Atlanta Restaurants 2010 Sales Cream 2009
By Robert Wagner, CPA
NetFinancials’ latest sales survey of 71 independent Atlanta restaurants reveals that December same-store sales jumped 10.5% over sales for December 2009. Our fourth survey of this year shows year-to-date 2010 sales also increased, rising 5.2% over full-year 2009 sales. These same-store sales gains are broad-based, impacting three major Atlanta restaurant sectors – fast-casual, causal and fine dining.
December 2010 vs. December 2009
A substantial majority of Atlanta restaurants smashed same-store sales for December 2009. Of 71 restaurants surveyed, 69% reported positive sales gains compared to December 2009. Thirty-five percent of restaurants surveyed reported double-digit sales gains over December 2009 sales.
Year to Date 2010 vs. 2009
Sixty-five percent of surveyed restaurants reported 2010 sales gains vs. 2009. Cumulative 2010 sales increased 5.2% over total 2009 sales. Twenty-four percent of restaurants surveyed reported double-digit sales gains for 2010 over 2009.
Conclusion
Robert Wagner, NetFinancials president states that, “Each of our 2010 surveys shows that the industry continues to heal from the disaster of 2008 and 2009. As 2010 progressed more restaurants reported year-to-date positive sales trends. Significantly, the total dollars spent on dining out increased in 2010 vs. 2009 in each of our surveys. The trend of increased consumer spending and improving year-to-date sales is unmistakable.”
The Sample: The 71 independently-operated, non-franchise restaurants were drawn from the metro Atlanta market. Total December 2010 sales in our survey were $12,058,825. Full year 2010 sales for surveyed restaurants was $146,114,288. Our sample included restaurants in Atlanta’s fast casual, casual and fine-dining segments.
Robert Wagner, CPA is president of NetFinancials, Inc. which provides a full range of tax and accounting services for restaurant companies. Email: bob.wagner@netfinancials.com. www.netfinancials.com 404-874-7002
NetFinancials’ restaurant sales surveys are provided free of charge as a public service to the industry.
Tuesday, February 15, 2011
Tuesday, November 16, 2010
Atlanta’s Independent Restaurants Whip Up Strong Sales
By Robert Wagner, CPA
September 2010 was a watershed for Atlanta’s independent restaurants. Not only is the Great Recession receding as a bad memory but same-store sales are picking up significant momentum going into the crucial fourth quarter when restaurateurs hope to finish the year with strong holiday sales.
NetFinancials September 2010 survey of 67 independent Atlanta restaurants, its third survey of 2010, reveals that September same-store sales increased a whopping 7.4% over sales for September 2009. The September same-store sales gains are broad-based, rippling through three major Atlanta restaurant sectors – fast-casual, causal and fine dining.
How are individual restaurants doing?
A hefty majority of Atlanta restaurants were really cookin’ in September. Of 67 restaurants surveyed, an amazing 78% reported positive sales trends compared to September 2009. Thirty-seven percent of restaurants surveyed showed double-digit sales gains in September. That is a startlingly strong up-tick in sales volume.
The September results contrast with our May 2010 survey which showed that only 55% of restaurants reported same-store sales increased over May 2009. September’s 7.4% sales increase is twice the 3.7% increase in same-store sales measured in May 2010.
The NetFinancials’ September sales survey also looked at year-to-date sales trends. Sixty-one percent of the restaurants in the survey reported 2010 year-to-date sales gains over 2009. Again, that is a significant improvement over the May 2010 survey in which only 50% of restaurants indicated that year-to-date 2010 sales were ahead of 2009.
Conclusion
Robert Wagner, NetFinancials president states that, “Finally Atlanta same-store sales are accelerating! Our September survey shows clearly that the recent, long recession is giving way to a substantial, broad-based recovery of sales among Atlanta’s independent restaurants. The survey results are easily the best sales trends we have seen in several years. In addition, there are indications that sales will remain strong through the rest of 2010.” The Sample: The 67 independently-operated, non-franchise restaurants were drawn from the metro Atlanta market. Total September 2010 sales in our survey were $10,566,420. Our sample included restaurants in Atlanta’s fast casual, casual and fine-dining segments.
