TAX DEDUCTIONS FOR CONTRIBUTIONS OF FOOD

In order to encourage charitable contributions of food inventory to organizations that feed the needy, Congress passed legislation for an increased tax deduction.

A restaurant may now deduct the cost of the food, plus ½ of the difference between the cost of the food and the amount for which the food would have been sold at menu price.

Assume during the tax year XYZ Café donates food with a cost of $4,000 to a local food bank, and that the food had a fair market value of $10,000.  XYZ could deduct a charitable contribution of $7,000, computed as follows:

Menu price of donation                                  $10,000

Less cost of food                                               -4,000

Difference                                                           6,000

            x 50%                                                      3,000

Charitable contribution                                   $ 7,000           

In order to qualify for the increased deduction, certain conditions must be met.

1. The food must be inventory normally sold to customers in the ordinary course of the restaurant’s trade or business.
2. The organization to which the food is donated must be a Section 501(c) (3) public charity exempt from income tax under Section 501(a).
3. The organization must use the donated food in connection with the function or purpose for which it has been granted tax-exempt status, and use it solely for the care of the ill, the needy, or infants.
4. The organization receiving the donation cannot receive compensation for the transfer or use of the contributed food.
5. The restaurant must receive a written statement from the organization stating that the donated food will be used in accordance with items 3& 4.
6. The food donated must meet the definition of “apparently wholesome food” as defined in the Good Samaritan Food Donation Act.  Suffice it to say, that a donation of salable food from a restaurant’s inventory would meet this definition.

Please note that the increased donation will apply only to restaurants that are C corporations for tax years beginning after December 31, 2009.  However, the increased deduction was previously available to restaurants not operating as C corporations.  MRA suggests you consult your tax professional regarding the applicability of this information to your restaurant, referring them to Section 170(e) (3) of the Internal Revenue Code.

A RESTAURANT BUSINESS PLAN IN A RECESSION

If you want to open a restaurant, financing can present a problem in today’s economy.  Banks aren’t taking a lot of financial risks at the moment, and for better or worse, restaurants have a high failure rate.  So the question becomes, how do you get financing for a restaurant in a recession.  A solid business plan will steer you in the right direction.

A restaurant business plan outlines your entire restaurant concept, from who your target audience is to how much you estimate for restaurant costs and how much you estimate for restaurant costs and profits.  A well thought out restaurant business plan will also help you identify possible problems, such as a poor location or lack of customer base. 

Opening a new restaurant in today’s financial climate is still possible, but it requires careful research and consideration, beforehand.  If you show the bank or potential investors your idea has been researched, you will be one step closer to opening day.

Most business plans have the same general parts, but some sections of you plan should be geared specifically to the restaurant industry.  Here is a break down of all the necessary parts of a restaurant business plan.

1. Executive Summary - Start out with an overview of your entire business plan.  Think of it as your introduction.  Make it interesting, to keep your readers attention.  Here are some tips for writing an executive summary geared toward a restaurant. 

1. You want to give the reader (a potential investor) the basics of your business idea.  What is the style of your new restaurant, the name, the location?
2. Explain why you are well suited for this restaurant venture.  Do you have previous cooking experience in restaurants?  If not, do you have any experience in the restaurant business?  If the answer is “no,” then you need to sell them on the idea that despite your lack of experience, you are still the perfect person for this new restaurant business.

2. Market Analysis -  This part of restaurant business plan is sometimes referred to as a marketing strategy.  There are 3 parts to a market analysis:

1. Industry - Who are you going to be serving?  Is your restaurant going to cater to the older folks at lunch time?  Single professionals at dinner?  Families with young children?  Explain your customer base and why they are going to flock to your new restaurant, not your competitors’.
2. Competition - Who is your competition?  Many people opening a new restaurant assume everyone will prefer their new establishment to the existing competition.  Don’t undermine the other restaurants.  They already have a loyal customer base, and luring customers from that base is not always easy.  Find out as much as you can about your competition, including their menu, hours and prices.  Then explain in a paragraph or two how you will compete with the already established businesses.

3. Business Operation - Sometimes referred to as Products and Services.  This is where you tell investors about your hours and how many employees you plan to hire.  Here is where you explain the benefits of your establishment for customers, such as its convenient downtown location, or its close proximity to the local interstate exit.  This is also a good place to mention any close ties you have to local restaurant vendors, such as food supply companies or local farms that will give you a competitive edge.

4. Management & Ownership - Who is going to run the ship?  Are you going to be the general manager, bookkeeper, head cook and bartender?  If so, how are you going to do it all?  Many new restaurant owners either hire a general dining room manager or a kitchen manager (but usually not both).  Explain who is going to do what, including any potential employees whom you feel will be a great benefit to your new restaurant.

5. Funding - Now the tricky part of a restaurant business plan.  How much is this stellar business plan going to cost?  Here you want to list the projected growth of your new restaurant.  You should include a profit and loss statement that projects how much you are going to spend vs. how much you are going to make.  This is a good time to once again point out all the great aspects of your new restaurant.  Other items you should include in your funding report include:

·         Break even analysis

·         Balance sheet

·         Industry data

·         Possible risk (show that you acknowledge them, and outline how you plan to deal with them)

For more details on writing a small business plan, check out Critical Steps to Writing a Business Plan by About.com expert Darrell Zahorsky.

KITCHEN FIRE SAFETY

When it comes to preventing commercial kitchen fires, your greatest primary defenses are cleaning and maintenance.

Fire prevention

Prevention is critical when it comes to fire safety, especially in areas where fires can start easily due to cooking methods such as grease frying, grilling, and/or open-flame cooking.  Here are guidelines that will help prevent a commercial kitchen fire from occurring:

• Pull down and clean filters in the cooking exhaust hood frequently -
1. every day for solid fuel grills
2. every two days for open meat-cooking grills
3. every two to three days for high volume deep fat frying
4. every fur to five days for all other cooking
• Wipe down and clean the inside of the hood, fire suppression nozzles, and back splash daily to reduce grease buildup.
• Contract with a service company to schedule hoods and duct cleaning every quarter to remove grease buildup on the ductwork.  (Low volume operations with no grill and light grease cooking may choose to do this every six months.)
• Contract with a service company to schedule inspection and any necessary repairs to the fire suppression equipment every six months.
• Verify that your cooking fire suppression system is a wet chemical UL 300 rated system.
• Train employees to use caution when near ignition sources such as grills, woks, fryers, etc.

Again, remember that prevention is the key.  If a fire never starts, there will be no damage.

Fir response

If a fire does start in the cooking area, employees who have been trained to respond effectively are your best method of curtailing damage and possibly saving your business.  Your employees should be prepared to:

• Call the fire department immediately
• Manually activate the fire suppression system if the system has not activated automatically
• Locate and turn off the emergency fuel shut-off switches
• Locate and properly use the portable fire extinguishers (Class K extinguisher for grease fires verses the traditional ABC extinguisher for all other types of fires)
• Remember the details of the emergency Action Plan, including where to gather in the event of an evacuation.

The most important tip to know regarding fire safety response is that training is the best thing you can do to protect your employees, property and business.  Simple instruction is most likely not sufficient when dealing with fires.  Recurring, hands-on training in how to use fire extinguishers will be of more benefit than telling an employee once, on the day of hire, to use a fire extinguisher if needed.