By Steve Zagor—Dean, Business & Management Studies

As Minimum Wages Rise, Restaurants Say No to Tips, Yes to Higher Prices,” reads the New York Times headline. I experienced this seismic change firsthand on a trip to St. Louis. My son and I stopped for an impromptu lunch at a very modest neighborhood café (see: worn upholstery, paper menus and general shabby charm). Only two other tables were occupied during prime lunch service, and one look at the extravagant menu prices had me wondering if we were in for a taste of highway robbery.


Photo Credit: Lea Latumahina

I ran down my typical checklist. Was the restaurant an alum of Diners, Drive-Ins and Dives? Was it a farm-to-table, locally sourced, organic, natural, gluten-free, green, Slow Foods-endorsed, celebrity chef-fueled find? Nope. None of the above. Discomfort swelled inside me like a cheese soufflé rising in a too-small cup. Finally, I saw a small note between the burger of the day and the Caesar salad stating, “all prices include basic gratuity.

Even with this knowledge in hand, my son—a generous tipper, but business minded—struggled to digest the high prices. I tried to explain that we would likely pay the same in the end, but then, I couldn’t quite be sure. My consultant mind started poking holes in that argument: Was this just another crafty restaurant gimmick? Who would benefit from the extra money? What do the words “basic gratuity” even mean? Am I still supposed to leave a few dollars extra on top of the charge, or am I cheap if I don’t? And finally, what if I hadn’t seen the discreet menu note about tip included and left my usual 20%? Suddenly, a simple meal had turned into a complex puzzle.

Is this the dawn of a new restaurant reality? It’s not a simple answer. With new laws promoting wage hikes—ultimately up to $15.00/hr. or more—restaurants are shouldering an incredible spike in operation costs. At the same time, states are doing away with the tip credit. That’s the loophole in the minimum wage system that permits tipped employees to receive hourly pay that is only a small percentage of the minimum wage because the balance is made up by tip income. Put simply, these two reforms mean that waitstaff will be paid a straight hourly rate based on the new minimum wage. Sure, this protects workers from the occasional slow shift, but it may ultimately result in lower overall income. Eliminating tips and instituting a flat hourly pay rate also marks the end of the historic wage gap between lower paid kitchen workers and higher paid waitstaff.

restaurant kitchen

Photo Credit: Jun Seita

Just thinking about this, I’m already sweating. Will the strategy to eliminate tipping work? At present, Seattle has been the most visible test case for these new initiatives. For several months now, restaurant operators have tried different strategies—increasing menu prices, eliminating tipping, including a compulsory labor or service charge in the bill. Some have even tried adding an administrative fee. Clearly there is no one solution. In the end, it’s customers who will be footing the bill. What’s more, these reforms will trickle down and affect every business that utilizes low-cost labor, from retail to health care and beyond.

So how are things going in Seattle? Well, it’s still early, and the full $15 wage is yet to come. Many operators are waiting to make changes until they see how others fare. But some marginally successful restaurants have already tanked. Labor costs that were 30–33% of sales are now more than 40%, devouring most or all the profit. To cope, some owners are considering shorter hours or reducing staff. A few plan to mechanize and cut jobs. As for the guests, some refuse to pay the additional charges. Remember, perception in the restaurant business is huge. If something looks expensive to a diner, it is expensive. No thoughtfully worded explanation can overcome the emotion of high cost. Even I—an educated industry expert—succumbed to shock and confusion at that café in St. Louis. Some more successful and well-run restaurants are making it work, largely because they absorb part of the increased costs while guests pick up the rest via new menu prices.


In the long term, I’m curious to see if those who benefit from higher wages will actually take more money home. They may just see those wages eaten up by the higher prices of the very products they produce—and those they buy themselves. For when they go out to eat, they too will spend more. As the old saying goes—a rising tide lifts all boats. Personally, I’m also curious to see if the owners of those boats end up with enough money to gas up and go for a joy ride.

For now, the jury’s out, but I’ll be keeping a watchful eye on the situation. The buying power of a $15.00 minimum wage population may help the overall economy, and it would be terrific if everyone made a living wage. Widespread reform is no substitute for opportunity, ambition and growth. Maybe this is just a transitional phase. Maybe consumers like my son and I will get used to the sticker shock—that is, until the next government initiative turns the industry upside down.

Eager to master the business side of the food industry? Click here to learn how you can study with Steve and other leading restaurant consultants at ICE.


By Steve Zagor—Dean of Business & Management Studies

Once again, the headline reads: “Well-Known Neighborhood Café Closes Due to Escalating Rents.” We hear it about the iconic temples of gastronomy like Danny Meyer’s Union Square Café. The local bistro where you proposed to your wife. Or maybe it’s—worst of all—that little neighborhood coffee shop that always remembered your order. In fact, last year Zagat reported twice as many restaurant closings as openings—the first time that has happened since 2007—due in large part to rising rents.


As a consultant, I’m privy to insider information about these kinds of restaurant woes. I recently received a call from an owner of a long-established East Village restaurant whose lease expired after 15 years. She was forced to sign a short-term, interim lease to see if she could afford the huge rent increase. “It’s better than closing or moving,” she said.

But is this really the whole story? Who is right? Who to believe?

First, like apartment tenants, most restaurant operators don’t really love their landlords. The word landlord alone is Scrooge-like, conjuring up images of medieval kings and indentured servants. What do they do for you? They give you the keys to the door, and then you pay them monthly. A necessary evil at best.

inside the restaurant

What’s more, many landlords don’t understand the financial stresses and inner workings of a restaurant. They see lines out the door and customers in seats, so they assume the owners are trucking bundles of cash to the bank. The tougher the landlord, the more they want a piece. Hence, the rent goes up, and when the restaurateur balks, a FOR RENT sign appears with no regard for personal relationships or loyalty. On the other hand, some landlords value the reliability of a long-term tenant with a consistent, sustainable rent—better that than testing the waters of a new, unknown occupant. In short, much of my consulting career looks like that of a marriage counselor, as I attempt to breed an understanding between operators and landlords.

The real truth, however, is that these closings may be due to more than just rising rents. Maybe, just maybe, that old restaurant ain’t what it used to be. If a café has occupied a single location for many years, the neighborhood may have evolved with new and different diners—not to mention new establishments competing for those customers. Perhaps that ten-year-old concept has grown stale, the celebrity chef is no longer in the kitchen or the operator has grown tired and complacent. Not to mention that it’s far easier to get media buzz when you’re the new kid on the block. All these elements can cause declining sales and lagging profits. When it comes to public failure, citing an increase in rent lets a restaurateur hang on to his or her dignity, while often, the real reasons remain hidden.

pots and pans

That isn’t to say that it isn’t a challenge to keep a restaurant running for more than 10 years. Like an old car, after years of use, operators may need a major cash investment to fix up the place. Kitchen equipment falls apart, carpets stain, compressors burn out—in short, too many miles on the old business. Combine that sizeable investment with higher rents, and it may be a better financial decision to just open a new restaurant.

The short version of the story is that any food business owner will say rent is a contemptuous expense. We blame the landlord, the competition, the neighbors, even the weather—there is plenty of blame to go around. Yet, too many times the real solution is hidden in the old saying, “The fault is not in our stars but in ourselves.” It takes a lot of luck to make a new restaurant a success. It takes experience, skill and hard work—an incredible amount of hard work—to keep that success going for the long run.

Ready to be a restaurant insider? Click here to learn about ICE’s Culinary Management program.

Restaurant Consultant Vin McCann

By Carly DeFilippo

“Everybody thinks they know how you should run your restaurant,” says Culinary Management instructor Vin McCann. “But what really matters—and what I focus on as a consultant—is the early stages of a project. The initial choices can be make or break. If you start on the wrong foot, you’re likely to end up crippled.”

As an executive for such iconic restaurant groups and corporations as Shelly Fireman’s Café Concepts, American Hospitality or National Restaurants Management, Vin has truly seen it all. In his seven years at National Restaurants alone, he oversaw more than $300 million worth of projects in more than 100 different venues. So when it comes to knowing where the money goes—and where new business operators trip up—you’re unlikely to meet a more seasoned expert.

Vin’s beginnings in the restaurant industry, however, were somewhat accidental. After graduating from law school, he tried his hand at writing professionally, supplementing his income with restaurant work. Eventually, he opened up his own Irish pub in Washington, D.C., followed by a 17-room inn in New Hampshire. But he soon found himself curious to “get serious about the business side of the business,” which is how he ended up working on the opening of Shelley Fireman’s iconic Café Tartufo. From there, Vin grew his new career under Fireman and eventually National Restaurants Management, establishing himself as a sought-after multi-unit operations manager.

After more than 40 years—and 100+ restaurant openings—in the industry, Vin’s career is truly in a sweet spot. Today, he and fellow ICE Culinary Management Instructor Julia Heyer work together as private consultants on an incredible range of projects, including Noma founder Claus Meyer’s upcoming $16 million project in Grand Central Station.