Wednesday, November 3, 2010
NEW TAX LAW
This September Congress passed and the president signed into law a series of new tax laws implementing changes to tax law effective January 1, 2010. Hard to have serious tax planning if we don't know the law until the year is two-thirds over as is the case for 2010.
There are many summaries cirulating that recap the new tax law - a subject that's dry as toast. I like the summary prepared by and recieved from an Atlanta CPA, Kent Bridges of Bridges & Dunn-Rankin, LP (www.bridgesdunnrankin.com). Here is what Kent had to say about the tax law changes:
· Bonus first-year depreciation – For most new depreciable assets (other than buildings) placed in service during 2008, The Economic Stimulus Act (which was passed in early 2008) permitted 50% of the cost to be expensed immediately, with the balance recovered under the regular depreciation rules. This special first-year deduction applied both for regular tax and alternative minimum tax. For autos and light trucks, for which first-year depreciation would otherwise have been limited under the so-called “luxury automobile rules”, bonus depreciation of $8,000 could be taken (bringing the total deduction for such to approximately $11,000). These bonus depreciation rules were to have applied only for 2008. However, the rules were subsequently extended through 2009, and this new legislation further extends bonus depreciation through the end of 2010. Also, for purposes of the long-term contract accounting rules, bonus depreciation will be decoupled from allocation of contract costs under the percentage of completion method.
· Increased section 179 expense amount – The amount of furniture and equipment purchases that businesses can elect to immediately expense is increased to $500,000 for purchases made during 2010 and 2011, and the level of purchases at which this benefit begins to be phased out is increased to $2,000,000. This benefit is also now extended to cover the cost of qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.
· Increased deduction for start-up expenses – For tax years beginning in 2010, the amount of start-up expenses which can be immediately expensed is increased to $10,000.
· Increase in exclusion for gain on sale of Qualified Small Business Stock – Under current law, non-corporate taxpayers may exclude from taxable income 75% of the gain from the sale of “qualified small business stock” which has been held at least 5 years. The new legislation increases this exclusion to 100% for qualified stock purchased after the date of enactment and before January 1, 2011. Further, while the benefit of the exclusion has in the past been somewhat limited by an alternative minimum tax add-back, the alternative minimum tax adjustment will not apply to qualified stock purchased during this period. Accordingly, gain from the sale of qualified stock could be completely free of Federal tax.
· More favorable treatment of small business tax credits – “Eligible small businesses” (those with average annual revenue of less than $50 million) will be able carry general business credits generated in 2010 back 5 years. Further, such credits will be able to offset both regular tax and alternative minimum tax.
· Shortening of the “built-in gains tax” period for S-corps – C-corporations which make a Subchapter S election and then sell their assets within 10 years of electing S status are subject to a corporate level tax (the “built-in gains tax”) on any unrealized gains that existed at the effective date of the S election. For asset sales which occur during 2009 or 2010, legislation enacted last year shortened this period to 7 years. For asset sales which occur during 2011, the new legislation further shortens the period to 5 years.
· Deduction of health insurance in computing self-employment tax – For 2010, self-employed persons may deduct their health insurance premiums not only in computing income tax, but also for purposes of the self-employment tax.
· Cell phones no longer listed property – For tax years beginning after 2009, cell phones and similar telecommunications equipment will no longer be subject to the strict substantiation-of-use requirements which apply to “listed property”.
· Information reporting by owners of rental property – Under the new legislation, owners of rental real estate will generally be subject to the same information reporting requirements as businesses, which means that they will need to file Form 1099s with respect to payments of $600 or more to service providers.
· Increased penalties for late filing of information returns – Consistent with recent trends, the legislation seeks to offset some of the cost of its favorable tax provisions with increased penalties for late filing of information returns such as 1099s.
· Roth conversions within employer plans - Participants in employer-sponsored retirement plans which include a Roth feature, will be able to convert pre-tax balances to Roth status, provided the funds are otherwise eligible for distribution at the time of conversion. The conversion is a taxable event.
· Sourcing of guarantee fees for foreign corporations – Foreign corporations which receive fees from their U.S. subsidiaries for guaranteeing their debt will be required to treat such fees like interest under the sourcing rules, which will generally mean that such fees are subject to U.S. withholding tax, unless otherwise exempt under an income tax treaty.
