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Entries in restaurant tech (4)

Wednesday
Aug162017

Disabling Code: Franchisors Should Ensure Digital Properties Are Accessible

Franchise Distribution Attorney Barry KurtzChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

Are we still in the dawn of the digital age, or have we moved on to mid-morning yet? Only time, and your company's web site and applications, will tell.

Unfortunately, when it comes to website accessibility, it is still dark as midnight before the dawn for some users. That’s evidenced by the rise in web and app litigation we’re seeing lately – a surge of claims citing Title III of the Americans with Disability Act (ADA) violations.

One Forbes contributor opines that California, Florida, Texas and New York are the states most burdened by ADA lawsuits, though the heyday of quick ADA settlements may be throttled with new legislation soon. The writer is referring generally to physical impediments to a disabled person's use of a public facility.

But lately, there has been some litigation concerning online use as well. And this is of particular importance to franchisors who provide online ordering services.

An ADA Defense Can Not Be Built on Bricks Alone

To illustrate, franchisor Five Guys Enterprises LLC recently learned a class action lawsuit against the company will proceed in court. The suit was filed by Lucia Marett, who claims that Five Guys' online ordering system is inaccessible to the blind and visually impaired.

Five Guys attempted to get this suit dismissed by contending that the ADA only applies to brick and mortar locations, not to digital properties, and that the company was in the process of building a compliant site to better accommodate the disabled.

In denying the dismissal, U.S. District Judge Katherine B. Forrest said,

. . . defendant’s website is covered under the ADA, either as its own place of public accommodation or as a result of its close relationship as a service of defendant’s restaurants, which indisputably are public accommodations under the statute. 

Another web accessibility lawsuit actually went to trial, this time in Florida, and the result does not bode well for non-compliant businesses.

In Juan Carlos Gil v. Winn-Dixie Stores, Inc., plaintiff is blind and uses screen reader software that speaks written text, to help him navigate commercial websites. Unfortunately, Gil was not able to use this tech on Winn-Dixie's website.

Gil previously relied on in-store services and acquaintances to help him purchase groceries, refill prescriptions, and use coupons at the chain's physical properties – but a Winn-Dixie television commercial spurred Gil to try these services online. Unfortunately, when Plaintiff visited the site, he found about 90 percent of it was inaccessible to him and could not be read by the software he used.

The grocery chain argued that it never tried to prevent Plaintiff's access to any of its physical stores, and therefore, is not guilty of violating the ADA.

The federal district court disagreed, saying Winn-Dixie's website serves as a digital wormhole of sorts – it is a "gateway to the physical store locations" and therefore, is considered a service of public accommodation. Judge Robert N. Scola clarified,

. . .the ADA does not merely requir[e] physical access to a place of public accommodation. Rather, the ADA requires that disabled individuals be provided ‘full and equal enjoyment of the goods, services, facilities privileges, advantages, or accommodations of any place of public accommodation.

What impact do these lawsuits have on franchisors?

Franchisors' Guide to Digital Compliance

Chances are, if you're successfully running a busy chain of restaurants, hotels, accounting offices or whatever, you are not well versed in the technical aspects of digital properties. The best thing to do is hire the right people to handle this. And by the "right people", we mean web and app developers who are well versed in ADA Compliance.

When engaging a third party to build your websites and ordering systems, here are some basic questions to ask:

1. Will there be "alt tags" or "longdesc tags" added to all images? (Tags are part of hypertext markup language, or html code – these tags will allow a screen reader to describe an image to the user.)

2. Will documents be posted in readable formats for the visually impaired? The standard PDF (Portable Document Format) is generally not readable. Ask your developer to upload restaurant menus, coupons or other documents in html or "rich text format," as well as pdfs.

3. Will users be able to adjust font sizes and colors? Branding is critical to your business and you'll want your font and colors to be used on all marketing collateral. But some visually impaired users will need to see screens in specific color combinations and sizes. You developer will need to design to reflect your brand, but also to allow end-users to adjust to their own readable specifications.

