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hello everyone and welcome to today's virtual panel hospitality industry QA koban 19 and beyond my name is Paul DiBenedetto SVP of Hospitality practice for hub international Midwest hub is the world's fifth largest insurance brokerage and leading provider of business and personal insurance as well as employee benefits retirement and risk service consulting we were all in uncharted waters here and the challenges we're facing this crisis have been unprecedented now more than ever it's critical for owners operators business leaders and HR professionals such as yourselves to have exit information to guide your decisions you know private taking my insurance role I was a ten-year veteran of multi-unit multi-state owner operations for a full-service bar chain so I fully understand the issues you're all going through if there's one thing I've definitely learned from the hospitality industry it's that it's resilient hardworking and I know we can all get through this you so today's agenda will cover introductions in panel Q&A we're answering your questions previously submitted due to the number of attendees we won't be answering any live questions today thank you to all of you who submitted your questions ahead of time and we'll be going through a lot of Q&A during today's panel we will provide you with the speakers contact info for any questions that didn't get addressed on this panel we try to answer as many as possible with due to time constraints and the overwhelming response we will get as many as we can there will also be a survey directly following the webinar to submit additional questions and feedback this program is also going to be recorded so after the webinar you'll receive a link to this recording to listen again and share with your colleagues if you choose so before we get to the panel its introductions I'd like to introduce Sam toya president and CEO of the Illinois Restaurant Association who we are proud to be partners with Sam the team have been working tirelessly on the industry's behalf over these last few months and have done some great work Sam is not only gonna let us know what he's seeing here in Illinois but across the US so please welcome Santoya thank you Paul again my name is Sam Toya I'm president and CEO of the Illinois Restaurant Association before this crisis began our organization served 25,000 eating and drinking establishments across the Illinois that employed five hundred and eighty eight thousand people our industry was projected to do more than 30 billion dollars in sales in 2020 I speak in the past tense with these figures because these numbers are going to drastically decline as we fight who is pandemic here are the high-level impacts of covet 19 on the restaurant industry across the country eight million employees in the restaurant industry have been laid off two out of three people in our industry have lost their jobs we will have lost eighty billion dollars by the end of April by end of 2020 we will have lost two hundred forty billion dollars or out of ten restaurants are currently closed to fight for survival every day no restaurant is immune to the challenges we are facing every city neighborhood business model and type boozing is impacted across the state and the nation the ir serves every facet of the restaurant and hospitality industry we've got iconic brands neighborhood spots chef driven restaurants diners Bar restaurants quick service breweries food trucks and everything in between and right now we are all hurting we all need help I like to share some sobering statistic about the status of the restaurant industry in Illinois these states the staff are from two weeks ago so numbers are likely even more dire now restaurant sales are down seven eighty percent across the board through two state based on these results the National Restaurant Association estimates that the Illinois restaurant foodservice industry lost more than two billion dollars in sales in April eighty-eight percent of Illinois restaurant operations today have laid off or furloughed employees since the beginning of the corona virus outbreak in March based on these results the National Restaurant Association estimates that more than three hundred and twenty one thousand restaurant employees in Illinois have been laid off or furloughed since the beginning of the corona virus outbreak in March fifty-five percent of Illinois operators say they temporarily closed their restaurants since the beginning the corona virus outbreak in March forty-five percent of operators anticipate temporary closing the restaurants third index 30 days we anticipate twenty percent of restaurants will not reopen after this crisis before just pandemic the restaurant industry was the largest private sector employer in the state of Illinois as I said right now I can't today we will certainly will continue restaurants are the cornerstone of all Chicago 77 communities every town in the state of Illinois from Peoria to Rockford to Carbondale everywhere in between restaurants are so loved every neighborhood throughout the country every restaurant wants to continue serving their team members and local communities the very best they can but right now we just do not know when the light at the end of the tunnel is coming over the past seven weeks the IRAs been working non-stop for regulatory and financial relief for restaurants at the local state and federal levels despite the passage of pressman federal stimulus paycheck protection program the PPP simply does not work for the restaurant industry the IRA has been urging our congressional leaders and the Treasury Department to make necessary changes to the PPP program to help restaurant survive now and thrive in the future some of the leaf measures we are working at the state and local levels include delayed sales tax remittance for all restaurant and bars breezing unemployment insurance rates suspending the Illinois Liquor Control Commission retailer delinquents lists for restaurants that can't pay their liquor invoices to distributors allowing for sales or cocktail mixed drinks to go delaying the minimum wage increase capping commission fees that third party delivers services charged restaurants the IRAs also focus on what reopening will look like an