This September Congress passed and the president signed into law a series of new tax laws implementing changes to tax law effective January 1, 2010. Hard to have serious tax planning if we don't know the law until the year is two-thirds over as is the case for 2010.
There are many summaries cirulating that recap the new tax law - a subject that's dry as toast. I like the summary prepared by and recieved from an Atlanta CPA, Kent Bridges of Bridges & Dunn-Rankin, LP (www.bridgesdunnrankin.com). Here is what Kent had to say about the tax law changes:
· Bonus first-year depreciation – For most new depreciable assets (other than buildings) placed in service during 2008, The Economic Stimulus Act (which was passed in early 2008) permitted 50% of the cost to be expensed immediately, with the balance recovered under the regular depreciation rules. This special first-year deduction applied both for regular tax and alternative minimum tax. For autos and light trucks, for which first-year depreciation would otherwise have been limited under the so-called “luxury automobile rules”, bonus depreciation of $8,000 could be taken (bringing the total deduction for such to approximately $11,000). These bonus depreciation rules were to have applied only for 2008. However, the rules were subsequently extended through 2009, and this new legislation further extends bonus depreciation through the end of 2010. Also, for purposes of the long-term contract accounting rules, bonus depreciation will be decoupled from allocation of contract costs under the percentage of completion method.
· Increased section 179 expense amount – The amount of furniture and equipment purchases that businesses can elect to immediately expense is increased to $500,000 for purchases made during 2010 and 2011, and the level of purchases at which this benefit begins to be phased out is increased to $2,000,000. This benefit is also now extended to cover the cost of qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.
· Increased deduction for start-up expenses – For tax years beginning in 2010, the amount of start-up expenses which can be immediately expensed is increased to $10,000.
· Increase in exclusion for gain on sale of Qualified Small Business Stock – Under current law, non-corporate taxpayers may exclude from taxable income 75% of the gain from the sale of “qualified small business stock” which has been held at least 5 years. The new legislation increases this exclusion to 100% for qualified stock purchased after the date of enactment and before January 1, 2011. Further, while the benefit of the exclusion has in the past been somewhat limited by an alternative minimum tax add-back, the alternative minimum tax adjustment will not apply to qualified stock purchased during this period. Accordingly, gain from the sale of qualified stock could be completely free of Federal tax.
· More favorable treatment of small business tax credits – “Eligible small businesses” (those with average annual revenue of less than $50 million) will be able carry general business credits generated in 2010 back 5 years. Further, such credits will be able to offset both regular tax and alternative minimum tax.
· Shortening of the “built-in gains tax” period for S-corps – C-corporations which make a Subchapter S election and then sell their assets within 10 years of electing S status are subject to a corporate level tax (the “built-in gains tax”) on any unrealized gains that existed at the effective date of the S election. For asset sales which occur during 2009 or 2010, legislation enacted last year shortened this period to 7 years. For asset sales which occur during 2011, the new legislation further shortens the period to 5 years.
· Deduction of health insurance in computing self-employment tax – For 2010, self-employed persons may deduct their health insurance premiums not only in computing income tax, but also for purposes of the self-employment tax.
· Cell phones no longer listed property – For tax years beginning after 2009, cell phones and similar telecommunications equipment will no longer be subject to the strict substantiation-of-use requirements which apply to “listed property”.
· Information reporting by owners of rental property – Under the new legislation, owners of rental real estate will generally be subject to the same information reporting requirements as businesses, which means that they will need to file Form 1099s with respect to payments of $600 or more to service providers.
· Increased penalties for late filing of information returns – Consistent with recent trends, the legislation seeks to offset some of the cost of its favorable tax provisions with increased penalties for late filing of information returns such as 1099s.
· Roth conversions within employer plans - Participants in employer-sponsored retirement plans which include a Roth feature, will be able to convert pre-tax balances to Roth status, provided the funds are otherwise eligible for distribution at the time of conversion. The conversion is a taxable event.
