Third Party Deliver Fee Cap / Hotel Loading Zones

Recently, the Oregon Restaurant & Lodging Association (ORLA) went to bat on a couple of issues affecting restaurants and lodging properties in Portland and we came away with two huge wins!
 
On the restaurant side, ORLA was instrumental in securing an extension of the 10% Delivery Fee Cap for an additional eight months. The ordinance takes effect June 29 when the ordinance from 2020 was set to expire. ORLA will now work with restaurant owners, the City of Portland, the third party delivery companies and other stakeholders on a proposal around a permanent delivery fee cap within the city limits. A huge thanks to the restaurant operators who testified and shared their stories to City Council.
 
On the lodging side, ORLA reached out and communicated with Commissioner Hardesty’s office about proposed changes to hotel loading zones that would have turned the current 15-minute zones into 3-minute zones. Our discussions were successful in maintaining the 15-minute loading zones.  ORLA pointed out that as Portland hotels continue to recover from the last two and a half years, making it more difficult and less welcoming for visitors to enjoy our city is the opposite of what we need to be doing.
 
Advocacy on behalf of the hospitality industry and our members is at the core of what we do at ORLA and we appreciate your involvement and your support as we continue to fight on your behalf.

Questions? Contact ORLA Regional Representative Steven Scardina or ORLA Director of Government Affairs Greg Astley.

Inflation / Job Loss / Travel Forecast 

More than two years into the pandemic and we're still realizing the effects of Covid on travel, supply of goods, and inflation. We appreciate the work our national partners do to provide valuable insights and data highlighting the ongoing economic issues facing our industry.

RESTAURANTS
This week, the National Restaurant Association released an updated summary of the Misery index based on the May jobs and sales reports. While job growth is still slow, sales are continuing to grow. American restaurant owners and operators are experiencing the impact of several global factors influencing food supply. The war in Ukraine, India’s record heat wave, and delayed planting in China last year mean that wheat is in short supply. With wholesale food prices already up nearly 18% in the last 12 months, the growing list of unavailable or items in short supply is adding pressure to an already strained industry.

Highlights from the June 2022 Misery Index:

• Eating and drinking places added just over 46,000 jobs in May, the fifth consecutive month of growth below 100,000 jobs. No other industry has a longer road to reach a full employment recovery.   
  • Despite steady growth over the last year, the industry still hasn’t recovered 750,000 jobs – or 6.1% – of the jobs lost in the pandemic. 
• 90,000 restaurants closed permanently or long-term because of the pandemic. 
  • The rebuilding of the restaurant and foodservice workforce is being hampered by the most severe labor shortage on record. 
• Wholesale food prices increased more than 15.6% during the last 12 months (May 2021-May 2022). This was the 10th consecutive month of double-digit gains (on a 12-month basis). 
• Menu prices rose 7.4% during the last 12 months (May 2021-May 2022), the largest 12-month increase since 1981. The recent rise in menu prices was due largely to higher input costs – particularly food and labor. 

LODGING
A recent survey commissioned by the American Hotel & Lodging Association (AHLA) shares how new concerns about gas prices and inflation are impacting Americans’ travel plans in a variety of ways. Majorities say they are likely to take fewer leisure trips (57%) and shorter trips (54%) due to current gas prices, while 44% are likely to postpone trips, and 33% are likely to cancel with no plans to reschedule. 82% say gas prices will have at least some impact on their travel destination(s).

The survey of 2,210 adults was conducted May 18-22, 2022. Other key findings include:

• 57% are planning a family vacation this summer, a majority of which plan to stay in a hotel
• 60% say they are likely to take more vacations this year compared to 2020-21
• 60% are likely to attend more indoor gatherings
• 90% say gas prices are a consideration in deciding whether to travel in the next three months
• 82% say gas prices will have at least some impact on their travel destination(s) 
• 90% say inflation is a consideration in deciding whether to travel in the next three months 
• 78% of Americans say that COVID-19 infection rates are a consideration in deciding whether to travel this summer

AHLA recently relaunched its Hospitality is Working campaign with a focus on reigniting travel across the nation and highlighting hotels’ positive economic impact in cities across the country. With travel ramping back up, hotels have embarked on an unprecedented hiring spree to recruit hundreds of thousands of workers for more than 200 hotel career pathways. 

Bottom line, restaurant and lodging operators are feeling the same economic pressures that our customers and guests are, and we’re always going to work hard so we can keep serving them, our employees, and our communities. 

Stay strong, serve well!