Illinois on the local level mayor light foot has set up a series of task forces that are focused on reopening and the IRA is leading one of those groups yesterday the governor release the restore Illinois plan for reopening we were disappointed with the aspect of the plan that will not allow restaurants to reopen their dine inch service until 20 to 26 at the earliest we are urging the governor and his team to reconsider this provision and allow for restaurants to reopen in Phase three with limited occupancy and additional health and safety guidelines in place we need balance in all of this Public Health and Safety has always been a top priority for restaurant as everyone that works in the industry has training and proper food handling and sanitation already Illinois is known as one of the more progressive states when it comes to food handling and sanitation so restaurants will be well equipped to welcome customers back into our dining rooms again we are really in the best position of any industry reopen and operate with prevented safety measures in place we know that the state is going to require occupancy and capacity limits but we don't know exactly what that will look like yet the IRA is working to make sure the state will take Restaurant tours operational financial and safety concerns into account as official guidelines are developed and implemented we are viewing the best practices established through the National Restaurant Association and serve safe reopening policies in other states it results from our I remember reopening survey in order to help make recommendations to the state of Illinois about reopening restaurants in Illinois restaurants need to be positioned to spring back into action quickly once the crisis abates to serve our employees customers and communities I encourage any restaurant bar any business that serves the hospitality industry to visit our website at their own oil on trippin s dot org for the latest updates again Illinois restaurants dot org Association is providing frequent email updates that you can also sign up for on our website please feel free to reach out to me or my team anytime appreciate the opportunity to lead this collaborative dialogue thank you and I turn it back to Paul all right thank you Sam I know I know you know my clients and friends and industry is there thank you guys for all your hard work that you do and then your your defense of restaurant operators everywhere so with that said today we've brought together a panel of hospitality industry experts discuss pressing issues and answers to all the questions you submitted that we can fit in here so I first like introduce my friend Patrick Wharton partner and chair of food and beverage practice group at tap Phineas Hollister LLP Pat take it from here hello all and thank you for joining and thank you to Paul and the entire team at hub for putting all this together my name is Patrick Wharton and I'm an attorney at Taft Stettinius and Hollister a firm of 11 offices and roughly 650 attorneys at Taft I chair our food and beverage Practice Group and really ultimately serve as outside general counsel to restaurant groups hotel developers and consumer food and beverage brands we typically work with groups on capital raises leasing land acquisitions employment issues and food and liquor licensing matters in addition to my work at Taft I am on the board of directors of the only Restaurant Association and a partner in CPG brands and a few restaurant concepts one of which we were about three weeks from opening when the shelter in place was announced so suffice to say I'm all too familiar with all sides of this and I just like to add I know we're not going to get to all the questions asked so you know I think my BIOS included my email addresses is going to be included please feel free to reach out and connect with me if there's anything you know I can do on my end happy to help great Thank You Pat next I'd like to introduce Chris Plunkett partner an HR pro and HR Director at Sunda and underground Gary hello and good afternoon thanks for joining us today and thank you the national for hosting I'm thrilled to be here currently I had a the HR function for a restaurant group with concepts in Chicago and Nashville several long-term success stories maybe you've heard of Sunday new Asian restaurant and the underground club under that leadership Billy deck and I started an HR services company called ask HR Pro our business model is different we pull from and utilize a network of top HR pros depending on the specific needs finds so whatever the mission we can align that exact expert or experts to scale up to or down to the need we do this by working with independent contractors we don't carry overhead and the associated inefficiencies to come with that old business model our services include anything from a one-time project such as regulatory compliance analysis to may be remote sexual harassment training on-site even provided by a master trainer or maybe we are hired to replace a traditional direct HR manager or maybe the entire department we do not have a one-size-fits-all approach we completely customize everything we do based on the needs and the budgetary requirements of our clients our claim to fame is that we have been able to consistently demonstrate your clients how to spend less money in HRM work we do deep dives break down what our clients are already paying under the HR flex sometimes to an extent they're not aware of then streamlined refined systems processes that produce a higher quality product for their teams and save money currently we have clients in multiple industries but our sweet sauce it's definitely hospitality whatever clients is one of the most successful independent restaurant concepts locally Bob Chin's Crab House to the opposite side of the spectrum the resurrection project that excels in the nonprofit sector so me myself and I I've worked extensively in all areas of hospitality including restaurants full and fast casual hotels and casinos have extensive experience providing leadership guidance and counsel to senior level company executives as well as a ton of labor relations experience in both Union and non-union environments managing up to four contracts simultaneously additionally had vast experience in training