Category Archives: Capital and Ownership

Avoiding the Hidden Tax Trap of TI Allowances

TI Allowances

Tenant improvement allowances (frequently referred to as “TI”), are an enticing and common incentive that many restaurateurs and landlords incorporate in their lease agreement because it’s a win-win for both parties. The landlord gets the benefit of someone building out their space and committing to rent it, which will in turn attract future tenants and

The Ideal Restaurant Management Incentive Plan in 3 Steps

The rise in operating costs and shortage of restaurant labor has forced restaurant owners to incentivize key employees with performance bonuses and equity by building the ideal restaurant management incentive plan. The ideal incentive or bonus plan should: Incentivize and reward key employees for increasing profitability and improving the hospitality experience; Provide an ROI to

How Much Should Restaurant Owners Be Paid?

“How much should restaurant owners be paid?” is not the most common question we get, but it is certainly a key question that should be asked and answered. A successful restaurant must be able to create value beyond its owner’s abilities. The only way to understand a restaurant’s value creation is through accurate and representative

How Distributions and Profit & Loss Allocations are Taxed

Welcome to the second portion of restaurant capital and ownership series: How Distributions and Profit and Loss Allocations are Taxed! In Part I, Raising and Distributing Capital for Restaurant Startups, we discussed what capital is, how to read an operating agreement, and we walked through an example showing how capital is distributed among owners. In

Raising and Distributing Capital for Restaurant Startups

raising and distributing capital

This is part 1 of a 2-article series. Please check back to read our article on taxation of distributions and allocation of profits and losses. You are a restaurateur with a great idea for a restaurant and feel it is a cannot-miss investment opportunity. There are several different options to raise the capital you need

Incentivizing Restaurant Employees with Ownership Equity and Profits

If you have been in the restaurant industry for a while, you have probably heard some buzz about alternative pay structures for your managers and employees, such as granting ownership, equity, or deferred compensation. While these ideas might seem tempting to attract and retain good talent, figuring out the differences and tax consequences can be