Digital marketing, building influence and PR
for chef-driven restaurants

Anatomy of a Great Tweet

Ever wondered what makes the best fodder for Twitter? Well, some really smart science-y dudes did the research to deliver you the ultimate infographic you can print out and paste next to your computer.

Pulled from Harvard Business Review, from a study by Research by Paul André, of Carnegie Mellon University, Michael Bernstein, of MIT, and Kurt Luther, of Georgia Institute of Technology.


Understanding Google Search Results and How They Impact Your Restaurant

Since we are on the topic of Google and that handy little Zagat reference they deliver with the search results when someone Googles your restaurant, I thought I would go a little deeper into the topic, for those of you who are really starting to get your feet wet in the world of digital marketing.

(For those of you who aren’t starting to wade into the digital marketing waters, this is a compelling post about why you should be.)

Search Engine Optimization (SEO) professionals spend their entire careers trying to master understanding of Google search results. For the rest of us, Google’s algorithms are a mysterious puzzle we’d rather avoid. Contrary to what you may believe, it isn’t just a matter of tossing up some keywords and getting some links and calling it a day. Great SEO is an art and Google changes canvas regularly, just to keep things interesting.

Throughout June and July, Google made upwards of 86 significant changes to their algorithms. Of those, what you should be most interested in is the fact that they are now working hard to give users immediate access to answers, instead of just a list of places where they can find the answer. Translation: they actually don’t seem to want people clicking on your restaurant link.

Before we go on, please, Google your restaurant. You’ll see what I mean.

After Google made their big updates, what comes up when you Google a restaurant’s name is a handy reference that delivers the key information people likely want when they are searching for a restaurant. There’s a map, Zagat scores and review, pricing, a reservation link.

I covered why this is important to understand here. Today, I want to cover one small but important portion of this handy reference — a portion you can do something about.

One of the elements that comes up with those results are keywords. There’s a big complicated mass of algorithmic explanation one could give for how Google settles on the most important keywords for a restaurant, but suffice it to say that it can be boiled down to the “most prominent keywords written about a restaurant, filtered through what is deemed “popular” by the links from other websites as well as RTs and Likes and Shares.”

You’ll likely notice, in most instances, Google isn’t showcasing they key marketing messages of restaurants.

In fact, if you decided to spend an afternoon, just cause you were curious, Googling the names of all your favorite restaurants, you might be surprised at what you’d find. One restaurant I won’t link to since it’d be mean to has the unfortunate keyword “Joliet Prison,” a few others the customer-repelling keywords of “corkage fee” and “noise level”— and then are the slew of restaurants touting the names of  of chefs who left three years ago.

One restaurant I won’t link to has the unfortunate keyword “Joliet Prison”

You might wonder how this happens.

In the case of the restaurant with the unfortunate keywords “Joliet prison,” well, they’ve got lights reclaimed from Joliet prison that the media all wrote about when they opened. And people shared and RTed those stories. And so now that’s what you see. Now, again, this is a really simplistic explanation for a complex process, but you gotta start learning somewhere!

What you don’t need any expertise to understand is that this is a real problem. (And this is one of the reasons I keep writing about great content and social media optimization.)

If the restaurant wants to combat this, they can do a lot of things — some more expensive than others.

Expensive or no, the bottom line is that restaurants need to publish enough compelling (sharable) content to drive new keywords to the top of the heap. This doesn’t mean essentially random Facebook updates that may be clever enough to get comments and some “likes.” It doesn’t mean posting pictures of dishes on Twitter or Instagram, listing the main ingredients in said dish and hoping people click to see the photo.

It means strategy. And that strategy, again, can be easy or hard, expensive or cheap.

I am going to use the RIA model because it is an easy way for me to explain to you how this works, but I also added some ideas for those of you who opt for going all rogue and indie, blazing your own trail.

The way RIA approaches this: asking chefs to put in his 15 minutes a day.