4. Will videos include both audio and captions? If incorporating multi-media, ensure both the visually impaired and the hearing impaired can access the files.

5. Will online forms include descriptive HTML tags? All web users should be able to complete forms without a hitch.

The general rule of thumb for compliance is this: ensure all features available to the customers with full sight and hearing capabilities are also available to those with impairments.

The internet is nearly 50, and both the World Wide Web and the ADA are 27 years old this year – that's actually pretty ancient in terms of cyber shelf life. Don’t ignore web and app development for so long. Code that’s more than three or four years old may not be readable by the latest browsers, let alone tech tools for the disabled. Update regularly.

Barry Kurtz is a Certified Specialist in Franchise & Distribution Law, per the State Bar of California Board of Legal Specialization.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jul172017

So You Say You Want a Revolution? Franchises Evolve as Retail Declines

Franchise Distribution Attorney Barry KurtzBar Certified Franchise & Distribution Law Specialist

by Barry Kurtz

818-907-3006

 

You’ve seen the news: retailers are struggling. Traditional anchor stores like Macy’s and Sears are closing up shop, creating a domino effect of fiscal death for shopping malls across the country. The Los Angeles Times reports over 8,000 retail stores may close before years’ end. 

Empty Food Courts Hurt Franchises

This is bad for Quick Serve Restaurants (QSRs) that have done a booming business in traditional mall food courts. But like all threatened species, there is a solution: Evolve. Though the traditional mall may be singing a swan song, other types of shopping complexes are doing good business.

Brick & Mortar Restaurant Locations

Not all malls are dead or dying, of course. And some properties will attempt a comeback through “experiential retail”, converting large anchor stores into movie theaters, restaurants, gyms, laser tag playgrounds or other facilities, which will hopefully lure back the smaller retailers as well as consumer foot traffic. But for franchisees leasing space in malls that are truly facing a decline, it may be time to revise a franchise agreement to accommodate a move to a more lucrative location. Consider alternative venues:

Outlet Malls: These still draw customers and generally have booming food courts filled with QSRs and other casual eateries. Many of them also lease space to family-friendly, full service restaurants as well.

Lifestyle Centers: Also known as boutique malls, these are mixed use commercial properties and popular draws for more upscale consumer spending. CityPlace in West Palm Beach or The Grove here in Los Angeles are prime examples. Single location restaurants and chains that are a little higher end tend to set out shingles in these locations. But QSRs may have opportunities in the surrounding areas.

Marketplaces: These settings are also on the rise in the U.S. Check out Grand Central Market in Los Angeles, or a venue like Underground Atlanta in Georgia.

Franchisees, consult with your franchisor regarding pulling up the stakes.

Franchisors, don’t allow franchisees to relocate at will; however, if a franchisee can make a convincing showing that relocation will be in the best interests of both franchisee and franchisor, the franchisor’s consent may be forthcoming. Consider the economic realities – franchisees who turn good profits make for a healthier system.

Food Delivery Services Help FranchisesOther Options for QSRs

Hanging on at the traditional mall food court to the bitter end? That’s understandable in some cases, as moves can be very expensive in terms of cash, lost customer bases and good employees who simply can’t commute to a new store further down the road.

Though foot traffic may be declining, digital sales are up. Consider a mobile delivery service or curbside pickup (consult with the mall’s management for this option) to bolster the account books.

A Morgan Stanley report says $210 billion in restaurant food is consumed outside of the restaurant from which it is ordered each year – though currently, only about five percent of that spend accounts for deliveries of online orders. But a writer for The Motley Fool projects a 15 percent growth in digital deliveries annually.

Whatever a QSR or other franchises decide to do – there are still plenty of options for business growth. You just have to embrace the change.

Barry Kurtz is the Chair of our Franchise & Distribution Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Friday
Jun302017

Will Minimum Wage Hikes Kill Restaurant Jobs?