recruiting policy implementation HR metrics compliance risk management and payroll so I'll turn it back to you Paul thank you all right thank you Chris and last but certainly not least and one of my former business partners I'd like to introduce you to Kristin Crone heart founder at mind-meld Partners a restaurant marketing and alcoholic beverage consulting firm hello everyone thank you Paul and thank you to the hub team for inviting me to participate today my name is kristin crone Hart and I am the founder of mind-meld partners of restaurant marketing and beverage consulting firm based in Scottsdale Arizona I have a 30 year history in the restaurant industry working with everything from 2sr fast casual casual dining and bar focused restaurant concepts with the main goal being to create marketing and beverage programs to drive sales and profits I have also worked for a franchisee I've worked for a franchisor and I have been a franchisee myself so I think that gives me a broad and balanced understanding of the restaurant industry and what restaurant tours go through on a day to day basis it is not easy and certainly with khova dried now it is much more difficult after launching and managing a hundred unit chains marketing and beverage program and working alongside the various beer and spirit partners I decided to start mind-meld a little over five years ago I realized that there's a big opportunity to improve the working relationships between restaurants and the alcoholic beverage suppliers to identify brands that fit their menu and create marketing programs that drive sales and overall beverage volume and a very profitable menu category our clients range from local to regional to national brands offering everything from just bottled beer programs to extensive draft beer handcrafted cocktails and sake I too would be more than happy to take emails or questions from anyone if we can't get to all the questions on the call so Paul I'll turn it back over to you all right Thank You christen and now that everybody has had the chance to meet our panel we're going to jump to the Q&A portion so a lot of questions on PPP which was to be expected so we're gonna hit it off out the gate here with Pat so Pat one of the first questions we received actually multiple times was my business is not currently operating because of the shelter-in-place order do I have to use PPP loan proceeds funds now if I plan to open in a few weeks and just bonus out my employees then get it to the 75% threshold uh sure thanks Paul good question and yeah I I too have gotten many questions on this over the past few weeks I start with there's there's going to be a few ways to answer this and I think folks are approaching it differently and part of it as many of you know who have applies for PPP or kind of track this process is there is new rules and guidance issued constantly you know even after the program was put in place so from a timing perspective I understand the timing not ideal for businesses that are shut down like the restaurant or hospitality industry but yes from our perspective you must use 75% for payroll costs within eight weeks of the date of receipt of the loan funks so the clock is already ticking for many or else PPP will turn into a loan that must be paid back meeting that 75% threshold there meaning that 75% requirement rather is a threshold requirement for loan forgiveness so the covered period which many of you might know is is February 15 through June 30th so that said we believe the cupboard period would need to be extended for anyone who receives funds say today or moving forward however for folks who already received funds we've seen nothing to suggest yet that that covered period will ch
nge so that said I want to at least recognize that I'm seeing a few strategies here each with their own considerations so the strategies really boil down to either start the point the PCP funds now or hold and wait so in the holding wait scenario what a borrower would be I think holding and waiting for is when we restaurant let's say restaurant and borrower can reopen and the SBA rules change to allow businesses to redefine their measurement period so the funds would then be preserved so they're able to use the funds at that time I think the risk there is the rules don't change right if the rules do not change then the PPP converts to a loan albeit at a relatively favorable interest rate the other scenario is deploying the funds now so what your your benefit there is you preserve the forgiveness of the loan effectively benefiting from utilizing 24 25% unpermitted expenses you'll rent and loan payments and utilities the risk there is in the event the measurement period or the covered period rather is changed so you can redefine it based on when you open your business those funds are depleted great you know and pet on that note I know there were some additional questions when you're considering payroll for the hospitality industry which we know is heavily tipped are you seeing people putting that average tip into that payroll or how our tips being included that pay these employees when they're obviously not going to be making the money they've been they were making in the past prior to Cove at 19 yeah so so tips just like Commission another compensation could be included in the calculation of the tummy and a loan amount so those tips should then be paid out to employees and we're seeing folks get creative and what we're seeing here is is maybe increasing the hourly rate for employees calling it you know a few bucks for hazard pay and in distributing out that that was effectively tip compensation out that way I think a risk in that scenario is when the you know when PPP is used up and quote-unquote normal operations resume and the hourly wages wages reduced employee could claim constructive termination and may be then eligible for unemployment but at the end of the day that employment may have already been I'm sorry that employee may have already been on unemployment prior to receiving the PPT loan proceeds anyway and then the other thing I would just throw out there because we've gotten this question quite a bit is you know I can I just sit and wait and you know not use the funds yet and just pay it up as a bonus to my employees to meet the 75% threshold