ERC Eligibility / National CEO Presence / Board Nominations

Eligibility Clarification for 2021 Q3 Employee Retention Tax Credits
The law states there are two criteria by which an employer may qualify for the Employee Retention Credit:

• A full or partial suspension of the operation of their trade or business during the quarter due to government orders limiting commerce, travel or group meetings due to Covid-19
• A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter were less than 80% of the gross receipts in the same quarter in 2019

Much discussion has been had regarding the first test and if a partial suspension of business, even for just a few days in a given quarter, would still trigger the credit. The answer is yes as the law does not extrapolate that there is a certain number of days that need to be affected for that quarter to qualify for the credit in that quarter. There has been many interpretations of the law and we would highly recommend any company not qualifying under the revenue based test to document the ways government orders limited their ability to operate as they move through the process to secure their employee retention tax credits. A special thanks to Jay Torgerson, CEO of Cross Financial for his analysis. To learn more about applying for your employee retention tax credits and for assistance with paperwork, visit ORLA’s ERC Support Center.

AHLA and NRA CEOs to Speak at ORLA's Hospitality Conference
Mark your calendars and plan on attending the ORLA Hospitality Conference September 11-12 in Eugene. We are excited to host both CEOs from our national affiliates for the first time at an ORLA event. Michelle Korsmo, President & CEO for the National Restaurant Association and Chip Rogers, President & CEO for the American Hotel & Lodging Association will be speaking in person during the kickoff lunch on Sunday. This is a rare opportunity to hear insights directly from these industry leaders on legislative activity in Congress, industry trends, emerging issues, and projected industry recovery. In addition to the general sessions, we have eight breakout sessions including two that will offer a deeper dive on restaurant and lodging advocacy. 

ORLA Board Nominations Committee Convenes in July
Active ORLA members provide the backbone for all association efforts and we remain fortunate in having committed restaurant, lodging, and allied members who serve on ORLA’s Board of Directors. The ORLA Board is made up of 10 restaurant member representatives, 10 lodging member representatives, and 3 Allied member representatives. Board members serve 3 year terms and attend 4 board meetings each year. Those serving are eligible to serve two consecutive terms before reaching their term limit. For ORLA’s upcoming fiscal year beginning October 1 there are 3 openings on the board due to term limits – 1 restaurant, 1 lodging, and 1 allied position. If you are interested in being considered for ORLA Board service please reach out to ORLA President & CEO Jason Brandt.

Sysco Sponsors Teacher Flex Fund
Thanks to our partners at Sysco, the Oregon Hospitality Foundation had the opportunity to extend a small grant application in support of the ProStart program across the state. The Oregon ProStart Teacher Flex Fund encouraged teachers to apply for a $500 grant for to prepare for the 2022–2023 school year. At the teacher's discretion, these funds can be spent on much-needed products or equipment within the classroom to help facilitate their culinary program. Allocations from the $5,000 Flex Fund were made on a first come, first serve basis, and will be dispersed later this month. To learn more about how ProStart is helping foster our next generation of industry leaders, or to see how you can support this valuable career technical education program, visit OregonRLA.org/prostart.

Questions? Feel free to contact your association.

Guest Blog | Porter

Staff shortages are leaving many of us with no choice but to shortchange the guest experience. Here are 5 ways that you can create positive guest experiences with a reduced staff. 

1. Train + Retain
   It may seem counterintuitive to invest more time in your onboarding program, but helping your team quickly become confident experts in their roles will reduce friction down the road. This will lead to fewer mistakes, questions, and underperformance. The quicker that new hires are able to positively contribute to the guest experience, the more quickly they will grow in confidence — an attribute that leads to better performance and greater retention. The Disney Institute has found that when a staff member has confidence in their leaders, they are more likely to make a positive contribution through their work. So by investing in training, you are investing in better customer experiences and greater retention — both big wins when having to deal with reduced staff.
   
   
2. Stay Positive
   It is very natural for the stress of running a business + the pressures of reduced staff to add strain, complications, and weight to our disposition. That weight we carry trickles down into the interactions we have with staff, which adds weight to their already heavy load as well. As that weight mounts on everyone, performance will drop and retention rates will suffer. By maintaining a positive and supportive culture, staff will become more productive during their working hours, more engaging with customers, leading to better experiences, and better staff retention. Headspace found that 79% of workers feel underappreciated, and while there are a variety of reasons for that statistic, the one clear takeaway is that cultivating a positive and supportive working culture will lead to better results for customers, staff, and your bottom line. 
   
   
3. Reduce + Focus
   Every situation is unique, but most operations can become more focused and still offer a great experience. If you are forced to make tough decisions in light of staffing difficulties, use this opportunity to evaluate what you do best and focus on delivering that very best offering for this experience-driven economy. Maybe that means closing down one day a week so you can deliver a great experience the other six. Maybe it means cutting delivery options and focusing on the on-site experience. Only you know your context, but focusing on making it the very best can allow you to keep the value of your business intact while making the best of the situation with reduced staff. 
   
