Astute Restaurant Owners
Embrace Barter To Stay Abreast Of The Ever-Changing Times. .
& Fickle Public Keep Restaurateurs On Their Toes!
situation that might utilize (even minimally) idle
equipment, space or time would by its very nature spread out
costs and increase business profitability.
trade opportunities that would fill unsold radio time, empty
hotel rooms, or idle printing presses, for example must be
seen as a boon to these industries.
Restaurants, too, are an integral part of this segment of
the barter economy, their meals being an eminently tradable
uninitiated, restaurants might seem to be unlikely
candidates for trade. Their costs appear high: food,
alcohol, salaries, linens, rent, gas and electricity, all
figure into the cost of every menu item.
Further, the question is usually raised as to the ability of
any barter group to match the restaurant�s established food
purveyors in quality and price.
Schacht and Joan Varner of the Chicago-based Illinois Trade
Association, find that despite outward first-glance
appearances, restaurants almost always prove to be
particularly successful traders.
it is obvious that food and alcohol do not comprise all of
any restaurant�s costs. Also, because barter promises to
bring in customers when the restaurant is less than full,
and is most successful when used to fill empty seats.
can�t count the cost of staff, electricity, linen or decor,�
Varner and Schacht explain. �The lights are on, the tables
are set, the waiters in place anyway. By utilizing this
space barter simply spreads costs more optimally.�
actual cost of doing barter business is really limited to
only the cost of the food and beverage,� Schacht points out,
�and that cost usually runs somewhere between 30� to 35� on
a dollar. What the restaurant is trading is its food,
beverage, and empty space!�
Incorporated into many barter agreements with restaurants
are certain exclusions. A restaurant always busy on Saturday
night may want to exclude that night from trade. A
restaurant packed at lunch may also exclude lunch.
restaurants choose, however, to trade across the board. They
wisely find their barter business important enough not to
turn away any of the potential.
owner of a highly successful group of restaurants in the
Chicago area views his incremental barter business income as
virtually cost free. Here�s why:
barter successfully furnishes essential goods and services
to the restaurants in return for meals. In contrast to the
many varied situations in which restaurateurs �comp� meals,
barter is not asking for freebies.
exchanges regularly provide such peripheral but necessary
items as advertising, printing, flowers, plants, window
treatments, carpet cleaning, exterminating, painting, even
roof repair, as well as sealing the striping of parking
Second, in addition to paying restaurants back in kind for
their meals, the exchanges might also take their fee in
return for their brokering services, they take meals back at
a ratio of one and one-half to one in their favor, rather
than in cash.
example, for every $100 of printing the trade exchange
provides to the restaurant, the restaurant gives back $150
in meals, but pays no cash fee.
arrangement constitutes a particularly good deal for the
restaurant. A quick comparison of the ratio to a cash fee
deal illustrates why. It is safe to assume that an average
restaurant�s cost of food is about 30� on a dollar.
the restaurant to pay a 10% cash fee for the barter
services, a typical cash fee for the industry, it�s trade
dollar would cost them 40�: 30� for the food and 10� to the
ratio of one and one-half to one the real cost to the
restaurant would be 30� for the food plus half again for the
fee--an additional 15�--or 45� on the dollar.
However, for the extra 5� the restaurant has realized, in
addition to no cash outlay at all, the acquisition of real
value: more people have come into the restaurant to fill the
empty seats. And the possibility of future, cash spin-off
business has risen.
if there are special exclusions to the trade, potential
on-the-spot cash income.
Illinois Trade Association (ITA) has developed a scrip
program, which offers restaurants additional advantages.
Identified in the non-barter world as coupons, scrip usually
comes in $10 denominations.
be used to pay for food and beverage, excludes tax and
gratuity, and has an expiration date. And, the proviso that
no change can be returned in the event that the meal costs
less than the face value of the scrip redeemed.
expiration date is largely for the benefit of the restaurant
owners; most of them like to know that there is some date
after which they would not be accepting the scrip, should
they decide to cancel the program.
Restaurants on ITA�s program soon learn to appreciate the
extra trade or cash they receive.
a meal cost $44 plus tax and tip, the patron would usually
give the restaurant four pieces of scrip with a face value
of $10 each, plus $4 cash for the balance, plus tax and tip
the meal cost $47 or $48, the patron would probably pay with
$50 in scrip and allow the restaurant to retain the barter
profit. (No change is given when scrip is used.)
first scenario, which often occurs, the restaurant gets 10%
of the bill back in cash. Since his real cost was only 30�
on a dollar, he has received back full fully a third of his
actual out-of-pocket expense for food and beverages.
times a patron will spend much more than the amount of scrip
he has to pay for it with. Accordingly, he must make up the
difference in cash.
sweeten the deal even more for client restaurants, ITA�s
scrip is good for 100% of the meal only for parties of up to
five. For parties of six or more scrip is valid for only 70%
of the bill.
all larger parties the restaurateur sees a return of his
entire cash outlay. His barter income is virtually free.
Schacht and Varner both maintain that the barter income
their member restaurants receive is virtually cost free.
Varner estimates the actual net outlay for products and
services purchased on trade by her restaurant clients is
about 10-cents on the dollar.
most important factor in securing restaurant clients and
insuring the overall success of their trade participation is
initial education coupled with on-going guidance.
has made it a major priority to work closely with its
restaurant clients from the moment of initial contact
throughout the entire working relationship, to develop a
sound understanding of every phase of the barter
opportunities open to them.
Nothing works as well as face-to-face contact and so ITA�s
representatives regularly visit clients, counseling them on
new and better ways to benefit from membership in the
Although nothing can be counted on 100% of the time, this
procedure plus the development of specialized brochures and
seminars (open to members and potential members), increases
the trading volume of the client restaurants.
these services encourage referrals to friends in the same
industry who could also benefit from the growing service of
education process has become one of the most important
client services that can be offered to a restaurateur or any
client firm, for that matter.
plays an important role in increasing the trading volume of
clients as well as the quality and number of goods and
services traded or offered for trade.
Certainly, as ITA has discovered, the number of new
restaurant clients rises in direct proportion to the
increased awareness of the advantages offered by barter
groups to the restaurant industry.
Restaurants, by their very nature, offer one of the most
promising areas for new client development within the trade
Illinois Trade Association has recognized this fact and
through its unique marketing efforts, designed to fit the
needs of the restaurant industry, has seen and will continue
to see the positive results of its works.
more information contact Jack Schacht or Joan Varner at
Illinois Trade Association, 7449 N. Natchez, Niles, Illinois
60714. Phone (897) 588-1818, fax (847) 588-1570.
(This article was provided by Stuart Feiler of Feilcom
Worldwide in Skokie, Illinois.)