· Sourcing of guarantee fees for foreign corporations – Foreign corporations which receive fees from their U.S. subsidiaries for guaranteeing their debt will be required to treat such fees like interest under the sourcing rules, which will generally mean that such fees are subject to U.S. withholding tax, unless otherwise exempt under an income tax treaty.
Monday, July 12, 2010
The Atlanta Business Chronicle has published Bob Wagner's article about the reluctant recovery of Atlanta Restaurants from the recession. He has also been interviewed by WGST radio this am.
Sunday, July 11, 2010
Atlanta’s Independent Restaurants and the Reluctant Recovery
By Robert Wagner, CPA
Yes, Atlanta restaurant sales continue to improve. Mother’s Day helped with ‘families who brunch,’ and waits for “Dads and Grads” dinners were long. In fact, aggregate sales for May 2010 at surveyed restaurants increased 3.7% over sales for May 2009 - a slight improvement over our February restaurant survey. February 2010 total restaurant sales increased just 1.3% over sales the prior February.
How are individual restaurants doing?
The number of restaurants in our survey showing sales increases edged out those showing sales declines. Of the 62 restaurants surveyed, 34 experienced increased sales over May 2009. Twenty-eight restaurants showed sales decreases from the prior May. So that’s 55% showing a sales rise, with 45% reporting a sales decline.
We also examined year-to-date 2010 sales compared to 2009. And here the results are about the same. Of the 62 restaurants surveyed, 50% had year-to-date 2010 sales greater than 2009 sales and 50% showed 2010 year-to-date sales declines.
Conclusion
Much like the rest of the area’s economy, our Atlanta restaurant industry is still waiting for a robust economic recovery. While May aggregate restaurant sales increased slightly, only a little over half of the restaurants we surveyed saw a sales increase in May. And that’s compared to very weak sales for May 2009! The Great Recession may be over but many Atlanta restaurant operators feel trapped in a reluctant recovery. With highly-regarded restaurants such as Repast and Joel closing their doors, many independent restaurants are still looking for a post-recession “bounce” to show up at their cash registers.
The Sample: The 62 independently-operated, non-franchise restaurants were drawn from the metro Atlanta market. The sample includes restaurants in the fast casual, casual and fine-dining segments.
Robert Wagner, CPA is president of NetFinancials, Inc. which provides a full range of tax and accounting outsourced services for restaurant companies. Email: bob.wagner@netfinancials.com. www.netfinancials.com
By Robert Wagner, CPA
Yes, Atlanta restaurant sales continue to improve. Mother’s Day helped with ‘families who brunch,’ and waits for “Dads and Grads” dinners were long. In fact, aggregate sales for May 2010 at surveyed restaurants increased 3.7% over sales for May 2009 - a slight improvement over our February restaurant survey. February 2010 total restaurant sales increased just 1.3% over sales the prior February.
How are individual restaurants doing?
The number of restaurants in our survey showing sales increases edged out those showing sales declines. Of the 62 restaurants surveyed, 34 experienced increased sales over May 2009. Twenty-eight restaurants showed sales decreases from the prior May. So that’s 55% showing a sales rise, with 45% reporting a sales decline.
We also examined year-to-date 2010 sales compared to 2009. And here the results are about the same. Of the 62 restaurants surveyed, 50% had year-to-date 2010 sales greater than 2009 sales and 50% showed 2010 year-to-date sales declines.
Conclusion
Much like the rest of the area’s economy, our Atlanta restaurant industry is still waiting for a robust economic recovery. While May aggregate restaurant sales increased slightly, only a little over half of the restaurants we surveyed saw a sales increase in May. And that’s compared to very weak sales for May 2009! The Great Recession may be over but many Atlanta restaurant operators feel trapped in a reluctant recovery. With highly-regarded restaurants such as Repast and Joel closing their doors, many independent restaurants are still looking for a post-recession “bounce” to show up at their cash registers.
The Sample: The 62 independently-operated, non-franchise restaurants were drawn from the metro Atlanta market. The sample includes restaurants in the fast casual, casual and fine-dining segments.
Robert Wagner, CPA is president of NetFinancials, Inc. which provides a full range of tax and accounting outsourced services for restaurant companies. Email: bob.wagner@netfinancials.com. www.netfinancials.com
Wednesday, July 7, 2010
Exploration
I found myself envying my daughter who is experiencing everything for the first time. From the goats on the farm we visited to the pug and German Sheppard we stayed with to the carrots you see here.