   
4. Move to Digital F&B Ordering
   Whether you are a restaurant, brewery, or any other venue offering food and beverage, move to digital ordering. Some platforms are clunky and will actually slow down your staff, so choose a platform carefully. Porter is one platform that has been able to reduce staff time by 50 seconds per order. That adds up to 58 hours of reduced labor per month at a small food hall! They also have found orders to increase by 20% in ticket size and tips are up 15%, so you save labor and generate revenue. Win-win!
   
   
5. Go Deep with FAQs 
   If you are answering the same questions on a regular basis, invest some time in a deep and engaging FAQ section to your website. This will save your staff time and offer customers a better experience. Even if you don’t have good news, providing quick answers to common customer questions are appreciated and will improve a customer’s perception of your brand. As you build out your FAQ, be sure to cover all of the common questions, but you can also branch out to add personality to the experience by answering less obvious questions, and you can make it more engaging with playful copy, video explanations, and demonstrations. And to help customers find this section of your site, here are Google’s tips for increasing your FAQ’s searchability. By investing in an engaging FAQ, you will improve the guest experience, increase traffic to your website, and reduce staff time in the process. | Bryan Taylor, Co-founder at Porter

Guest Blog | Togather Restaurant Consulting

The landscape of our industry is in constant flux. It seems that each day we wake up to a new obstacle on our horizon, whether it be rising prices from vendors, competing with the mounting employee wages in your community, or simply tackling the ongoing supply chain issues. Looking at these things from a broad scope can be overwhelming for many business owners. A question that begs to be answered is this: how do we achieve our financial goals when the economy seems to be pitted against us? 

We have seen plenty of restaurant owners scale back their operations lately. Menus are shrinking, hours of operation are dwindling, and table service is becoming a rarity. Many would consider this unavoidable in the current market climate. While these actions have been proven to help mitigate losses, it would be a disservice to ignore additional options for making a profit. Vertical integration is a fantastic opportunity to gain revenue elsewhere within your restaurant. Vertical integration, simply put, is when a company controls more than one stage of the supply chain or production cycle. This creates an avenue of potential income based upon commodities already found within your company. Some examples of vertical integration would include bottling and selling signature sauces that your restaurant produces, creating take and bake menu items for pickup, or perhaps even hosting cocktail classes taught by your bartenders. The possibilities differ for each restaurant or concept, and finding a lucrative vertical for your specific company might look different from your competitors. The key to creating the right vertical for you lies within your unique company. Take a look at the things that keep your regulars coming back and ask yourself how you can make them even more profitable. 

There are numerous benefits to utilizing vertical integration in your business. However, the strongest advantages include sustainability, quality, and increased market share. To help explain these notes, we will be using a hypothetical vertical. In the following scenarios, we will be discussing a fabricated Mediterranean restaurant called “Yamas”. They are pursuing a vertical that markets their tzatziki in bottles to local stores and vendors. Now, we can dive into the benefits of vertical integration. 
​

• Sustainability: When businesses integrate verticals, their metrics for sustainability increase. How is this possible? Put simply, vertically integrated companies communicate more fully and crossover their staff, product, and ingredients. Efforts towards sustainability are more successful overall. This is due to the fact that their efforts are deeply rooted amongst multiple levels and move quicker than a standalone concept, as the order of operations becomes more concise. Consolidating staff and allocating resources appropriately ultimately save your bottom line, all while eliminating the middleman markup regularly found in production. For example, Yamas decided to bottle and sell their tzatziki. By creating a production line that is overseen by the holder of the recipe, and is being created by staff that has knowledge of said recipe, each facet of production is held to the highest standard and is executed by employees that have experience creating it. 
  
  
• Quality: Vertical integrations have a proprietary claim on their concepts, which ensures consistency amongst sister companies and concepts. “Trade secrets” are taught in house, and the ability to learn from within improves the overall caliber of each product. Streamlining your process can only benefit the quality of your creations. Through repetition, insider knowledge, and consistency, we see an elevated standard of production across the board. Our tzatziki line, Yamas, sees an uptick in customer satisfaction when each bottle produced is invariant and refined. 
  
  
• Increased market share: Increasing your market share means increasing the effort you put into sales as a business, and using new or additional strategies to help you get there. The higher the market share, the more stable your business can potentially be. Additionally, this helps deter competitors. It’s difficult to compete with a company that gains access to limited production. By creating a vertical internally, you are efficiently monopolizing your own market. This creates effective barriers for competitors to enter your market. Yamas has perfected their production line and has found an excellent strategy for receiving and maintaining their supply. This helps Yamas to expand their brand recognition and upset the market with leading sales in their community for tzatziki. 

