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Hospitality News - April
HOSPITALITY NEWS -------- APRIL 2008
This news page is produced by Raymond Cote, author; it is made possible by my textbook customers.
 Thank you to my loyal customers for your support.
 BASIC HOTEL AND RESTAURANT ACCOUNTING
is a hospitality principles and systems text based on the uniform system of accounts for hotels (AHLA) and restaurants (NRA). It offers state of the art hospitality accounting with computerized general ledger accounting as the basis for processing financial data. The text also contains several introductory managerial accounting chapters.
 Accounting for Hospitality Managers
is a hospitality managerial accounting and financial management text. The text provides comprehensive coverage for hotels, restaurants and casinos. Premier hospitality companies demand hospitality candidates that know the uniform system of accounts and the application of hospitality financial management principles in addition to the usual specialty courses in purchasing, menu planning, et al. Successful executives in the hospitality industry have a profit results objective and exceptional financial decision skills.
 HOSPITALITY ARTICLES OF INTEREST
 U.S. HOSPITALITY NEWS
New Menu Items
- This spring, McDonald's will begin selling a chicken breakfast sandwich featuring similar to one presently sold at Chick-fil-A.
- In select cities, Kentucky Fried Chicken will introduce a new product called Kentucky Grilled Chicken to entice health-conscious consumers who dropped or reduced fried chicken from their diets.
- CiCi's Pizza is now selling three new Buffalo-style wings to broaden its menu. The wings are sold in quantities of 4, 8, 12, and 18- piece orders starting at $2.49. All 600 restaurants are to have the equipment to prepare the new menu item by the year's end.
Panera Bread has added grilled breakfast sandwiches; made fresh daily with all-natural egg, Vermont white cheddar cheese, Applewood-smoked bacon or all-natural sausage, grilled between two slices of freshly baked Ciabatta.
Burger King will soon add a new Cheesy Bacon BK Wrapper to its menu.
Burger King offers two Angus beef burgers: The "Steakhouse Burger" features a flame-broiled steak burger topped with two slices of melted American cheese, A.1 steak sauce, crispy onions, red ripe tomatoes, crisp lettuce and creamy mayonnaise on a premium bakery bun; available as a permanent menu item for the suggested retail price of $3.79. The second Angus burger is the "Loaded Steakhouse Burger" made with bacon and loaded baked potato toppings that replace the tomatoes, lettuce, and mayonnaise; available as a permanent menu item for the suggested retail price of $4.19.
Jack in the Box has introduced Jack's Cinnamon Roll.
Wendy’s has a new line of three Chicken Go Wraps featuring center-cut chicken breast fillets (Grilled, Spicy, or Homestyle) with shredded cheddar cheese, lettuce and ranch or honey mustard sauce wrapped in a warm flour tortilla; suggested retail price is $1.49.
Wendy's is bringing back its Southwest Chicken Caesar Salad, available as a limited-time offering during April and May. The salad features seasoned diced chicken, corn and black beans, and grape tomatoes on a bed of crisp Romaine lettuce, garnished with shredded natural Parmesan cheese and garlic croutons,
New Restaurant Concepts
- Burger King plans to start building new version this year called the Whopper Bar that will sell a wider variety of its signature hamburger but have a more limited menu. The Whopper Bars' will look different from a typical Burger King. Workers will place toppings on the burgers in front of the customers, previously the company that has always hidden food preparation from customers. Design plans include chrome, wood, exposed brick and plasma-screen televisions with images of fire on their screen to simulate Burger King's flame-broiled motto. Whopper Bars are planned for places such as casinos, airports and other venues with limited space. The company hopes open its first location before year-end.
New Competitor
- South Korea's chicken delivery chain operator Genesis Corp. has opened a branch in New York, Orange County, California, and in Korea Town in Los Angeles. The company plans 200 additional branches in the U.S. within this year. The chicken franchisor, operates 250 restaurants in 43 countries; it entered the Chinese market in 2003 and then opened branches in Madrid in 2004 and in Tokyo in 2006. Genesis President Yun Hong-keun said "We aim to open 10,000 shops in the U.S. by 2020 in a bid to outperform the world's biggest fast food chain McDonald's Corp."
Beverage Sales
- Alcoholic beverages average 21% of sales at full-service restaurants, according to the National Restaurant Association.
Food Regulation
- Boston's Public Health Commission unanimously voted to ban the use of trans fats in city restaurants.
- The Baltimore City Council has approved a citywide trans-fats ban effective in the fall 2009.
Bottled Water
- Bottled water is a big profit item selling at $6 to $7a bottle in many Boston and California restaurants; the restaurant’s cost is about 50% of the selling price. Now there is a small growing trend to eliminate bottled water sales for environmental purposes. "At Small Plates in Harvard Square, the menu lists "Individual Bottled Water," but instead of a price you'll find this message: "Not sold here because plastic bottles are BAD BAD BAD for the environment & that water is really no better than tap water."
(Boston Globe 3/22)
Economic Effect on Hospitality Industry
- According to interviews, "People still eat out because they have to, but they find ways to cut back on how much they spend; namely appetizers, desserts and tips."
- "Fifty-four percent of Americans are eating at restaurants less, according to a survey of 1,000 people by RBC Capital Markets. If they do dine out, many are going for cheaper options such as fast food."
- Restaurants are trying to remain profitable by offering smaller menu items, and/or effecting small price increases.
Mergers/Acquisitions/Sales
- IHOP recently sold 41 Applebee's to franchisee Apple American Group. IHOP purchased Applebee’s last year and now plans to sell most locations.
U.S. Accounting and Taxation
- The IRC 45 b credit for the Social Security and Medicare taxes paid on employees' tip income:
http://www.irs.gov/businesses/small/industries/article/0,,id=98463,00.html
Forms and Publications for Restaurants and Bars: http://www.irs.gov/businesses/small/industries/article/0,,id=110123,00.html
 INTERNATIONAL NEWS
Australia
- Australian developer Laing O'Rourke plans a new AUD $80 million multi-level resort condominium and residential building in Townsville, Australia, to be managed by Outrigger Hotels & Resorts. Construction is to begin in mid-2008, with planned completion in late 2009. Townsville is North Queensland's largest city.
Bahamas
- Bennigan's has opened its first restaurant in the Bahamas; the restaurant features the largest Bennigan's bar across the globe, and includes an outdoor patio, flat-screen televisions in the bar area, and an On-the-Go area. The restaurant is the first casual dining restaurant in Nassau to sell draft beer in the region.
Canada
- Nova Scotia: On May 1, Nova Scotia’s minimum wage will rise from $7.60/hour to $8.10/hour. Further increases are planned in 2009 and 2010. The training wage differential for employees with less than three months’ work experience was retained.
- Alberta: On April 1, Alberta’s minimum wage will rise from $8.00/hour to $8.40/hour. This 5% increase follows a 14% wage hike in September 2007.
- Manitoba: On April 1, Manitoba’s minimum wage rate will rise from $8.00/hour to $8.50/; the second substantial increase in only one year.
- Quebec: On May 1, Quebec’s minimum wage rises 50 cents an hour; the province’s largest one-time minimum wage hike since 1975. The new minimum wage for tipped employees is $7.75/hour and the new rate for non-tipped employees is $8.50/hour.
- The foodservice industry’s share of the total food dollar was 39.4% in 2007, a decline from 39.7% in 2006. This decline can be traced to slower economic growth in many regions, rising gasoline prices and fewer international visitors to Canada. However, food and alcohol sales from retail stores grew 5.0% to $88.6 billion; the retail trend has exceeded the foodservice industry’s share in five of the last seven years.
- Papa John's International Inc., the pizza chain, has signed development agreements with four franchisees for a total of 57 new stores in Canada.
China
- The Ritz-Carlton, Guangzhou will be the company's fourth hotel in mainland China, with new openings scheduled for Sanya, Shenzhen, Shanghai, Hong Kong and Macau in the next two years.
- The country's GDP of 10% is more than double the global average. During 2007, according to Hotelbenchmark Survey by Deloitte, China's hotel operators managed to increase revPAR by 3.2%, an ARR of US$86, and occupancy at 67.9%.
Cyprus
- Investors are buying houses in popular Cypriot holiday resort areas. Cyprus offers good weather for 12 months of the year instrumental to profitable rental returns. Investors from countries such as Ireland are showing an active interest in the market.
Guam
- Liu Xie Jie, the mayor of Baishan, China, said he is impressed with the island residents' hospitality, and attributes the healthy tourism market to it. Joe said " When I return to China, I will promote Guam as a good travel destination, and I think that we can help each other in this regard."
India
- DLF-Hilton plans to develop and operate 75 hotels in India over the next five to seven years.
- IHG (InterContinental Hotels Group) has 14 new-look Holiday Inn hotels in various stages of development across the country. Room capacity exceeding 3,700 rooms. The hotels are scheduled to open over the next three years in 11 cities.
Japan
- Best Western International plans for 30 hotels by 2010, would make it the largest hotel chain in Japan.
Malaysia
- KFC Holdings Bhd expects its new menu item Colonel Chicken Rice Combo to contribute about 10 percent to its total sales during this current promotion period. The Colonel Chicken Rice Combo offers two versions, "Hot & Spicy' or 'Original Recipe' chicken, served with chicken ball soup, cucumber slice and a carbonated drink. KFC Holdings has about 480 outlets in Malaysia, Singapore, Brunei and Cambodia; it expects to add another 22 KFC outlets by end of this year.
Mexico
- Wendy's International, Inc. has signed development agreements to open Wendy's restaurants in two major Mexico cities - Monterrey and Mexico City. The two new franchisees will build and operate more than 60 restaurants over the next seven years; the first restaurant is expected to open before year-end. (Wendy's existing franchisee, Wenco-Mexico S.A., currently operates 12 restaurants in the northern Mexico cities of Ciudad Juarez and Chihuahua.)
- Mexico City bans smoking in almost all public places. Exempted from this ban are parks, soccer stadiums and outdoor seating area. The owners of restaurants and bars can be fined or even closed if they ignore smoking in prohibited areas. Smokers ignoring the ban may incur fines from $50-$150 and 36 hours in jail.
Middle East Region
- Ruby Tuesday franchisee Bin Hendi Hospitality plans to open a dozen restaurants in United Arab Emirates including two in Dubai this spring. Additional Ruby Tuesday restaurants are slated to open in Cairo, Kuwait and Bahrain later this year.
- In Saudi Arabia, IHG (InterContinental Hotels Group) has opened InterContinental Al Khobar, the group's 20th property in the Kingdom of Saudi Arabia.
Switzerland
- A member of Egypt’s wealthiest family is to move his hotel empire from Cairo to Altdorf; Chairman Samih Sawiris said he plans to relocate Orascom Hotels and Development. OH&D obtained rare permission from the Swiss government to develop a luxury resort in the Alpine village of Andermatt.
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