Barter Offers a
Way to Trim Costs While Filling Seats.
Barter, or trade, is a
cashless system of exchanging goods and services. In the
restaurant industry, it's converting empty tables into
thousands, even millions, of dollars in sales and purchases.
Among the hundreds of restaurants bartering, a common
experience is the learning curve associated with using
"I was leery and
skeptical of barter when first approached by a barter
organization on a cold call," says Chuck Narel, owner of the
Discover Bay restaurant at the Embassy Suites Hotel in
Deerfield, IL. "I did not have much experience with barter.
But now, on a consistent basis, I do many thousands of
dollars in trade every month."
Narel observes that
computers and the Internet have simplified barter. Using a
barter organization's website, he can track his restaurant's
buying and selling or choose other trade members to deal
with from a list of nearly 5,000.
"Like anything else, it's
an asset on your balance sheet if you manage it properly,"
says Narel, who also uses barter at his other two
facilities, Gino's East eateries in Rolling Meadows and Lake
Ways to Use
The best way to make barter
work is to identify ways to build a positive trade balance
and then "spend" those funds on something that you otherwise
would have paid for with I just spent $5,000 barter on a
radio campaign. That's $5,000 in cash that I didn't spend,"
says Narel. "We pay on trade for landscaping, cleaning
services, repair work and HVAC."
Most often, restaurant
owners use barter dollars to pay for everyday expenses like
office machines, shelving, linen service, carpet cleaning,
electrical work, exterminators, exhaust hood cleaning, roof
repair, ice machines, landscaping, printing, marketing
services, snow plowing and newspaper and radio advertising.
barter meals any time but some may select to trade only on
specified days they preselect, usually slow nights like
Monday-Thursday. Some will cater events and host parties in
the restaurant as well. For higher-priced events, they may
trade 50/50 or barter the whole amount up to a certain
point. The barter organization usually publishes a bulletin
every month listing the restaurants on trade and their
specific requirements. Members scan the list and take into
account the stated guidelines for each restaurant posted.
To attract more barter
business at times favorable to the restaurant, some owners
host special daytime cooking classes and luncheons or wine
tastings paired with preplanned meals on weekday evenings.
By using downtime, the restaurant remains full and income is
being generated. Some restaurants will agree to barter only
a certain dollar amount per month. This is arranged with the
barter organization and certificates are "sold" to members,
usually in $10 increments, with the restaurant's name
stamped on the back. In that way, the trade is controlled
and the restaurant knows what to expect each month.
A professional trade
association operates as a clearinghouse; its brokers work
closely with clients to learn their needs and then line up
necessary goods and services for the business on an ongoing
Restaurant owners often
work with other trade association members who have been
recommended by their brokers because of their good work and
ethical business dealings. It's not uncommon for
restaurateurs to consider their barter association brokers
among their most crucial business contacts.
Restaurateurs have not
only supplied and serviced their existing locations with
trade money, but also use trade to expand, and even to
build, new restaurants.
Rich Wohn, the owner of
Chicago's Fireside Restaurant, does anywhere from
$10,000-$15,000 in trade each month. "I wouldn't have been
able to expand my existing restaurant if it wasn't for
trade," he says. "A few years ago, I opened a
Southwest-style restaurant called the Blue Iris in only 30
days. A lot of the work was done on trade. I bought an
eight-foot custom cigar case and cash registers and also had
the center island custom-made."
When he began using trade
12 years ago, Wohn worked hard to find out what it was all
about. "Now, I take a halfhour a week looking for trade
opportunities and talking with my broker."
Wohn said he has no intention of giving up trade. "There's
no reason to stop bartering even when I am bringing in
plenty of cash. That's shortsighted. The only time trade is
not needed is if you don't have any more empty seats."
Jean-Marc and Mari Loustaunau are the founders of Cafè
Pyrenees in Libertyville, IL. For their 15-yearold business,
which features French cuisine, "trade has been terrific,"
says Mari. "We started two and a half years ago and, quite
frankly, it took me a good eight months to learn how to
spend the barter.
"We would look in the
listing of members like we were looking through the Yellow
Pages," she remarks. "Then, we'd talk to my broker about who
they would recommend and we started to use people who
respected their work and we built good relationships. Now,
we're doing over $30,000 in trade a year."
For the Loustaunaus,
networking through barter was the lynchpin to their success,
since it allowed then to meet business people who would
become valued barter vendors—and vice versa.
Advertising and cleaning
services are the two biggest expenses the Loustaunaus offset
through barter. The 30-table restaurant hosts large parties
and, following trade association guidelines, bills 70
percent on barter and 30 percent in cash.
One of their trade
customers held a Halloween party at the restaurant for 35
people; since that event, the couple has seen guests from
that function return as new, cash-paying customers.
Barter can also provide perks for a restaurant's wait staff.
Like other restaurant owners, the Loustaunaus have seen
firsthand that diners paying with trade dollars are often
more generous with the cash tips they leave. "The tip is
never less than 20 percent for any of my staff," Mari
Restaurant owners can
also benefit through barter on a personal basis. One
owner/operator couple recently used trade to fund most of
their daughter's wedding reception expenses, including the
deejay, limousine, videographer and tent rental. Barter can
also pay for a honeymoon or other vacation travel since many
hotels and some airlines participate in trade. Of course,
it's best when travelers have some flexibility with
scheduling and can avoid peak travel seasons, but good deals
are readily available.
David Richards owns Sweet
& Savories, an upscale eatery in Chicago. Richards, who
began bartering several years ago, only allows a small
percentage of his total sales to be on trade. "I look at
barter meals as sales directed in a different way," he
Chicago's Oak Street
Beachstro hosts a growing number of special events, from
clam bakes to big band nights and chef's wine dinners.
Barter provides a financial safety net by underwriting such
rental costs as banquet tables, tents and other items for
these unique events.
Owners Kimberly and
Antony Priola accept a limited number of admissions to these
special events on trade since it helps them keep per-person
costs in line. "I'm doing the event no matter if 10 people
or 500 people show up," says Tony Priola, "but using trade
greatly increases the guest count."
As you can see, a little
research and progressive thinking can turn your restaurant's
empty tables into an array of valuable commodities and
services, allowing you to increase sales without dipping
into your cash reserves.
Karen Kelly is the
restaurant account manager of the Niles, IL-based National
Trade Association, one of the country's leading barter
organizations. Karen can be reached at 847-588-1818 or