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To Enter(the)Net or Not

by Robert Wagner, CPA

Will everyone raise their hand who is tired of hearing about "The World Wide Web" and "The Internet". As one radio commercial puts it, "I W. W. W. dot don’t get it!" Most hotel and restaurant operators in Georgia have heard of the World Wide Web and the Internet but have chosen to ignore those advising us to "go on-line". The reason is simple -- we are tired of over-promising, over-hyping techno-weanies who are going to make our lives easier! Most of us are still waiting for the personal computer to live up to its real promise -- and we’ve been waiting since 1982.

For me, there are only two reasons why a hotelier or restaurateur should pay for any service or product -- it saves TIME and MONEY. So, has the Internet matured to the point it can save YOU time and money? To answer that question, try focusing on whether just two Internet applications -- 1) research and 2) communications -- can pay the freight.

What Does It Cost?

For unlimited access to the Internet you can easily get by with paying no more than $20 per month ($240 per year) -- That’s all most operators need. We use BellSouth.net from the local phone company but you can take your pick of a number of providers. Since you’ll be on-line maybe one hour per week on average, you don’t need another phone line. If you have a recent vintage computer, you won’t need any hardware. Worst case, you may need to buy a high-speed modem for about $150.

Research On-line

Many operators (and their CPA’s for that matter), have no reliable means to obtain financial benchmarks for their restaurant/hotel. And unless they travel extensively its difficult to appreciate the latest culinary tidal wave hitting the industry.

Getting benchmarks of restaurant financial operations on the Internet takes about 15 minutes. My first try found the following industry averages posted by Kubiak Fidel & Associates, a CPA firm in Albuquerque, New Mexico:

Formula used = Annual sales/Total square footage = sales per sq. ft.

Restaurant Profitability Guidelines by Square Feet

Restaurant is: Full Service Rest. Quick Service Rest.
Losing money Less than $150 Less than $200
Break-even $150-$250 $200-$300
Moderate profitability $250-$350 $300-$400
High profitability Over $350 Over $400

The same firm offers restaurant liquidity ratios and sales per labor dollar. Should you want more in depth analysis of restaurant profitability, you may dial up the National Restaurant Association on the Internet where you can order the latest book on industry operations. Researching the latest culinary trends takes a little longer. For example, there are dozens of sources offering information on "new southern cooking".

Two points are important here: 1) There is a mind-boggling amount of FREE information on the Internet some of which can help you operate a more savvy, profitable operation and 2) retrieving that information is easier than you might think.

Communications

The second reason to use the Internet is to facilitate communication with your customers, lawyer, CPA, insurance provider and others. The preferred method of communication is electronic mail. For that $20 a month for Internet access, you get a mail box and software which you can use to send and receive messages. The result: NO MORE PHONE TAG!

We estimate that electronic mail has saved us an hour a month which we would have spent playing phone tag with busy restaurant/hotel operators. If an operator has a question, say, about the IRS’s new tip reporting program, he or she can send us a message by e-mail and receive an answer within 24 hours. No more repeated tries to phone each other. Since the messages are typed, the chances of miscommunication are reduced. In addition, operators can print out any message on their office printer and file it for future reference.

Does It Add Up?

So what have you gotten for the $240 per year it costs to access the Internet? You’ve gotten 1) time you would have played phone tag with your vendors and 2) time you would have spent researching menus, recipes, and financial data. Say it works out to 24 hours per year. If your time is worth at least $10 per hour (I would suggest it’s worth many times that) you can cost justify access to the Internet.

 

Robert Wagner is a principal in Robert Wagner & Company, LLC, CPAs. The firm provides tax and accounting services to restaurants, bars and hotels. He can be reached at 404-874-7000, fax 404-874-1132, email: rwagner@bellsouth.net.

 

Copyright © 2004 by Robert Wagner & Company, LLC .