  • Set Your Keywords
    The RIA Way: On our members’ restaurant profile, we have set up a system whereby our members set their keywords once and then whenever they share from our site, the share is embedded with keywords. So, everything they post and (they or anyone) shares to Twitter and Facebook drives those keywords.
    The Indie Option: First, you’ll need to write down your keywords and then keep them handy for when you write content. When you then write content (blogs, tweets, FBs, whatever) you’ll need to weave those keywords into your writing. So, if it is your goal, you’d need to get the words “Outdoor Patio” into as many posts and updates as you can as often as you can.
    The Take Away: Either way, the idea is to plan in advance what your keywords are and then get ‘em out there as often as you can.
  • Share Shareable Content
    The RIA Way: On RIA, we offer up conversation topics, ideas and platforms for sharing content completely. We also coach our members when they post content that could use a little help to be more shareable. They don’t have to worry about embedding keywords in the copy, it’s already done, so they can focus their energy on answering an easy question or telling the story of a dish.
    The Indie Option: If you’re going rogue, you need to do the gymnastics and write the keywords and connect the links into the content itself — all the while making it compelling for someone to share. Now, you might imagine that you an only write so many “shareable” pieces of content that include the words “Outdoor Patio” in one given day, making this whole SEO thing a fantastic PITA. You’d likely be right (or if you can accomplish this feat, you’d be Steven King or James Patterson) but you should still work toward the goal of making sure your Google keywords are working for you.
    The Take Away: Whichever route you choose, this is a bit of a numbers game so you win the more content you get out that people then RT or share. People RT/share great content.
  • Distribute Content
    The RIA Way: Our goal over at RIA is “post once, reach everyone” so we’ve built our system to distribute what our members post to important audiences automagically. So, posts reach their followers, our followers, influencers media and new diners. It’s just easier on our members if they don’t have to think about it.
    The Indie Option: If your going solo, you should look into tools like Hootsuite or Sprout Social to at least focus all the tasks in one place.  You should also spend time every day working on driving people to that content by doing things like commenting on other blogs, reaching out to influencers on Twitter, sending the content to media, also trying to wrangle in new diners — they don’t just spontaneously find you, you know that, right?
    The Take Away: If you only post on Twitter or FB, your content is “siloed” and, often times, not even indexable by Google. Meaning, only one small subset of the people that need to see it actually do. So, you need to do something (actively and aggressively) to get your content distributed. You need it to reach media, influencers and new diners — as well as your own list of friends and followers — in order to ensure it is reaching everyone that can impact your restaurant.

Lessons from Leonardo da Vinci

Something to consider:

A cautionary content marketing tale: The notebooks of Leonardo da Vinci

You may remember Leonardo da Vinci as the master who painted the Mona Lisa and sketched the Vitruvian Man. But did you know that he was also one of the most imaginative inventors who ever lived?

Many of da Vinvci’s most interesting and prescient imaginings were scribbled down in his notebook, and never saw the light of day.

We’re talking about sketches of submarines and helicopters in the 15th century. Clearly, the man was a genius, and his sketches, in the right (influential) hands could have changed the world as we know it.

These notebooks were filled with excellent “content” (once they were deciphered …) but because most of his ideas never got in front of the right eyes — nothing came of it.

No matter how good you are, if you don’t get your work in front of the right people, it isn’t going to matter at all — not for the world, and not for your business.

The above was quoted from 4 Proven Strategies for Finding a Wider Audience for Your Content because it is so well-written and such a mind-blowingly clear message that I didn’t want to even begin to tackle translating it into “chef.”. Copyblogger offers up killer ideas for online marketing in easy-to-read and actionable blog posts (great on Twitter, too!).


Tell to Win: A game-changer of a book for chefs

Tell to Win: Connect, Persuade and Triumph with the Hidden Power of Story has the potential to be a a game-changer of a book for chefs.

I state that flat out because I believe in the power of creating a narrative about a restaurant in order to create buzz and drive business. It’s what we focus on at RIA: Giving chefs a blueprint for what to share on Spoonfeed and helping them reach an audience of new diners via Soapbox. Menus, food photos, it feels great to share that stuff and get the requisite “yums” and “nom noms” — but in reality what moves humans to act is something more — we’ve listened along and been spurred into action by stories since time began.