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

In 1981 “Video Killed the Radio Star” was the first music video MTV broadcast in the United States. The song was actually written a couple of years earlier, appeared on an album entitled The Age of Plastic by the Buggles, and raised questions regarding new technological advances in the music business.

Which brings us to the point:

Restaurant owners may be blindly reaching out to embrace technology, but at a high cost to humans, most notably their employees. Unfortunately, this move to team up with new tech isn’t entirely because of choice.

Robotic Handshake

Rise of Restaurant Machines

On July 1st, employers in Los Angeles and in many other metro areas across the nation are required to raise minimum wages. The mandate is the result of numerous campaigns initiated by labor unions to improve the lives of low-wage workers, by raising hourly rates to $15 per hour.

The restaurant industry is struggling with such a drastic increase, even though the daunting $15 pill is mostly being swallowed in smaller bites – gradual increases over a period of five years in Los Angeles County, for example. So what’s the industry’s survival instinct response?

Many are being forced to cannibalize their work forces, by investing in machines to replace human workers.

Former McDonald’s CEO Ed Rensi described the situation in a guest column on restaurant tech published in Forbes Magazine last November:

In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.

Economists at the University of Washington also find the minimum wage increase to be detrimental – they are claiming low-wage earners have actually lost $125 per month because of the city’s minimum wage hike. (Study published by the National Bureau of Economic Research – NBER Working Paper No. 23432.) The economists concluded Seattle’s wage increase of $11 per hour in 2015, and then to $13 per hour eight months later, had a negative impact on hours worked. Employers reduced labor costs by about nine percent.

Restaurant waiter taking customer orderPeer review for the University of Washington study is pending, and another study contradicts the economists’ conclusions.

Nation’s Restaurant News for example, cites the Washington study as well as another research project from the University of California at Berkeley’s Center on Wage and Employment Dynamics. Berkeley researchers found no loss for low-income earners in Seattle as a result of minimum wage increases.

It looks like we’ll have to rely on time to let us know which researchers submitted the more accurate findings. Either way though, we see the handwriting on the digital wall: quick serve and fast casual restaurants are buying or contemplating buying more computers and kiosks, beefing up websites and apps, and generally eliminating the human factor to the furthest extent possible.

But chew on this:  Researchers at Harvard Business School conducted yet another study, this one centered in over 100 cities in the San Francisco Bay area. According to these authors, Bay Area cities saw 21 minimum wage hikes between 2008 and 2016. Which restaurants went bust because of these wage bumps? The lower quality restaurants with lower Yelp ratings seemed to be the ones most likely to close:

"Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale)."

Based on this study, it appears restaurant owners may now either choose to close their doors or be forced to close their doors because of the increase in labor costs. Whether that decision to shut down is a result of having to devote financial resources to paying workers rather than making improvements to food, facilities or other areas – or some other factor – remains to be seen. The authors of this study say a purely causal relationship has not been determined.

But what recourse do restauranteurs have? When it comes to minimum wage increases already in place, we refer back to The Buggles:

“We can’t rewind, we’ve gone too far…”

 

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jun082017

There's an App for That: Franchisors Fight Slumping Sales, Millenials

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

How has the gourmet burger gone awry? According to Fox, the better burger business dropped five percent in foot traffic at quick-serve restaurants last year, primarily because consumers are opting to “DIY” their food at home.

But why would customers go through the hassle of firing up the grill when it’s so much easier to belly-up to a counter and place an order? For many, double-digit burgers just cost too much.

Franchisors are taking notice, and making adjustments.

Some are offering premium toppings to compete with the fancier restaurant chains. Others like McDonald’s plan to try using non-frozen beef or offer more “Signature Crafted” items alongside the menu mainstays. Franchises like Wendy’s are sticking to lower price point items, knowing the average consumer just can’t spend $6.00 per day on lunch, according to the article.