Vin and Julia have also worked on various smaller restaurants, including the West Village outposts of ICE alumni Mark Sy and Michelle Gardner: Viên (a healthy, Southeast Asian quick service concept) and Chalait (the city’s first dedicated matcha bar), respectively. Yet no matter the scope of the project he’s worked on, Vin is proud to say that he has always left a company in a better position than when he started—an incredible feat in an industry renowned for intense competition.

Watch Vin coach a new restaurant owner in our Restaurant Success video series:

So after all these years, why does Vin keep at it? “I like the pace, the rhythm of the business. You come to work, get set, there’s a rush, it ends and then you start all over again. We always say, it’s a disease—you either have it or you don’t. There’s a lot of moving parts, and for them all to work well—shift after shift, after shift—that’s where the real skill comes in.”

As for teaching, that’s a passion that Vin learned during his many years as a Chief Operating Officer at National Restaurants: “Once you’re managing several properties, you no longer get the hands-on satisfaction of the guest experience, but I really enjoy developing someone who starts out as a ‘know-nothing’ into an impressive, productive manager.”

Want to study with Vin? Click here to learn more about ICE’s Culinary Management program.


By Grace Reynolds—Student, School of Culinary Management

After only four months, I can’t believe I’m already halfway through the Culinary Management program at ICE. Yet, when I think about the ground we’ve covered—choosing a location, menu design, concept development, marketing, purchasing, management and finance—it seems much longer. With each passing class, my understanding of how a restaurant business operates on both a micro and macro level increases, and I know it will only continue to do so in our remaining three months.

lecture - culinary management - kate edwards - steve zagor - classroom

One of the most valuable aspects of the program thus far has been the incredible guest lecturers. To be honest, we’ve had so many speakers from such a wide range of professional backgrounds that I’ve almost lost count! Their lectures have provided the opportunity to network with some of the top players in the industry—in fact, one of my after-class conversations with a recent speaker actually resulted in a job offer in hospitality consulting!

While every speaker has brought something new to the table, there are three in particular who made a lasting impression. Below, I’ll share a bit of their backgrounds, as well as their advice on how to make it in the restaurant industry.

Douglas Zeif

douglas zeif - headshot - hospitality - ICE BlogDoug is an international hospitality consultant who specializes in gastronomy and concept development. In addition to consulting projects for companies like Hilton Worldwide and Darden Restaurant Group, he currently oversees global food and beverage operations for the Blackstone Group hotel assets. His career in culinary management began at The Cheesecake Factory when it was just opening its second location, and he eventually rose to become the company’s second-in-command. In 1992, Doug took the company public, and helped grow the company into the internationally recognized brand it is today.

Of the stories Doug shared with our class, one of my favorites was how he got his start at The Cheesecake Factory. While working as the General Manager at a fine dining restaurant, he noticed that a fish entree being set in front of a diner was clearly undercooked. He immediately walked over to the table, excused himself, and explained to the diner that he felt her fish could use a few more minutes on the fire. Would she mind if he returned with her properly cooked dish in a few minutes, entirely on the house? She said yes, he returned with her dish several moments later, and that was that—or so Doug thought. The next day, Doug got a call from the man who had been dining with that woman the previous evening. To Doug’s surprise, he offered him a job on the spot. After witnessing Doug’s attention to detail and his swift, appropriate reaction, he wanted Doug to help him open the second outpost of his restaurant, The Cheesecake Factory. Doug accepted, and the rest is history!

In short, Doug’s main message was to never underestimate the power of doing your job well one hundred percent of the time. You never know who may be watching, or the opportunities that could arise, especially in such a visible environment as the hospitality industry.

Jennifer Baum

culinary management - guest lecturer - jennifer baum - pr - bullfrog & baumJennifer Baum is the type of person that commands your attention and respect the moment she enters the room.  A PR powerhouse, she is the founder and CEO of Bullfrog + Baum, a restaurant-focused firm based in New York City. In addition to representing some of the best restaurants in the city, including Gato, Sushi Nakazawa and Bar Americain, Bullfrog + Baum has also worked with The Four Seasons, Wolfgang Puck Worldwide and Starr Restaurants—just to name a few.

Jennifer’s central story was how she decided to strike out on her own. After getting her MBA in finance and management, she found herself in an unfulfilling job in the corporate banking world. She couldn’t ignore the strong pull she felt towards the restaurant world, so after a year at the bank, she decided to dive head first into the restaurant industry and has never looked back.

After working in the restaurant industry in various capacities for about ten years, Jennifer realized that she had the tools and the connections to start her own restaurant-focused PR firm. That was fourteen years ago. Today, Bullfrog + Baum has more than twenty-five employees, offices on both coasts, many high-profile clients and a stellar reputation in one of the fastest-paced industries in the world.