Real chefs and real mixologists sharing the reality of what is goes on in America’s kitchens, developing diners by uncovering the passion to create — there is nothing more powerful and engaging. How to do that is what Tell to Win is about.

According to President Bill Clinton, Tell to Win is a book “that masterfully demonstrates that telling purposeful stories is the best way to persuade, motivate, and convince who you want to do what you need.” It’s a book about sales. But it is an awesomely helpful read for a chef looking for investors, for chefs who are learning to be more effective in dealing with media and even for chefs looking to turn their social media posts from “food p0rn” into sales tools that drive action.

A lot of chefs rely on their menu to “tell their story.”

If you ask them what kind of food they make, they often rattle off a few dishes and expect the listener to “get it” by extrapolating the chef’s philosophies and inspirations from there. And it seems a lot of chefs are starting to just post a menu for their restaurant and assume it will do the job of driving business in the door. Unfortunately, a menu rarely paints the enough of a picture to make the ideas behind the menu memorable and frankly, they often tend to all look alike after a while.

Tell to Win is a bit of a blueprint for getting out of that trap and becoming more effective in communicating just why it is you are important enough for people to pay attention to you.

Now, I’ll admit that although I loved the book’s message, Tell to Win, was unfortunately written by a dude who has spent too long in Hollywood. I found it hard, at times, to deal with his writing things like “the art of the tell.” A affected phrase that doesn’t really play here in the Midwest — or at least in my slice of the world. It’s also, I’ll admit, to overlook the guys’ constant showboating about who he met and how successful he was in picking the perfect tale or tool in making the sale.

But if you can overlook the Hollywoodization of the stories, there are a few helpful lessons to learn. And these lessons apply to selling your business plan to a potential investor, selling your story to the media and even “selling” a dish to your Twitter audience.

Lessons

  • Stories humanize ideas
    It’s hard to make a emotional connection to cold, hard facts (and a menu, by the way, is a list of cold, hard facts). By presenting your idea in the form of a story, you are able to humanize the ideas you are bringing to the table, making it easy for people to support your vision.
  • Stories capture attention
    If you want someone to really pay attention to you, you need to find a way to cut through the noise. This is especially true with the media as they are bombarded with ideas, information, releases and pitches all day long. Stories have a way of resonating with people in a way that is memorable, which helps you stand out from the crowd.
  • Stories demonstrate authenticity
    Stories, well-told, can communicate your inspirations and philosophies — the very things that speak to your authenticity as a chef and help people not only understand you but believe in you. Hand someone a menu, they may or may not understand that you make all your condiments from scratch and work with a farmer to source rare heirloom pork. Tell them a story and they will.
  • Stories create active listeners
    You want people to feel they are a part of your goals and they simply won’t do it if they aren’t actively engaged. Stories engage people more effectively than facts can compel people to take action that will help you reach your goals.

The magic of developing an audience of evangelists who believe in you occurs when you stop relying on other people to tell your story, and embue your menu with a purposeful story. The story creates an experience for your audience, making restaurant and your food memorable, resonant and actionable. A story brings to life the call to action — getting more butts in the seats of your restaurant.


You May Also Be Interested In

  • Forbes has a great interview with the author that makes for solid followup.

Guest Post: Social Hiring — Faster, Better, Smarter

Finding great staff is probably the biggest non-marketing problem I hear about from chefs. There are no line cooks out there, pastry chefs are scarce and, as always, there are no great AGMs and GMs on the market. I thought it would be a good time to introduce you to Shiftgig, a social hiring site. The following post was written by Shiftgig Staffer Lauren Knight, on how Shiftgig may be just what the industry needs.

The restaurant industry is nothing if not dynamic. With trends and tastes constantly evolving, there’s always something new and exciting happening. There’s a dark side to the ever-changing scene, however, and that’s an ever-changing staff. Employee turnover rates in the restaurant industry are consistently high; the annual average ranges between 75 and 80 percent, and some sectors have reported rates higher than 100 percent.

Hiring is a constant priority, but the methods of finding employees have changed drastically in the last decade. Classifieds in newspapers don’t reach as many people as they once did. Referrals are still important in this close-knit industry, but they can’t cover all the staffing needs of a restaurant. Walk- ins account for quantity, but quality can be hit-or-miss. The internet is chock-full of job boards and candidate soliciting services, sure, but words typed into an online application can only tell you so much. For a chef or restaurateur, time is of the essence. You need potential hires whose quality can be assured quickly and reliably. You need staff who will bring customers to you.

The solution? Social hiring. Get to know your candidates right from the start. It’s not just the years worked in the service industry that makes a worthwhile employee. It’s their personality, ability to adapt and lead, and social prowess. You want an employee who can not only describe your dishes with care, but has the charisma to sell them and a network of friends to draw to your restaurant.

There are a few obvious advantages to a social hiring method. First of all, you can get a good feel right away about how passionate a candidate is about the industry. You can determine their level of interest and dedication. For a server hired on a seasonal basis, this might not be so important, but when you’re looking for staff for higher positions, this can make all the difference. Social hiring can also provide instant feedback on a candidate’s working style. Just as customers might use reviews to determine whether or not to patronize your restaurant, references included on a social hiring profile can give you insight into the effect they’ve made in other restaurants and what they may be able to do for yours. Word-of-mouth is a powerful tool in the industry in all aspects, and it is always worth considering.

Most importantly, social hiring opens the doors for making your staff part of your marketing strategy. Find the employees who have a long reach on social media outlets and who actively participate. You can use them to engage their networks and draw new customers to your tables. Candidates with social presence can be an excellent resource for spreading the word to a sought-after audience. Including employees in your marketing plans will make them feel like they have a stake in your restaurant and help breed loyalty: another plus. When you feel like you are an integral part of the business, you have an investment in its success. Social hiring helps you find the hires that can help you build a following.

This type of hiring is uniquely suited to the restaurant industry. Success relies heavily on getting people into your restaurant, and that requires casting your name out there as far as possible. Internet and social media extend that reach phenomenally, if you know how to utilize it. Social hiring immediately offers candidates who are familiar with this resource and can put it to use for you, while providing you with the details you need to pick and choose who will fit best for your staffing needs.

In a world where social networks carry so much clout and offer so much reward, it makes sense to take advantage of what they present, especially when it can give you so much control over a very central part of your business. So cut out the question marks and craft your own staff: start thinking social when it comes to hiring.

To check out an effective platform for social hiring, create a profile on Shiftgig and see the advantages it offers you!


Giving real insights into the life of the kitchen at RIA

We’ve been on a mission over at Restaurant Intelligence Agency (RIA). A mission to help chefs share authentically, which we know means sharing effectively. We’re on this mission because sometime around 1993, craftsmanship started taking a back seat to celebrity in the food world.

We left Julia Child’s charming and self-effacing educational style behind and embraced the modern age of food television — a gladiator arena of “cheftestants” battling it out for culinary glory.

We stopped revering chefs like Michel Troisgros for their exquisite talent, culinary vision and dogged pursuit of perfection. Instead, we are now supposed to love Bobby Flay because he can ”Throwdown” banana cream pie and chicken-fried steak.

Hard-working restaurant chefs, fighting to stay relevant so their restaurants stay busy, have had to take notice. These days, in the name of business-building, it is widely accepted that a chef must pursue the fame thing. Awards, accolades, maybe a book, and a few stints on TV have become the blueprint for success.

And perhaps the biggest loser in this new world order is the dining public. I assure you, nothing makes for more uninspired and homogenized cuisine than a culture where chefs spend more time thinking about fame than food.

To right the culinary ship, our focus at RIA has been to shift from “eatertainment” to the heart of what makes food good. Rather than gorge on television’s culinary battles, we believe in a world where diners feast on and are nourished by what is really happening in our nation’s restaurant kitchens.

Setting that table is our vision for RIA. By directly connecting chefs with diners and media — and letting them speak for themselves — our mission is to shift the focus on chefs from fame to familiarity.

With Soapbox by RIA, we invite diners into the kitchens of their favorite restaurants. Our new front page is brimming with content posted by the chefs themselves and our expanded Front Burner curates that content, getting behind the scenes to help lift up and celebrate the ideas, philosophies and opinions of chefs, mixologists and sommeliers.

Of course, our readers quickly discover that chefs are sometimes a bit, well, provocative. They’ll admit that open kitchens “control the pirates behind the line” and that it’s quite possible they were their “own worst boss.” They’ll happily share a recipe for cooking up Punxsutawney Phil on Groundhog Day and cheerfully tell you why you should eat more offal. And they aren’t afraid to share strong opinions about their industry, including on foodiesanonymous critics and whether fine dining is dead (it’s alive and well at Vetri in Philadelphia).

You’ll find that a good number of chefs don’t spell so well. But even that becomes endearing because you begin to understand that while you were focused on book learnin’, they were learning to cook, deliciously so.

Above all, you begin to discover new chefs and restaurants from the chefs themselves – and the stories they tell are infinitely more authentic than anything you’ll find anywhere else.

You learn that as a kid in a Korean-American household, Edward Lee of 610 Magnolia in Louisville always knew that dinner was ready when the apartment smelled of many different layers of funk. And when you try his food, you’ll remember this and delight that the layers of his culinary memory resonate in every bite.

From sommelier Charlie Berg you’ll catch a poignant glimpse into the challenges faced by Town House, a brilliant — if brief — restaurant that opened in a rural Appalachian town of fewer than 2,000 on the cusp of America’s financial collapse and closed a few years later after capturing the hearts of the culinary elite.

And you’ll get the kind of real insights into life in the kitchen that don’t make it onto “Top Chef.” Like how a simple dish of cauliflower can humble a talented kitchen run by one of the country’s best chefs. And why, in a world chock-full of molecular gastromania, what many chefs really obsess about is a perfect spoon.

For most chefs, mixologists and sommeliers, RIA is their first chance to share their ideas and inspirations directly with diners – no handlers, no gatekeepers, no spin. And it diners’ first opportunity to peer straight into our generation’s most engaging culinary minds and get to know them and their food – no filters, no bias, and definitely no cliffhanger commercial breaks for dramatic effect.

All of us at RIA hope you’ll love our newly dressed Soapbox — it’s newly expanded blog, Front Burner, and all the delightful content that is buried deep in the thousands of pages we’ve collected. It’s about putting food before fame by sharing the thought-provoking, hilarious, thorny – and above all authentic – anecdotes that, presented in one place, are a chronicle of America’s true culinary story.


Using Social Media Condiments to Increase your Digital Influence

I’ve long said that great food alone doesn’t make a great restaurant — or that it is even the most important element of great restaurants. To me, it’s the extras — the condiments — that can transform an experience for a diner and make the meal a memorable one.

And it occurred to me when I read Seth Godin’s blog post about improving your condiments that the commitment to the extras in social media, really, is the key to success.

A lot of chefs, even the ones that have fantastic housemade condiments in their restaurant, seem hellbent to make their social media as stripped back and bare as possible. They’ll post a picture, some key ingredients in the dish, call it a day.

Now, sure this is a great way to let your peers and “best customers” know what you are doing.

But it pretty much does nothing in the very area social media is most brilliant — reaching and connecting with new customers.

Whether you know it or not, your restaurant’s social presence is, increasingly, impacting your restaurant’s ability to reach any and all diners because search and social are merging. Not to mention the fact that, over time, search engines have already started highly customizing content that delivers what it thinks someone is looking for based on their social activity.

Which is why digital influence is becoming so important. Digital influence is an online form of real world influence — the juju certain people/organizations have to effect or change behavior.

It used to be that the juju was, plainly, media coverage. But, as we learned this week, people learn about restaurants not through traditional critics, but through friends.

And research supports this.

Recently, Duncan Watts, head Microsoft Research data analyzer and number cruncher found that people influence behavior en masse. Rather than information passing mainly through “hubs” or highly connected people, reach is often linked to the “pass-around power of everyday people.”

What’s that mean? That means that regular folk are passing stuff around and that’s how news spreads — not the preconceived notion of getting a bit article in an awesome publication that everyone reads and then rushes into your restaurant.

It means that, at most, an average of nine people visit the link of every Facebook post. This is true for your food porn and for the best memes out there.

Facebook is about lots of intimate sharing between people. So is Twitter. The number of shares on Twitter are, on average, an even lower five.

So, here’s what you should know: you need to reach a lot of people, a lot with stuff that will get shared. And the best way to “get shared” is with repeatable knowledge.

That’s content they can talk about intelligently or knowledgeably to another person. Content that tells a story, shares tips and hints, comments on trends or otherwise entertains/informs and engages.

And content that you’ve spent a little time to garnish. Because great food (pictures) alone doesn’t make great social media — or, might not even been the most important part of your social media. To me, it’s the extras — the condiments — that can transform a social media post for a diner and make your social share a memorable one.


Should you respond/react/even care about citizen reviewers?

I mostly love Seth Godin. Enough so that my friend gave me a Seth Godin Action Figure which I have kept NIB because I am sure it will be worth something someday.

That said, Seth wrote a post, which I excerpt below, that I was sorta, well, perturbed by …

You won’t benefit from anonymous criticism

I’m arguing that it’s a positive habit to deliberately insulate yourself from this feedback. Don’t ask for it and don’t look for it.

I am all about everyone not punishing themselves by listening to the mob. Criticism can be hard to take. But reputation management is also a serious thing. And, it seems, becoming more important as search and social start to merge.

Especially since so many people get their restaurant information from these citizen review sites. And especially since, like Google and Zagat, Bing is going to start leveraging customer reviews in their search results. Yup, if you clicked on that link you learned that Bing is going to start using Yelp! reviews in the same way that Google is using Zagat reviews — to keep eyeballs on the content they can monetize and, it follows, away from your website.

I know a few of you aren’t worried about it.

I kinda think these changes might have an impact on the future — the kind of which it might behoove people to start learning about how to deal with now.


Resources


How Diners Choose Restaurants

In light of some ongoing discussions on the Twitters, I thought it was interesting to note how many diners select restaurants from consumer-generated review sites.

Also, I was surprised restaurant bloggers have more pull than traditional critics.  And that the combined two have less impact than customer reviews — yet most restaurateurs actively avoid consumer reviews as a practice and drive money into marketing efforts whose goal is blogger/media hits.

Finally, felt a tingling sensation from a slap on the cheek when I saw the Google results are lower than restaurant websites — and I am curious how this will change in the next year now that Google is delivering handy cheat sheets with restaurant search results (this survey done prior to this significant search change).

 

This graph — and a fascinating article — tells the story of how diners are finding you. And if you’re interested, there is even a webinar you can attend on August 23 at 12:00PT to find out more. The bottom line: it ain’t through traditional media. It’s through friends first, then digital channels.

Which begs the question:  How can a restaurant become “friends” with all those “friends” making restaurant recommendations?


Guest Post: Low Hanging Fruit – Tax Benefits to Improve Cash Flows for Restaurant Owners

It is a bit off-topic for us but RIA’s lovely and amazing accountant wrote up a Guest Post for today. I thought it would be awesome to share as money saved on taxes could be used to pay for … better marketing! 

Jeffrey D. Bronswick is President of Bronswick Reicin Pollack, Ltd. – Certified Public Accountants and Business Advisors located in Buffalo Grove, IL. Bronswick Reicin Pollack has helped hundreds of businesses and organizations with their financial concerns — including some of my closest friends in the industry. 

In an ever-changing business environment where food prices are rising, competition is increasing and margins are shrinking, it is important to take advantage of all of the tax benefits available to help restaurant owners. However, when owners do not get the proper guidance, you miss opportunities that can improve your cash flows immensely.

So, we thought we’d give you some tips to set you up for success before the holiday rush comes around (which is right around the corner).

These important tax benefits for 2012 will help restaurant owners plan for business expansions or potential business renovations:

1. Immediate expensing of depreciable assets: Under Section 179 of the tax code, restaurant owners can elect to deduct (expense) the cost of qualifying assets purchased and put into service in the current tax year. This is an alternative to claiming regular depreciation deductions.Here are a few important points to note about Section 179 deductions in 2012:

  • Expense 100% of the cost of qualifying assets purchased and put into use in 2012, up to $139,000 of qualifying new and used equipment and off-the-shelf software:
  • Section 179 is limited to taxable profits
  • There is an investment limitation on Section 179 – $560,000 in 2012 – investments over this limit will reduce the available Section 179 deduction dollar for dollar
  • Financed and leased equipment under a capital lease also qualify for Section 179 treatment, and it may be the better financial strategy for some since the full amount of the deduction can be taken without using up a significant amount of cash

2. Bonus depreciation: in 2012 is now limited to 50% the cost of new assets purchased and placed in service in the current tax year. Bonus depreciation will still come in handy to those business owners who do not qualify for Section 179 due to investment limitations or the taxable profit limitation.

Here are a few important points about bonus depreciation in 2012:

  • Bonus depreciation allows an immediate deduction of 50% of the cost of qualifying new assets purchased and put into service in 2012 – with no limitation on the total amount spent
  • Unlike Section 179, bonus depreciation applies to new assets only, includes both tangible and intangible property, and can be used even if a restaurant has no taxable profit
  • Bonus depreciation can be taken in addition to Section 179 as long as the asset is eligible for both benefits to bypass the $560,000 limit on the Section 179 deduction

Note: In June, 2012 the House introduced an extension of the 100% bonus depreciation.

Other benefits that restaurants often fail to take advantage of are:

3. Health Care Credit: With rising health care costs, another important tax benefit for restaurant owners is receiving a tax credit for a portion of the cost of providing health care to employees. This credit is available through the Affordable Care Act, which allows for a 35% credit on the cost of health insurance premiums for their employees is available for the 2012 and 2013 tax years. A tax credit is superior to a tax deduction as a credit is a dollar for dollar reduction of the actual tax owed to Federal government whereas a deduction only reduces the income subject to tax.

To be eligible, a restaurant must also meet the following requirements:

  • Have less than 25 full-time equivalent employees (a full-time equivalent employee is figured by taking the hours worked by the employee divided by 2,080 hours, not to exceed greater than 1 full-time equivalent employee per person)
  • Pay at least 50% of the health insurance premiums of employees
  • Have annual average employee wages less than $50,000 (the credit is reduced proportionately for average wages over $25,000, up to a ceiling of $50,000)
  • Currently provide a qualified health care contribution arrangement where the employer contributes the money not pursuant to a salary reduction arrangement

4. Tip Credit: As many restaurant owners know, they are required to pay FICA taxes on cash tips earned by their employees. The good news for restaurant owners – the IRS allows a non-refundable credit for the FICA taxes paid on tips earned by employees. Under the general business credit, restaurant owners are allowed to claim a nonrefundable credit equal to the FICA taxes paid on employee tip income. The only stipulation here is no credit can be taken for any FICA taxes paid on employee tips needed to meet the Federal minimum wage rate of $5.15 (this only applies if a restaurant owner pays its employees less than the Federal minimum wage rate).

Jeffrey Bronswick, CPA, MBA
Visit www.brp-cpas.com or call 847-808-9800

Disclaimer: The information contained in this blog post is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will BRP, or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this blog post or for any consequential, special or similar damages, even if advised of the possibility of such damages.


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