later and you know our answers is no you know unless the bonus is normal course of business for that borrower there's a risk there that it wouldn't that the use of funds to pay the bonus would not meet that 75% threshold wouldn't would not be eligible great now we're gonna pepper you with a few in a row but so a next question I get this for my clients there's been a hot topic for a lot of operators out there for both hotels and restaurants what should I do if my former employees do not want to return to work because they view unemployment benefit as a better option for them yeah that's a great question it has been a really common question lately and it's incredibly strange times when employers are competing with unemployment for employees the short answer is there was actually just some guidance put out over this weekend over the weekend by the by the SBA and borrowers PPP loan recipients are obligated to document a refusal to return to work so what they have to do is make a good-faith written offer for rehire so again make sure that's in writing readiness key and document the employees rejection and just keep keep track of that and what that means is the answer is not a hundred percent clear but based on the guidance that was put out over the weekend we believe the SBA is going to issue a rule that will allow you to exclude and essentially an employee who refuses to return to work they'll be excluded from the forgiveness calculation what's not quite answered yet is how the borrower can then spend that additional money so I think no matter what the borrower will only be able to spend it on authorized uses I would hold off on giving raisins raisins until we have actual guidance but at the end of the day I think it was it was helpful to see that guidance come out and certainly a benefit to folks who are you know seeing employees reject job offers to stick around on the appointment and the other thing I would caution is both employers and employees should be aware that refusing a job offer likely invalidates that our unemployment and you know when this is documented that you know there's a good chance they're not going to be able to stand on employment anyway and just from a practical matter I think for employees it's a bit short-sighted because eventually you know this benefit of staying on an unemployment with the surplus funds is going to go away and you know the job market could be pretty tough out there the landscape is definitely changing all right and then the last question on this PPP subject is I need to pay my vendors what is the risk by use my PPP loan proceeds for unauthorized expenditures sure another good question and I don't want to be all doom and gloom here but this is serious with some serious consequences and many folks I think who received PPP funds early notice but the information is just critical and what we worry about our potential whistleblowers a disgruntled employee can call a tip line and say they saw their book their boss roll up in a new Mercedes after securing the PPP loan so I just want to be clear about a few things you you must use at least 75% of the funds for eligible payroll cost you can pay the payroll cost even though your business is closed and the employees are not working you must not use more than 25% for the permitted uses mortgage interest payments rent utilities and so on so if you intentionally break either of those rules that I just mentioned you can be prosecuted for fraud as a federal offense and if so the government's going to pierce the corporate veil it make you personally pay back that amount and again any any violations here can be reported by whistleblowers the scrums will employ an ex-spouse and we're already seeing I mean you saw with groups like pop bellies and Shake Shack taking PPP on you saw some scrutiny from the media just yes QA Department of Justice announced the first fraud case so albeit I think it was gross fraud on the part of a PPP borrower but nonetheless there was a fraud case and in that case Department of Justice indicated that they've already spoke with 20 of the largest SBA loan processors and they've already seen Department of Justice has already seen evidence of applicants overstating the the loan amounts so I would not be surprised if following all of this there were hundreds of investigations into in Topeka B just like we size Department of Justice prosecute tarp recipients for fraud all right great so don't make your exes angry that's what I got out of that a little bit so all right so we're going to head on to the next set of questions with we're going to go with some HR operations pre-opening stuff going to change the subject a little bit and head over to Chris thank you for all that that was fantastic information so Chris one of the questions we've gotten a lot is can I take employees temperatures to ensure they don't have a fever when reporting to work now policy had asked me this question in early March I would have said are you crazy so in this brave new world things have changed and they're changing at a rapid rate so the answer now the viruses yes because the CDC and both state local health authorities at acknowledge community spread of code 19 employers may measure employees out of temperature as with all medical information this is really important employers must maintain the confidentiality of employee temperatures and other symptoms that's required by the a DA if you if you want to read more about it the EEO C's website there's a section called employers may now take employees temperatures and we are currently helping our clients come up with their legal creating procedures for their businesses so there's there's a lot of different things you can do there all right great another one kind of along that same topic was can I require employees to go home or stay at home if he or she is sick and is there any ramifications from doing so so again absolutely yes employees who are showing signs of respiratory illness can be asked to leave the workplace and stay at home until their symptom-free our clients are using some different baselines for that so you know some of them are using three days so they're telling the employees if you have not had a fever for at least three days your medication is over with we want three days between the end and return to work some employers are also for respiratory and coughing saying three days we have another that is using a seven day rule so there's a little bit of variance on how you can handle that also in Chicago for instance there are health ordinances in regard to other types of illnesses for employees working in food preparation and service areas that they cannot attend work are you seeing any of these types of koban 19 related specific related things being added to employee manuals or handbooks at this time yet or have you seen come across it at all yes yes absolutely we're working with several clients to update policy and procedure SOPs and regard to management's responsibilities how they're going to handle it in-house are they going to permit people into the building are they going to screen at the doorway there's the question that came up the Amazon about people waiting and security lines that they get paid or not you know building why they wait to have their temperature taken will they get paid so we're working with our clients there's a whole host of internal procedures communication that needs to happen at all levels all right great and then another question along visa and as well was we've got this one multiple times what would we do if an employee disclosed that they have been in close contact the person who tested positive for Cova 19 so in the restaurant industry i'ma talk specifically I'm going to say that based on the current restriction this is a delivery employee so they're a Packer cooker there's somebody in the kitchen they're they're delivery and these employees are classified as essential employees so according to CDC guidelines essential employees who've come close contact with a person diagnosed with coded may continue to work as long as the employee is asymptomatic and protective measures are taken so this includes screening the employee each workday for fever and other symptoms having the employee wear a mask and regularly disinfecting work areas gloves etc and there's there's a lot more information regarding this family's first coronavirus response act if you want to see more about that great those are those are great responses Patrick we're going to bounce back to you because going along with opening and reopening is also a lot of landlord negotiations with a lot of questions on that as well so want to throw this at you what kind of deals are you seeing in the marketplace for rent referrals and what concessions are landlords asking for and then also Chris I know you guys have been in some negotiations with your specific restaurants you don't get into full detail but after Patrick so I would love to hear what you're kind of taking on that as well I'm sure so the variances we're seeing on rent collection rates are startling similar to the the figures that Sam gave earlier on you know where revenues are going for restaurants it's really the same for for rent payment and landlords looking at some recent data from 200 national tenants it looks like total rent collections is roughly 50 percent so companies like AMC Theaters Barnes & Noble LA Fitness and the gap are paying no rent and paid no rent in April groups like Applebee's Five Guys Panera Bread are all paying less than 20% rent you know in terms of what the deal looks like typically we're seeing deferrals and not forgiveness in some circumstances the landlord has offered to forgive rent you know either entirely or perhaps base rent with the expectation of collecting some cam so what would have the norm the norm deal that's come across my desk at least it looked like deferred rent with the the portion that's deferred amortized there for some limited period of time let's say 3 to 12 months at an agreed upon interest rate along with an extension of lease term to tack on a few additional months some additional I'd say covenants and caveats so a caveat that if there's any type of default its immediate payback and the deal goes away a covenant that the tenant will continue to update the landlord monthly on the state of affairs of the business and a concession is no assignment or sub wet during the deferral period in terms of what else we've seen I think the sky is really the limit landlords have really gotten creative here and we've seen recapture so during that deferral period and perhaps the the repayment period the landward can terminate the lease recapture the premise and you know marketing and really let to somebody else as a condition of entering into a deferral agreement we've seen landlords do away with fixed-rate options so if you know you're even if you're five years out from an option you negotiated some fixed rent they're asking that that gets dropped and converted to a fair market value we're seeing cam caps go away as part of entering into an agreement so you know if your your cam is capped at X you know X dollars per square foot to enter into the program at the landlord saying you know get rid of the cap and you just pay your pro rata share of cam we're seeing them drop exclusives so you no longer have an exclusive we're seeing them include percentage rent so you know if there's the percentage rent was not already part of the deal that might now be part of your rent going forward whether it's written the furlough period or or even beyond that and you know we're seeing additional asks from security maybe some additional guarantees as well great and then Chris did you have anything you wanted to add to that at all kind of what you've seen with your clients or you guys personally absolutely so in in multiple states that similar to what patrick said we're seeing um landlords be flexible and do a lot of different things for our clients we have seen everything from deferrals to the end of the year in one case complete abatement for a month or two and then of course they're just reduction for the interim period across the board that's great I can tell you you know between my real-estate clients and our hospitality clients landlords on the same boat as is bas daily restaurants are you we need you guys need sales to pay your rent they need your rent to pay to pay their mortgages and their banks and you know I've definitely seen people working together usually coming up with a solid win-win in these negotiations all right next question we're