carte restaurants to pay for a delivery service when their profit margins are already low.

Said restaurateur Marilyn Schlossbach: “The wonderful thing about trends is that the more they continue to grow momentum, the more affordable they are to the consumer, the wholesaler and the retailer. Eventually the trend might come into a place where its affordable where a company might understand how limited our resources are as an a la carte restaurant.”

Gabrielle Saulsbery
Albany, N.Y. native Gabrielle Saulsbery is a staff writer for NJBIZ and the newest thing in New Jersey. You can contact her at gsaulsbery@njbiz.com.

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