In the end, there are many factors to consider when looking towards vertical integration. Before deciding to take on a project of this scale, ask what is to be gained from pursuing a vertical. Would creating a vertical be realistic for your company? What problem would it be solving? What opportunities would arise from your vertical integration? Can your business support an internal start-up? These questions can only be answered with data analytics, creativity, and ingenuity. Integrating verticals into your business has the potential to elevate your profit margins when executed correctly. While expanding horizontally seems to be an impracticability in a post-pandemic climate, we can always look vertically. | Kate Ratledge, Bar & Front of House Consultant. Togather Restaurant Consulting. 

Alcohol Tax / Commission Caps on 3rd Party Deliveries / PFMLA / Tip Pooling Resources

Fighting Oregon Alcohol Tax Increases
Here's a quick update on our ongoing fight to protect the industry from increased beverage taxes in Oregon. Our next fight against increased alcohol taxes will surely come up yet again in the 2023 Legislative Session. Our friends at Quinn Thomas have been working hard to keep our organizational alliance intact as well as help identify messaging relating to some of the ongoing problems with Oregon’s broken addiction treatment and recovery system. This analysis on Alcohol Price Elasticity helps shed more light on the lack of correlation between increased alcohol taxes and decreases in alcohol use.

Upcoming Vote on Capping Third Party Delivery Fees at 15%
Portland City Council will vote on June 15 to cap delivery fees for restaurants from third party platforms at fifteen percent.  If approved, the ordinance would take effect June 29, 2022 when the emergency order capping delivery fees at ten percent expires. 

In addition to the fifteen percent delivery fee cap, the ordinance would allow third party delivery platforms the ability to charge:

• No more than five percent for a Restaurant Take-Out Fee
• A three percent Transaction Fee in the amount charged by the payment processor but not to exceed three percent of the Purchase Price per Order unless the payment processor charges more than three percent.

 
The ordinance also prohibits:

• Third party platforms from performing any services on behalf of or disclosing information about a restaurant without their consent, including, but not limited to: Menu, pricing and contact information
• Charging a restaurant a fee which they have not agreed to pay
• Charging a restaurant for a “telephone order” which does not result in an actual order being placed

 
Paid Family Leave Concerns
You may recall a tough fight in the 2019 Oregon Legislative Session on Paid Family Leave. The new labor law passed before Covid and has been in hibernation mode behind the scenes as the Oregon Employment Department worked to get their ducks in a row for a 2023 launch. Of course we had this little thing called Covid which upended our world and unfortunately those unexpected challenges have not changed the state’s plan to fully implement their “Paid Leave Oregon” program in 2023.
 
The Paid Leave Oregon programs latest round of rules addresses a variety of issues including appeals, wages, benefits, and equivalent plans. ORLA’s statewide business partner OBI has participated in the rulemaking advisory committee and submitted comments on behalf of the business community. We continue to worry about the confusion this will create for employers and employees that are also subject to the Oregon Family Leave Act and the federal Family and Medical Leave Act. OBI hopes to introduce legislation in the 2023 session to address this issue.

Key date: The 1% payroll tax will begin on January 1, 2023. Employees pay 60% of the tax and employers pay the remaining 40%. However, employers with less than 25 employees are not required to contribute to the program, but their employees are. Alternatively, employers can opt to provide a private equivalent plan through insurance or by self-insuring, rather than participate in the state program (ORLA is actively looking into private sector solutions right now – any progress will move through our ORLAMS board process). Employees will be eligible to file claims under both the state and private plans in September 2023.

Webinar on Tip Pooling & Overtime Compliance
ORLA hosted a webinar June 2 on “How to Ensure You’re in Compliance with Overtime and Tip Pooling.” Representatives from the Department of Labor, Wage & Hour Division Portland District covered these topics and more, including fielding several situational questions from industry members. The following resources were shared:

• Fair Labor Standards Act
• FLSA Poster
• Fact Sheet #2A: Child Labor Rules for Employing Youth in Restaurants and Quick-Service Establishments Under the Fair Labor Standards Act (FLSA)
• Fact Sheet #23: Overtime Pay Requirements of the FLSA
• Fact Sheet #44: Visits to Employers
• Fact Sheet #56C: Bonuses under the Fair Labor Standards Act (FLSA)

For questions, call the WHD toll free and confidential information helpline at 1-866-4US-WAGE (1-866-487-9243), or the Portland District office directly at 503-326-3057. You can also call or visit the nearest Wage and Hour Division Office.

For a copy of the webinar presentation slides, please email Lori Little.

Have any questions? Feel free to reach out to ORLA Government Affairs via email.