going to move on to Kristin I'm going to get in some alcoholic beverage topic some fun stuff here so Kristin what are some important steps operators should be working on in in prep for reopening their dining room as it relates their alcoholic beverage programs well we've been really recommending to our clients kind of a series of things to start thinking about and we already have some that are already opening and states that I have lifted their restrictions but some important things would be completing physical inventories of all your beer wine spirits sakae whatever it is just just checking because everybody was trying to deplete deplete existing inventory as everything got started also encourage you to date check your kegs your bottle beers to ensure that it's still in code and if it's not we're seeing the distributors and the beer brewers that are willing to pick it up as long as you have full cases or full kegs another thing that people need to get in the queue is if you have dropped beer that you've shut down you need to get your draft lines cleaned and so you need
o be contacting your local distributors to make sure that you are getting appointments scheduled for that there are some great practices on the Brewers Association website so Brewers Association org just on what you need to do to be restarting your systems we also think it's important to take a look at your pre coded product mix and we have some plants that are going with whole menus out of the gate on the alcoholic beverage side including draught but we have quite a few that are doing limited menus because they don't know what they're stacking in situations like just like the conversation that we had about whether everybody's accepting their rehire of the job we have a lot of clients that have been concerned about whether they're going to have enough bartenders so they're thinking about starting out of the gate with a reduced offering even some of them just doing call on the liquor side instead of doing their cocktails for a couple weeks just to get a handle of how things are going with the bar we'd really recommend that you also reach out to your local distributor reps we've seen a lot of the distributors have changed their delivery schedules due to Kovan so you want to see what your date's going to be as you're reopening to accept those deliveries we have some distributors that have new minimum orders we've seen some that have tweaked the minimums no longer allowing you to do broken cases and requiring full cases I just saw another major distributor today that is now going to get rid of broken case charges and we're seeing some really great deals come out from some of the Brewers and the local distributors on keg beer pricing you know there's been a big haul on draft beer so there was a lot of beer that was thrown out but the Brewers on a lot of brands are working on keg discounts and then also volume discounts so please check those out and ask for that you might be able to find some really great deals on inventory reduction item so things that the distributors are trying to get off their floor so if you're looking for some help with your margins that is another great avenue to look at you also want to make sure the distributor's have the brands available and that there's no supply issues with your mandated brands especially if you have them menu listed in a cocktail it's also important to make sure that you're very clear with your communication about what your opening date is with the distributors so that everybody is working to secure the supply chain and just help to make sure that you have what you're needed also really recommending that you are paying attention to your nuke Ovid sanitation procedures as it relates to the bar so I know everybody's talking a lot about the visible touch point that's going to be very important we have some clients that are coming out of the gate using disposable glassware instead of glasses that get washed and then reused so that might be something that you might want to consider and then along with what's happening with the food menu we're seeing a lot of our clients are going with the disposable one-time use paper menus and so we're seeing them do the liquor wine beer cocktail menus separate from the main menu so that if you're going to make changes on the beverage side that you're a little bit more nimble to be able to do that and to ramp that up as you start building up your business well that's a lot of great stuff awesome so our next question for you kristen is should I go with pre Cobra pricing or do I need to rethink my alcoholic beverage pricing and do you think that happy hours and special to remain the same across the industry or will be less or seen less honor we really yeah we really feel like consumers are going to be much much more price sensitive coming out of the situation due to job loss and their economic uncertainty we think value pricing will be a big sales driver I was watching a speaker the other day talking about kind of what happened in 2008 and that's when all the value meal strategies got put into place and they were really kind of recommending not to go that that route this may be a temporary thing but we do feel like we're going to see consumers splurge on the entree because they've been at home so they're going to get that main entree but where we think we're going to see reduction in purchases is in appetizers alcohol and desserts so that means you're going to have to get creative from a marketing perspective to ensure that you're getting those additional sales we also think the work from home culture is likely to grow and kind of stay in place as businesses are seeing that they can have people work from home which means a lot of people are eating lunch at home to save money and it's changing the daypart mix pretty dramatically so where lunch used to be the most popular now it's dinner which means that we're going to start seeing people if they're working from home happy hour is going to be important in the states where it's legal where people think they're going to get a deal and they can go have a drink might be able to start coming in a little bit earlier so we think that those you know promo nice happy hours social activities where they can go back and start feeling normal are going to be important so pay attention to what you're offering we're we're suggesting that our client even if they're going with regular pricing that they have some pricing deals in there we also have heard a lot about the fact that guests are probably going to cut back so they're going to treat themselves to alcohol if we're going to have two drinks they might only have one so having an upselling strategy in place is going to be really important because you want to get the most dollars that you can out of a guest if they're only going to order one you might trade them up from a six ounce glass of wine to a nine ounce portion or if they were going to get a pint of beer trade them up to that 22 by doing some some great deals you also might find people that were ordering a ten dollar glass of wine and during Copas they've been going going to the store and they're getting all those name-brand wines that are you know cheaper in price and you might see a trade down in what they're purchasing as far as brands so pay attention to that and kind of watch your inventory and then of course we still think that that the go sales are going to continue to be a much bigger part even on the alcohol side so I think we need to have a separate pricing strategy for to go more in alignment with retail and your dine in a strategy that you've currently been working with awesome that is excellent information that Kristen unique of this panel I'm have to ask myself a question just because we have gotten a few insurance questions on stuff they kind of go along with the strategy of on reopening so one question we got numerous times is where do you see hired not on the auto coverage going long-term what are your clients doing and have you seen people start to shy away from third party delivery I'll answer first and kind of the insurance side and then I'd like to open it up a little bit to Chris Kristen and Pat if they haven't can they want to add so for all you operators on this call who are you know piece of restaurants full you know full service delivery using no third party you have all seen how complicated expensive higher not on auto could be given this unique atmosphere we've seen carriers really start to open up how they're going to view that well one there's short-term policies you can add and put in place with major carriers who aren't really allowing it before for you know full delivery and then we have other carriers some in the market they're going to be offering long-term programs I'm getting inquiries regularly every day from clients and what other clients are doing are strategies to do this obviously it takes some training set up some risk services with your drivers to get a program set up but I think as these third-party delivery companies keep raising their fees during these times it's making a lot harder for operators to use them and now that people are used to being having home delivery it's not a habit that we're going to get away from so Chris I'll ask you first I know as a client you've asked me this question work on some of this stuff what have you seen with your clients as far as looking at getting away from third part delivery and starting to do their own driver coverages so you know great question so we're trying to be really really creative and especially for clients that have received the PPP loans there in other states giving getting back to work sooner than later but they're their dining room capacities you know Atlanta for example has been diminished extraordinarily to you know 25 percent of what it was previously so some of our clients are and us we're looking at coming up with some Universal job descriptions that are for for the house employees paying them a rate not a not a tipped rate but a rate above minimum wage to a get them off the couch because they're receiving substantial unemployment and stimulus money from the government but to have them do dual roles they may not just be serving we may have them packing takeout we may get into the delivery business a because of the cost and B because we want to get as many people working as humanly possible but across the board we have several clients that are looking at not paying tipped wages and coming up with a meaningful wage for servers getting back to work so they can do a little bit maybe a little bit more than just serving all right great and then Chris me having to add on that you seen with your clients at all I'm delivery for third party now I mean I think everybody's getting more and more concerned with the bees and I think that one of the issues even for third parties to have to address is another person touching the food so you know we're starting to see we have quite a few pizza customers clients and you know their volumes definitely picking up and people are getting in the habit of coming to pick up their food so I don't know I think it's I think that we're going to have to see some type of an adjustment in in the fees that are charged because I do think it's a lot especially right now getting started back up for for the restaurants to start kicking in with some of their own delivery so we'll see great yeah and like I said there's a lot more carriers open to this I think there's be a lot more programs a lot more master programs develop so I think higher nonno from an insurance perspective will kind of be a different animal than it was three months ago all right so we kind of have a group question here kind of along all these lines and Pat we'll start with you from the legal side and then Chris and Kristen kind of seen what your take is this what do you think will happen with all the state changes with temperature I'm sorry what do you think will happen with all the temporaries state law changes along restaurants sell alcohol to go doggie bag and delivery Kristin maybe you want to start with what you're seeing Arizona and then Pat you can go from there yeah you know of course it's a million dollar question so we're all hopeful that the states will continue with the new allowances after Kovas just in an effort to help restaurants grow their sales back because it has been a nice addition for them to be able to do I mean obviously it's been a little challenging from our perspective because we have clients have restaurants and you know 30 states and you know it's very