In this Weekly Wrap, we’re looking at the limitations of diners’ unreasonable expectations, how Texas Roadhouse continues to gain traffic, ‘no tax on tips’ and service fees, and more.
“The Bear” and “Unreasonable Hospitality”
What You Need to Know: “The Real-Life Limits of ‘Unreasonable Hospitality’”
The Source: Food & Wine
What You Need to Know:
The complaint started off, "Maybe I had watched too many episodes of The Bear, but..." I did not finish reading it because that was all it took to know that this diner had come to my restaurant Francie in Williamsburg, Brooklyn, with unreasonable expectations: a heightened and nearly impossible ideal of what a restaurant can or is expected to deliver.
The author of the screed was a person seeking a combination of hearing Dark Side of the Moon for the first time while hiking the Grand Canyon with the pope. Sorry, but even as the owner, I cannot offer that. What our restaurant can do is serve Michelin-starred food and deliver it with a personal touch in an elegant and unfussy atmosphere. Francie is not necessarily a religious experience. We know who we are, which is a very good restaurant with time limits and budget constraints. This puts us in the company of thousands of other restaurants in New York City and the United States, but not in the company of the fictional restaurants on The Bear.
The list of demands customers make of restaurants is both long and ridiculous. From complimentary Champagne to personal serenades to special accommodation for an emotional support boa constrictor (not joking), nothing seems beyond reason. The equivalent in another industry — say, for me to waltz into Tiffany and ask for something free simply because it is my birthday — is unthinkable, but it is well below par for the requests that people in my position get almost daily.
…
Will’s book has sold over a million copies and has had an impact far beyond the restaurant world. Fortune 500 CEOs invite Will to come speak with their leadership teams, and his tactics have been adopted in industries that have nothing to do with traditional hospitality.
The issue is that for most restaurants, save those few that operate on a different astral plane such as the ultra-high-end Eleven Madison Park, where Will built his reputation, "unreasonable hospitality" is difficult to achieve. Still, Will's dreams were creeping into my reality.
…
My talks with Will about hospitality have reinvigorated me to look back to my own experiences in "blowing away" my guests. Of course, unexpected grand gestures are amazing. They are just not realistic, either financially or because of the time and staff involved to make them happen. What I can do is make the past prologue and look inward to my own instincts for gracious gestures.
Our Take:
First off, I love the book “Unreasonable Hospitality.” I think it’s an important read for any hospitality operator, along with Danny Meyer’s “Setting the Table.” There are takeaways that can benefit and be executed by operators of any type. More than that, it should be used to shift the mindset of the operator, to think differently from the standards of hospitality of years past.
I love this article because it delves into the realities of “Unreasonable Hospitality,” but more importantly, how television has co-opted the vision. “The Bear” is a great show, but it’s fiction. Yes, there are things that are rooted in real events, and it’s ultimately triggering for those who have owned or worked in restaurants, but it’s still fiction.
What happens, and has happened in the case of “The Bear,” is people have taken the show as truth and believe this is how restaurants of a certain level need to operate, which is clearly an unrealistic expectation. The author, whose restaurant is fantastic and my family’s favorite, expertly explains both the limitations of his work and the repercussions when consumers treat a philosophy as gospel instead of theory.
Operators should always strive to go above and beyond, to create a memorable experience for all of their guests, but there are limits. Operators need to understand what actions can be executed without being a detriment to the business.
Butter — Simple But Effective
The Headline: “Butter innovation spreads across menus”
The Source: Restaurant Business Online
What You Need to Know:
This fall, they’re doing exactly that, launching a new Butter of the Month promotion with a calendar that will extend into 2026. Luis Haro, senior director of culinary for parent company SPB Hospitality, created 12 butter variations to serve with the rolls, each rolling out on the first of the month. It started in October, with campfire-inspired S’mores Butter, followed in November with Cinnamon Roll Butter highlighted by caramel notes.
…
The butter itself is also special. It’s a European blend whipped in-house, combined with the flavoring ingredients and stored in 5- to 10-pound blocks, which can be scooped out into souffle cups to serve with the rolls.
Haro also made sure that the Butter of the Month program didn’t add labor or excess cost. “We didn’t want to bring in a lot of single-use SKUs, so we mostly cross-utilize ingredients we already have in the back-of-house,” he said. Labor is minimal; servers heat up the rolls and scoop the butter.
Guests are excited about the Butter of the Month program, said Jasmine Stallworth, brand manager for Logan’s. “Posts are blowing up on social media and customers are excited to see what we’re coming out with each month,” she said. So far, the promotion has boosted return visits and strengthened brand loyalty.
…
Paris Café, a bistro in New York’s South Street Seaport neighborhood, imports its butter from France. “It was important for us to have French butter to be true to the classic French bistro,” said pastry chef Emma Scanlon. “It comes in a wooden barrel and we scoop it into molds shaped like the madeleine, the classic French cookie.”
Baguettes from Le Sournil bakery are sliced onto a plate and served with the molded butter at dinner. The kitchen also uses the product for the green garlic compound butter that comes with the escargot. “Silky, lush butter is the bedrock of French cooking,” said Scanlon.
Our Take:
It’s such a simple ingredient, yet so loved. As time goes on and we continue to discuss changing dining habits and the rising cost of dining out across platforms such as QSR, fast casual, and sit down dining, it’s something as simple as upping the butter game that can be a game changer.
Libertine, a NYC restaurant, is famous for its mound of Normandy butter. Food and Wine Magazine dedicated an article to one restaurant’s butter service. And never forget the Butter Board, a trend that I’m glad is subsiding, but it goes to show the power in the ingredient.
The great thing about butter is it’s butter. It’s plentiful. Yes, some butters can get pricey, but those are the exception. Which makes upping the butter game accessible to all kinds of concepts and formats from fast casual to fine dining.
The most notable quote came from Logan’s Roadhouse:
“Haro also made sure that the Butter of the Month program didn’t add labor or excess cost. We didn’t want to bring in a lot of single use SKUs, so we mostly cross utilize ingredients we already have in the back of house,” he said. “Labor is minimal; servers heat up the rolls and scoop the butter.”
All operators are trying to capture the attention of consumers, trying to drive with value, vibe, or quality, sometimes at the expense of the bottom line. That’s why this quote is so important, they made a point to not raise expenses.
I know it’s just butter, but this is the kind of thinking we need in our restaurants. And it’s not really about butter, it’s about how we take something we already have and make it special. That’s the takeaway. Butter is just the vehicle.
The Headline: “Texas Roadhouse may be stealing grocery share”
The Source: Nation’s Restaurant News
What You Need to Know:
Indeed, several restaurant companies have reported pressure from beef prices this quarter as they push historically high levels. But more than 50% of Texas Roadhouse’s basket is beef, so the steakhouse is disproportionately impacted in this environment. Because of this pressure, restaurant margin as a percentage of restaurant and other sales decreased 168 basis points to 14.3% during the quarter.
…
That said, the casual-dining chain still outpaced most of the industry in Q3, with same-store sales up 6.1% in Q3, including a 4.3% increase in traffic. During the company’s earnings call, Bailen said those traffic gains may be coming from grocery customers, which would be the opposite of an industrywide exodus toward grocery stores in the past year and a half as menu prices remain higher than food-at-home prices.
“I think people are aware of what it costs to buy beef in the grocery store, and maybe we weren't seeing as much retail demand degradation in the second and third quarter and you’re seeing a little bit more of that now,” Bailen said. “We have seen this year that more of our guests are getting a steak than what we have seen in years past. I think they are recognizing the value of our steak offerings relative to what they can do at home.”
Our Take:
I love seeing bright spots amid a pretty bleak earnings report season. What’s important is not that their margins have been shaved, it’s that they are seeing increased traffic, in their eyes from the grocery sector. Which means their value proposition is so strong that people would rather get a steak in the restaurant than go to the grocery store, buy the steak, and cook it themselves.
That’s huge. Every other segment is having discussions about restaurant prices being too high and how that has become a determining factor in consumers staying away. But the price of this commodity is so high across the board that the value is now in sit down dining.
Can every place offer this type of value? Probably not. Texas Roadhouse has serious buying power. But what operators can do is look for other products and offerings that present a similar value proposition to get people in the door. It’s times and opportunities like this where strong top line performance can drastically help cover the bottom line.
‘No Tax on Tips’ and the Large Party Service Fee
The Headline: “Trump’s ‘No tax on tips’ could be end of large-group service fees on restaurant bills”
The Source: CNBC
What You Need to Know:
The “no tax on tips” provision in President Trump’s One Big Beautiful Bill Act allows certain workers to deduct up to $25,000 in “qualified tips” per year from 2025 through 2028. The rub is that mandatory gratuities, the 15% to 20% that restaurants often impose on parties of six people or more, aren’t eligible for the deduction, a disappointment to the restaurant and foodservice industry, which held out hope for a different outcome.
…
The service fee issue is sure to resonate with many restaurateurs. Research from the National Restaurant Association shows that 54% of full-service operators — including 67% of fine-dining operators — say their restaurants sometimes add a service charge or automatic gratuity to customer checks. Among this group, 12% add the service charge or automatic gratuity to all checks, while 88% only add it to parties that exceed a specific number of people (typically six or more) or to banquets, private events or catering events.
Notably, the Internal Revenue Service has never considered these service fees as tips. However, the restaurant industry hasn’t necessarily followed the letter of the law, according to Jean Hagan, a partner at Eisner Advisory Group who focuses on the restaurant industry.
Hagan said during a recent webinar for a large state restaurant association, many proprietors were surprised to learn they weren’t supposed to be counting service fees as tips. “They’ve just always been doing it a certain way — passing on the service fees to employees as a tip,” Hagan said.
Now, however, restaurants will have to put all tips through payroll, even if they weren’t doing it before, or were incorrectly including service fees, so that the employee can benefit from the deduction. There will be more pressure on restaurants to do it properly. “They’ve got to clean their systems up and follow the law as it’s always been,” Hagan said. “If they don’t, the employee won’t get the full benefit of the new tax law.”
…
As restaurant owners and employees weigh their options, the clock is ticking. Because President Trump’s OBBBA is so new, and the IRS is still crafting the applicable regulations, the situation is complicated for restaurants and other businesses whose employees want to claim a deduction for 2025. The AICPA had asked the Treasury Department and the IRS to include a safe harbor for businesses for this tax year, which the IRS issued in early November. This means employers will not face penalties for “failing to provide a separate accounting of any amounts reasonably designated as cash tips or the occupation of the person receiving such tips.”
Our Take:
The service fees and large party gratuities being exempt from tax exemption is going to be a problem for a lot of places. (I’m looking at you, Miami.) Both service staff, ownership, and management are going to be hesitant to mess with the systems they are currently using. The servers because they will be concerned that their tip amount will be drastically reduced if they ditch the auto gratuity, and it’s a valid concern. Operators will be annoyed at the additional work it will create when doing their weekly payroll, having to separate out service charges from tips. It is going to be time consuming. Anyone who has had to do payroll with even a simple tip out system will tell you it’s already a pain in the ass, and this will only make it worse.
And then there are the places that let the servers claim their own tips. Yes, it still happens. In the dwindling number of places where cash is still king, you’re lucky if the servers claim any of their cash tips. In true restaurant fashion, I can see the larger operators strictly following the guidelines led by their accounting teams. For smaller operators, I could definitely see many keeping the status quo, not changing a thing, and hoping they don’t get caught. In truth, that will most likely be the majority of independent operators.
The tipping system is flawed, and always has been. This gesture to help the service industry is more performative kindness than an actual solution. It doesn’t really help the service employees, and it doesn’t help employers, but I’m sure the lawmakers on both sides are deluding themselves into thinking they did something good