Chains in fast food (Burger King), quick-serve (Habit) and full service, sit-down style restaurants (Red Robin) are offering rewards programs to encourage brand loyalty through discounts and freebies. These strategies may help bring back those customers wanting to save money.

But there’s another reason diners are cutting back on eating out: Physically going to restaurants just costs too much in time and stress. Some even characterize it as a “dying tradition” that eats up too much of the work day. Just consider the coordination of schedules, the drive to the restaurant, a hunt for parking, the wait for a table, the wait for service…all of that time adds up. It’s daunting.

And some blame the millennials, who, believe it or not, prefer to cook at home more than their parents did. They also rely more on fast, cheaper meals provided by grocery stores, grocery delivery services, and a new wave of hi-tech, time-saving web based applications for curbside pickup or delivery.

Speed seems to be key here. Denny’s just launched Denny’s on Demand, allowing customers to place orders for pickup or delivery, and pay for those orders. Forget 30 minute pizza delivery. In the land "Down Under", Dominos is working on making and delivering pizzas in 10 minutes or less.

Jack in the Box recently teamed up with DoorDash to deliver curly fries and tacos to home addresses. McDonald’s hopes to drive up profits through UberEats, now available in 100 test markets across the country. Eat24 and Yelp will help web visitors find fast food delivery services within their zip codes.

All in all, apps seem to be the way of the future for restaurants craving more business. Some eateries in the Los Angeles area are claiming anywhere from a 2 to 35 percent increases in sales due to expanded digital assets. But what should franchisors know about the legal ramifications of going hi-tech?

A Franchisor’s Mobilization Plan

Some recent litigation in the dawn of digital gastronomy points the way. Franchisors should ensure they hire the right developers to reduce the risk of litigation. Important aspects to consider include:

Accessibility: This is a big issue, as ADA (Americans with Disabilities Act) suits are on the rise. Sweetgreen, Inc., a Washington D.C. based salad chain faced a class action lawsuit filed on behalf of visually-impaired plaintiffs. The app Sweetgreen had developed to allow customers to order online for faster pickup worked great for those who could see. But those customers who were impaired or blind weren’t able to customize their orders as easily, and spent extra time refining their choices at the restaurant. For this group, the app wasn’t time-saving at all.

Intellectual Property Rights: It’s common for developers to borrow code already written, rather than reinvent the wheel every time they build a new site or app. The same applies to graphics and text. However, developers are being targeted more and more often for trademark, copyright or patent infringement. Franchisors should ensure the developers own all elements used in the project, have the licensed rights to use all elements, or that the developers assume all responsibility should IP litigation be initiated.

Privacy: This one’s always an issue, as anything that connects to the internet can be hacked. Just ask Starbucks, which attributes a third of its sales to purchases made through its app. The franchise also claims that less than one percent of its app users have actually been hacked, and that the fault lies with users employing simplistic passwords. Whether those claims are true or not, the hacking is turning out to be a bit of a social media challenge for the coffee franchise.

Third Party Partnerships: Customers are generally unaware when they place an order online through their favorite restaurant’s website that the food will actually be delivered through a third party delivery service. Zoomer is one example, and plaintiffs allege the company violated the federal Telephone Consumer Protection Act and other laws when the delivery service sent customers unauthorized texts after placing food orders with partner restaurants. Granted, it’s the delivery service that is facing the lawsuit – but franchisors should be wary of using any third party service that will annoy customers. Or break the law.

As for the non-digital logistics, remember the practicalities: People who order online generally don’t want to communicate with the restaurant – they want to get in and out quickly, or just have food delivered without fuss. Consider more short-term parking or curb service for pickups; counter space, windows or staff dedicated just to online orders; and whether or not it’s better to employ your own delivery staff or contract out.

Most importantly, make sure the app works, and that it works well – there’s no point in developing an app that doesn’t allow customers to order, customize selections, and pay. Useless apps without these features tend to get slammed in reviews. And the critics are harsh, as seen in the example to the right.

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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