The biggest message I took away from Jennifer’s talk was that you should always follow your gut, even if it’s leading you to take a risk. Yes, Jennifer had a prestigious, high-paying job in the corporate world prior to starting Bullfrog + Baum, but she knew she wanted something different. She was drawn to the restaurant industry, and she followed that voice to tremendous success. Had she held back and ignored her gut, her career in PR might never have happened (and neither would the many New York City restaurants that credit Bullfrog + Baum with their media success!). Given that many of my classmates and I are coming from professional backgrounds outside of the food industry, Jennifer’s story felt like incredible validation for our decision to follow our guts and enroll at ICE.

Shane Welch

shane welch - guest lecturers - culinary management - sixpointShane Welch is the founder and head brewer of Sixpoint Craft Ales in Red Hook, Brooklyn. Shane’s path, albeit a winding one, had one constant: a love of good beer. In college, Shane created his own mini-brewery in his basement, and began to play around with creating high-quality, small-batch brews. This led to an apprenticeship with Dean Coffey, the head brewer at Angelic Brewing Company. After three years there, Shane set off on a backpacking trip around the world, drawing inspiration from the various ales he came across during his travels.

When he returned from his time abroad, Shane wanted to translate his experiences into something tangible. This ultimately led to the birth of Sixpoint, which began in an 800-square-foot garage in Red Hook, Brooklyn in 2004. Initially, Shane did everything: he devised the concept, took care of the brewing and selling of his beer and made deliveries. Yet his passion—not to mention his delicious brews—was contagious. Craft beer lovers started coming out of the woodwork to join Shane’s team, and Sixpoint began to grow. Today, Sixpoint is a well-known and highly respected brand. Since 2004, the company has created hundreds of different kinds of beers and continues to be a leader in craft brewing.

The most inspiring piece of Shane’s story is the magnetic power of passion. When Sixpoint started, it was a one-man show. That quickly changed, however, as like-minded beer enthusiasts tracked Shane down, attracted to his quest to create brilliant beer. It was a telling example of the advice that if you truly love and believe in what you do, you’ll attract the right people and ensure your own success.

These three speakers are only a small sample of the profound stories that have inspired my own career path to this point.  As I continue to define my personal goals in the restaurant industry, I have no doubt that the lessons they shared will continue to help me persevere in the months and years to come.

Click here to learn more about inspiring guest lectures at ICE.


Does your restaurant have what it takes to thrive, or will it be just a flash in the pan? With this advice from ICE’s industry experts in American Express’s four-part Restaurant Success Series, learn how proper employee training and responding to customer feedback can help build a stable, profitable business. Plus, understand how to create a cost-effective menu that sells and discover how getting your manager out of the office and onto the sales floor can give you a leg up in this competitive industry.

For more tips on staying ahead of the curve, we consulted with ICE Culinary Management Instructor Vin McCann. Below, see his 7-step strategy for developing a marketable product and building customer loyalty:

  1. Research: Learn about your market—for example, are there already restaurants like your concept (potential competitors) nearby?
  2. Concept: Differentiate yourself in the market by developing a unique product.
  3. Strategy: Develop a business plan, taking into account costs, product, design and more.
  4. Funding: Raise at least 30% more money than you think you’ll need.
  5. Train: Your staff is the primary factor in whether or not new clients become regulars. Ensure they understand and can execute your vision through thorough training.
  6. Guests: They are your indicators of success, so take their feedback seriously.
  7. Observe: Monitor your costs, profits and losses and adjust as needed.

Learn more about the logistics, design and execution of restaurant success at ICE’s School of Culinary Management.


Cutting corners may seem easy and fast, but could you end up losing money in the long term? Join ICE Dean of Business and Management Studies, Steve Zagor, and American Express to determine your signature recipe for restaurant profits. Discover the number one thing you need to know to make money in the restaurant business, and learn how seemingly unimportant details—including the attire of your staff or the design of your flatware—can boost or hinder sales.

To further maximize your restaurant’s gains, we asked Zagor—a seasoned consultant and restaurateur— to highlight a few of his top tips for financial success in the competitive food industry:

  1. Gross Food Cost is how much you spend on all ingredients, divided by the total sales (not including sales tax). That resulting percentage is your main concern—it not only includes the menu item food costs, but any other food expenses (employee meals, complementary and discount dining, waste, etc.).
  1. The essential foundation for determining your Gross Food Cost is to perform an accurate food inventory on a regular weekly or monthly basis.
  1. When determining menu prices, it’s important to use the latest food cost information. To truly understand your food cost target, every item—even “complimentary” elements like french fries, bread and condiments—must be accounted for and included.

Ready to kick your culinary success into high gear? Train for excellence at ICE’s School of Culinary Management.

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