I found myself envying my daughter who is experiencing everything for the first time. From the goats on the farm we visited to the pug and German Sheppard we stayed with to the carrots you see here.
Each activity was received with such excitement! I was also jealous of our friends who are diving into the Nashville food and beverage scene to find their favorite restaurant and watering hole. (If you are ever in Nashville check out Monell’s for family style home cooked breakfast and The Patterson house for a throwback to Prohibition ambiance and delicious, innovative cocktails!)
While on vacation I love to explore what the locals do and where they eat yet at home I find myself eating at the same quality restaurants and going to the same Atlanta attractions week after week and year after year. Then I realized there is nothing stopping me from living like a tourist in my own town! It’s time to check out festivals and revisit museums, to look for new restaurants off the beaten path and go explore the OTP scene.
Please send me your suggestions of local hideaways and new adventures to explore.
Thursday, July 1, 2010
To Hire or not?
To HIRE or not?
by Robert Wagner, CPA
by Robert Wagner, CPA
On March 18, 2010 the Hiring Incentives to Restore Employment (HIRE) Act became law. The act has some really juicy tax benefits for employers that hire folks who have been unemployed for a while.
Payroll Tax Exemption
For an employer that hires a “qualified” employee the employer gets an exemption from paying social security tax on the new employee’s wages. The social security tax is calculated at 6.2% of wages paid. So for each $1,000 in wages paid to a qualified employee, the employer saves $62.
In order to take advantage of this tax break, make sure your payroll company knows you have hired a qualified employee. To do that, your new employee should complete new IRS Form W-11; available at the IRS Web site – http://www.irs.gov/pub/irs-pdf/fw11.pdf. Send the completed Form W-11 to your payroll company and then double-check your payroll reports to be sure that you are getting the HIRE tax exemption.
New Hire Tax Credit
In addition, the employer can claim a generous income tax credit on their 2011 income tax returns for each HIRE employee retained more than a year. The credit can be as much as $1,000 per retained HIRE employee.
Special Considerations for Restaurants
Restaurant operators should certainly consider taking advantage of the HIRE act for all new kitchen and front-of-the-house employees. It gets a little tricky when taking the HIRE tax exemption for new servers. Normally payroll taxes on server wages qualify for the FICA tip credit. Taking the HIRE tax exemption will mean that the FICA tip credit at the end of 2010 will be lower than normal. So while the HIRE tax exemption is a good thing even for servers, the restaurant operator may end up owing income taxes for 2010 because his FICA tip credit is lower than was expected. There is a similar issue with employees that qualify for the Work Opportunity Tax Credit (WOTC).
In addition, the HIRE tax credit available in 2011 may be limited on the restaurateur’s income tax return. That’s because the credit is subject to the Alternative Minimum Tax. If the operator cannot use the HIRE tax credit, at least the credit can be carried forward to another tax year.
Qualified Employee
The HIRE act tax reduction benefit is available only for a qualified employee – that is, an employee that began employment after February 3, 2010 and before January 1, 2011, who has been unemployed (or underemployed) during the 60-day period ending on the date he/she is employed. The qualified employee must certify that they have not been employed for more than 40 hours during the 60-day period ending on the date they start employment. Employees use Form W-11 to certify their unemployed status. Supply the Form 11-W to your payroll company. It does not need to be sent to the IRS. Note that the HIRE benefit is NOT available for an employee that is hired to replace an existing employee UNLESS the existing worker terminated voluntarily or for cause. Family members of the employer do not qualify for HIRE.
Bottom Line
The HIRE is a terrific tax benefit for restaurant operators. There is very little downside to taking HIRE to reduce payroll taxes for kitchen and management staff. In this economy, operators can use all the help they can get.
For restaurants with servers, care should be exercised in taking HIRE for servers since the reduction in payroll taxes will certainly reduce the amount of FICA tip credits available for 2010 and 2011.
For restaurants with servers, care should be exercised in taking HIRE for servers since the reduction in payroll taxes will certainly reduce the amount of FICA tip credits available for 2010 and 2011.
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