different from state to state on wine liquor cocktails mix pre-mixed cocktails or how it's all been unique so it's been a little bit challenging but you know some industry calls that we've been on we've heard people say that they feel the genies out of the bottle and of course you know I'm not going to go that far because this has been such a restricted area of our business for so long but would really encourage you to contact your restaurant associations contact your state legislators as well and how I tell them that you need that to continue going forward I'd also ask you to take a look at your executive orders from your state governors just to familiarize yourself with what the expiration date is on your particular state allowances for that because I know you know Arizona is different than Illinois we're starting to open dining rooms on the 11th in the state of Arizona we've got clients that have already opened in Florida and Texas and so know the particulars the other thing is we have had a client that was asking okay I didn't do mixed cocktails and I have restaurants that are in states that we can do it should I do it now and my advice on that is not that there's not value in it but you've got a lot to handle to get your dining rooms reopened I would not focus on that right now especially until we have clarity on what the future looks like with those temporary law changes all right Patti of anything you want to add to that as the attorney of the group um sure so so purely speculation on my end but I think the I guess I hope the outcome of all of this and what I think is realistic is that the health and sanitation requirements will probably increase but I think I think cities are going to be a little bit more flexible with business operations you know maybe with the way you sell liquor or the the scope of a say a sidewalk or outdoor patio right so I think generally that's that's a trend I hope we continue to see you know looking at the state of Illinois city of Chicago so the Illinois Liquor Control Commission I think was I would say if you are in Illinois you should go and look at their website to see what they've done if you haven't already done so there's been a ton of updates many are temporary all are kind of framed to be temporary and in some I think we'll kind of outlive this this koban situation so a temporary solution is is perhaps the return of whining spirits right so that's going to be temporary we think because there's a date certain on it rather it ran for wine and spirits that are purchased between February 18th up to March 16th licenses have kind of state licenses at least have been extended you know to the extent they were they were expiring between March 31st to June 30th have all been extended until July 31st so that's another temporary extension by to help navigate this this program there's been kind of talk on on delivery of liquor in the state of Illinois and then there's delivery include cocktails to go so the delivery of liquor lease in the city of Chicago it's not it's not it has not been crystal clear in the past but both the tavern license and incidental ordinance permits sale of packaged goods and incidentally to the primary activity so I think folks have taken a position for some time that you actually could deliver a package liquor even in the city of Chicago at least and in other surrounding municipalities even even before all of this and I think the state just made it a bit clear for everybody the the piece that's kind of still I'm going to say it's up in the air and I know that you know many are pushing forward to go cocktails I just don't think it's likely to change when you talk to the state you talk to legal counsel at the state they're really you know kind of holding on to it's a violation of the vehicle code and absent some legislative act you can't unwind that you know I think in the future maybe this brought that issue to light and you know we can convince a legislature to clear amend and permit sales of cocktails to go but but as of now in the short term I just I don't see it without that legislative action great and then of course I don't know that you have anything you want to add to that question as well just something on a little bit different vein is that talking to our clients who are all lobbying in states where they're not able to deliver cocktails because of issues with it being filled and other other laws associated that all of the rest your honors I've spoken to believe that due to the reductions that are going to be in place for a while for the dining rooms that alcohol beer or wine fills maybe they're saving grace so a matter of survival to get through this interim period so it's a it's a huge issue for a lot of restauranteurs
it may be a means to their survival all right great well I want to thank all of you who joined us today I want to thank all of our panelists for this great insight and information you know we will be following up with some additional resources including information register for hubs upcoming event hub is putting on this amazing event on May 20th we are actually doing a hubs of virtual summit ready for tomorrow this online of that offers perspectives and guidance on how to move your business forward and intended for business executives and HR leaders who are looking for practical guidance for today and forward-looking perspectives for tomorrow this is basically a virtual summit we will be able to sign up and attend different classes throughout the day it's a really cool idea so and lastly we appreciate all any feedback you have about our webinar to help us for future events please take a minute to complete the survey which will follow the webinar this is also an opportunity to request any further information like I said we will provide you with all of our panelists and the IRS contact info if anything that did not get answered on any one of from any one of our panelists or from us on the insurance perspective we're all here to help we all want to see able to get get through this together so again thank you so much this ends our webinar and we hope that you found this information valuable and are better informed on what options exist to help maintain your business when you get ready to open post Kovan please stay healthy and safe and thank you
