Restaurant Law Blog

A proposed amendment to the New York City Health Code that was opened for public comment on October 27, 2011 will now be subject to a vote by the full board of the Department of Health on December 13, 2011 at 10 AM.  Assuming the Board will vote to approve the new amendment, there is no indication as to whether the revised health code will go into effect immediately or whether its provisions will apply retroactively. If you would like a copy of the proposed changes, please let me know and I’ll email you a PDF version.

The New York City Department of Health has proposed a significant amendment to the New York City Health Code in an effort to clarify what is required of restaurant owners.  An opportunity to comment on the proposed changes will be held on October 27, 2011 between 10:00 a.m. and 12:00 p.m. at the NYC DOH, 125 Worth Street, 3^rd Floor, Room 331, New York, NY. 

Here are some of the notable proposed changes:

We all know that the ABC Law prohibits gambling in all restaurants and bars.  Recently, however, the question of whether poker should be banned as illegal gambling came before the SLA.  The long and short answer is no, but yes.  Confused?  So is everyone else.  For that reason the SLA issued a declaratory ruling outlining when poker gaming is authorized.  Here are the rules:

It should come as no surprise that there are considerable mixed reviews regarding the apparent success or failure of the Department of Health letter grading system.  On August 1, 2011 Mayor Bloomberg and the Health Department released a survey conducted by Baruch College, which shows that approximately 90% of New Yorkers approve of the letter grading.  The survey also suggests that approximately 70% of New Yorkers now rely on restaurant grading when choosing where they will eat.  In restaurateur terms, the financial impact of “earning” a B or a C is devastating.  New Yorkers are also becoming keenly aware of what “Grade Pending” really means. 

Beginning on November 14, 2011, the National Labor Relations Board (NLRB) is mandating that all employers conspicuously post a new 11” x 17” poster advising employees of their rights under the National Labor Relations Act to organize unions.  Employers will be able to download the poster from the NLRB online website, or obtain one at their local NLRB office. 

The goal is to increase employees’ awareness and knowledge of their NLRA rights. This poster must be posted with your other labor law posters, and if 20% or more of your employees do not speak English then you're required to post the poster in those languages which your employees speak.  If your employee rules and regulations are listed on your website, you will also be required to provide a link to this new poster online. 

Identifying the worst violations a restaurant can receive is simple, and there are two.  The first is a violation of NYCHC 81.15(a), or “not having a supervisor present at all times who holds a Food Protection Certificate.”  This is an automatic 28 points and virtually impossible to overturn at an OATH hearing.  This does not mean that the head manager on duty needs to hold the FPC, all that is required is that a supervisor with a FPC be present at all times.  This is often confused by DOH inspectors, but be safe rather than sorry and ensure that every manager has their FPC. 

Effective immediately, anyone holding a liquor license in NYC whose corporate structure substantially changes (80% change , must now, in addition to seeking approval from the SLA, notify their local community board 30 days prior to such change.  Additionally, a fee of $128 must accompany applications for corporate change. 

CHECKLIST FOR NEW RESTAURANT FORMATION

CONCEPT

• Create your own concept
• Consider buying a franchise
• Consider purchasing an existing restaurant
• Draft a business plan

I was recently walking on the Upper West Side and noticed this creative attempt to disguise the ‘C’ Grade received by a local establishment.  Creative…yes, but effective, I’m not so sure.  Two days later the children’s drawings were removed leaving one to ponder whether the DOH stepped in.  

All Partnerships End.  Whether it occurs by sale, sickness, death or court order, your partnership will end at some point.  Unfortunately, most partners do not have a written exit strategy or buy-out agreement in place.  They implicitly trust their partner during the honeymoon phase only to later realize that substantial differences of opinion exist as to how the business should be run.  Take Albert Trummer of Apotheke in Chinatown.  Last year Mr. Trummer was arrested twice for lighting alcohol atop his bar on fire, something he has argued is a common bartenders’ practice.  Partially at issue is whether Mr. Trummer’s partner, Heather Tierney, set Trummer up to be arrested in an effort to force him out of their partnership.  According to Glenn Collins of the New York Times, the partnership dispute is now in mediation in New York County’s Supreme Court.  A better practice is to build into your partnership agreement a buy-out provision while your partnership is still in its infancy.  Partners must ask themselves what they will do when a dispute arises, if partner falls ill, or if a death occurs.  Unless you want your partner’s husband or wife to inherit their interest in the partnership, these considerations must be given careful forethought.  For more information on Partnership considerations, click here. 

I just came across this list.  “The Top 15 Reasons why Restaurants Fail:

1. Lack of experience, 2. Lack of capital, 3. Poor locations, 4. Inventory, 5. Equipment, 6. Poor credit practices, 7. Personal expenses, 8. Premature expansion, 9. Bad attitude, 10. Too many expenses, 11. Poor collections, 12. Low sales, 13. Inventory mismanagement, 14. Competition, and 15. Crime

I’m not sure that I agree with the list entirely.  Let me start by saying that I am not a restaurant owner.  I am a restaurant attorney.  So, I may be wrong ( and often am)  but many of my clients who have sold their business express different reasons as to why their business failed.  This is what I’ve gathered to be their top reasons why restaurants fail: