Feb 17, 2024 13 min read

Marcia Marcia Marcia!

Marcia Marcia Marcia!
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Friends of Branded!

Happy Saturday and I hope you had a great week.

What did President Ronald Reagan say about the most terrifying words in the English language? Oh, that’s right, “I’m from the government and I’m here to help.”

Longtime readers of the H^2 know that politics play little-to-no role in this newsletter, but the above quote seemed appropriate as I was reading about how our restaurant brothers & sisters, specifically from Washington, DC are being impacted by Initiative 82 ("I-82").

I-82 was a voter-approved ballot initiative which would phase out the special minimum wage exemption for tipped employees as part of the national push for a $15 minimum wage. In November 2022, voters approved I-82 by a margin of 74% to 26%. I-82 became law on February 23, 2023, and is gradually removing employers from including the gratuities in the wage calculation for tipped workers.

Previously in Washington, DC and throughout most of the country, servers and bartenders earn a base wage which is lower than the minimum wage. Employers were permitted to use the tips to bridge the gap in order to meet the minimum wage requirements (thus called the “tip credit”).

Below please find the quick “For” and “Against” arguments for I-82 (with appreciation & attribution to Wikipedia for these arguments):


  • Employers have too much power over tipped employees, and it results in wage theft.
  • The tipped minimum wage extends far beyond bartenders and waitstaff, for example nail stylists, landscapers, valets, cab drivers, bellhops, massage therapists, and housecleaners, among others. These workers are disproportionally women, people of color, living in poverty, and are often not tipped the same as bartenders and waitstaff.
  • Tipped workers must tolerate inappropriate behavior from customers, including sexual harassment, to avoid a reduction in tips. Most tipped workers in D.C. reported having experienced sexual harassment while at work.
  • The tipped minimum wage is a legacy of slavery. While tipping existed before the abolition of slavery, employers in the railroad and restaurant industries – where formerly enslaved African Americans worked – used the practice to keep their wages low.


  • Tipped wages keep business's operating costs down, especially for bars and restaurants, which can have tiny profit margins. Eliminating the wage means that businesses will either generate less profit or raise their prices to address the new costs.
  • Tips enable a worker to earn much more than the minimum wage, while never making less than it. Opponents argue that customers will stop tipping since they believe that workers are earning a suitable wage. Workers who were making more than the minimum wage on average will see their incomes decrease.
  • Most tipped workers who publicly spoke about eliminating the tipped minimum wage have been in the opposition.

So, in the spirit of fairness and since I quoted a Republican above, I’ll now use a (modified) quote by a Democrat Mayor Ed Koch: How’s it going?

Quick side bar, do you know the word “TIP” is actually an acronym? Do you know what it stands for? To Insure Promptness.

Do you know what else? In working on Top of the Fold section this week, I learned that the above statement about "TIP" being an acronym is a myth and I’ve been wrong about this for a long time. You can read about the History of Tipping here: history-of-tipping-restaurants (and if you do read this article, I don’t want to hear any more complaints about the length of this newsletter b/c you if dive into the links, that means you’re into this stuff, just like me!). 😊

My fact checking for this Top of the Fold also lead me to this article: The Origins of Tipping, which thoroughly busted my balloon (has anyone ever uttered the words “busted my balloon” better than Madeline Kahn in her hit song, “I’m Tired,” just saying). I'm now forced to find other fun hospitality trivia questions (yes, there is such a thing as fun hospitality trivia questions and just b/c I can’t think of any right now, doesn’t mean I’m lying). 😊

Was Paul Dooley ever better than in his role as Claude Elsinore in Strange Brew?

But now back to the battle over the tip credit and how what’s being witnessed in Washington, DC is causing havoc on the District’s restaurant scene and scaring operators in other states where regulations which will eliminate the tip credit is gaining momentum.

According to Michael Saltsman, executive director of the Employment Policies Institute, a nonprofit research organization studying policy issues surrounding employment growth, “I don’t think it’s an exaggeration to call it a catastrophic impact. What we’re living through right now is a real-world experiment in D.C. Frankly, I think it validates a lot of the fears that people had.”

When this regulation went into effect, the closure rate of restaurants in the district reached one per week, the highest peak since the pandemic, according to the Restaurant Association of Metropolitan Washington (“RAMW”). Employment took an even bigger hit and data from the Federal Reserve shows D.C.’s full-service restaurants cut at least 1,300 jobs in the first six months after I-82 went into effect. That’s a 4.4% reduction in the workforce from May through November.

The expression a “perfect storm” gets used too often, but I think it’s appropriate here. Without I-82, restaurants were still battling inflation, and the enthusiasm of employees to not come into offices continues to have vacancy rates at high levels in downtown office buildings (and this of course is not an issue exclusive to Washington DC and is hitting cities across the country). RAMW’s 2023-member survey provided a clear picture of the challenges restaurants are facing and 96% of restaurants surveyed said they’ve raised prices. Inflation and increased food costs are certainly contributing to the increased prices, and over 90% of restaurants say they’re paying at least 25% more in wages.

But here’s where the rubber hits the road: 75% of the restaurants surveyed by RAMW said they’re seeing diminished income with profitability declining by an average of 34%. This is what presents a most unique and daunting task for restaurant operators: to figure out how to offset this unprecedented increase in labor costs without negatively impacting employees and guests.

That’s where my Brady Bunch theme and specifically title came from.

As a middle child, I’ve always had a soft spot for Jan Brady, and as Jan Brady (the middle sister) made crystal clear, sometimes it’s not always easy being in the middle. The many businesses that fall into this middle category, let’s call them “tweeners,” often don’t charge a high price for their guests to dine, but they’re still full-service operations. They’re also not quick-serve operations, which have a number of unique attributes and specifically more tools to reduce their dependency on human capital.

In the world of restaurants, there are advantages to being a high-end full-service joint or a quick service one. The tweeners are where it gets most difficult. High-end full-service restaurants can more easily raise prices, as guests see these joints as experiential (and were already expecting a higher charge). Quick-service restaurants can more easily lean into technology to reduce the number of employees needed and make the guest experience more transactional.

Even in the full-service / high(er) end category, operators are embracing some of the labor-saving technology that reduces the need for humans by having servers cover more tables per section. Such tech includes, but certainly isn’t limited to, tablets, QR codes and other self-ordering technologies. As you’re reading this, you might be making a face and cringing a little bit as you think to yourself that such doesn’t sound like a full-service / high(er) end restaurant you’d enjoy given the perceived lack of service and engagement with the restaurant’s staff. That’s correct and is exactly the fine line operators are trying to walk.

For quick-service restaurants, I’ve written about the full-on embracement of kiosks as well as other tech & innovation that will remove humans from these brands. This is happening and the pace of adoption is only accelerating.

I was speaking with my dad about some of the changes I see on the horizon for the restaurant industry, and he reminded me of the automats and cafeterias that used to be present throughout NYC. For those that want to dig in, here you go: The Lost Automats and Cafeterias of NYC

Yes, I intentionally chose a black & white photo b/c I felt, just like John Cusack said in 16 Candles, that “black & white would just capture the moment so nicely.” 😊

Does this image above look foreign or something out of an episode of The Twilight Zone? How about this image below of what our friends Stratis Morfogen & Dan Rowe of Fransmart are doing with Brooklyn Dumpling Shop. What’s old appears to be new again and how awesome is that!

My working assumption is that the regulators across the country will do what they feel they need to do, and I’ll even concede that the actions they take are well-intended. Regardless of these changes (and that’s not to say I’m indifferent about them, but that they're above my paygrade), the industry will continue to sharpen its pencil and address the costs required to run restaurants.

For avoidance of any doubt, these regulatory changes represent a powerful and favorable tailwind in connection with Branded’s investment thesis and the digital transformation that continues to be recognized as no longer a “nice to have” but as a most critical “need to have.”

I’m not going to say that the government is actually going to help hospitality operators, but these changes will continue to accelerate the industry’s embracement of tech & innovation, increase the spend that operators need to make in both tech & innovation and make an operator’s tech-stack a critical part of the foundation in which they try to earn the loyalty and share of wallet of guests.

An unintended consequence of the regulatory changes that increase the cost of human capital to restaurant operators, will be the acceleration of the embracement of tech and innovation. As an active investor and accelerator of operator-centric technology, innovation and emerging QSR brands, maybe the government is here to help!

It takes a village.

This week’s shoutout goes to Branded’s OG portfolio company - PourMyBeer.

Branded is proud of so many of our portfolio companies, but only one can be the very first investment and as I’ve written about previously, you always remember your first. 😊

A little walk down memory lane, back in 2018, Branded made it’s very first investment in a self-pouring beverage solution that we started using in one of our restaurants – PourMyBeer. I can now look back and say at the time, we LOVED what this company was doing for our restaurant and specifically how it saved us on labor and eliminated waste & theft (yes, theft happens in restaurants even though the people that make up this industry are among the finest in the world). The PourMyBeer system also created an engagement & experience for our guests that was loved. Yes, truly loved!

Despite all the benefits we were getting, I want to be a straightshooter and say the company was in somewhat of a "Ready, Fire, Aim" stage of their maturation. When Branded invested in PourMyBeer, the company had 45 customers using their technology and we were one of them. Fast forward to present day, and I’m proud to share that PourMyBeer, now has over 540 locations with over 13,000 self-pour taps. 5% of the US used their self-pour technology in 2023 and the data around what people consume through their technology is available in their 2023 Impact Report.

I’m proud of what this amazing team at PourMyBeer has accomplished and thrilled to call its leadership team, CEO Josh Goodman and COO David Jelinek, my partners & friends. PourMyBeer is the industry leader in self-pour beer technology.

And NOW for the actual shoutout.

Self-pour was born from draft beer, but this bird is ready to soar and that’s what we’re about to see. The PourMyBeer system is liquid agnostic and they’re now embracing the larger opportunity of being beverage agnostic!

Cold brew coffee, cocktails / mock-tails, kombucha, juices, yes, it’s all part of what’s coming next (and by next, I mean now).

PourMy…wait, it’s not limited to “beer”, but we LOVE the PMB acronym (at least I do). We need a name that reflects the breadth & depth of this market that PourMy… is going to impact.

Am I really about to break news on this Saturday morning? Only with permission of the company’s executive, here we go!

The PMB system uniquely combines labor savings, breakage & waste reduction, and delivers over-arching sustainability benefits! This company needs a name that captures the size of this opportunity and this unique controlled pour systems. Let's get it on!

The company will be featuring its self-pour capabilities, in-app integrations with QR codes and direct pay and pour capabilities as a sponsor of the Vibe Conference in San Diego, CA from February 26th to the 28th.

This is a show that brings many Very Important Beverage Executives (😊) together and where all buyers, brands, innovation, technology, sustainability, consumer consumption trends and preferences will on display!

If you plan on attending this event, please stop by and experience quality, fast, fun consumption with self-pour by PourMyBev! Tell them that "Jimmy" sent you, and then when they “who?!?” say “Jimmy Frischling, the dude that writes the long weekend newsletters, he says he knows you.” That will refresh their memory.

Readers of the Hospitality Headline, that are interested in learning more about Branded’s portfolio companies, investment strategies and future opportunities, are invited to explore becoming part of our Access Hospitality Network.

In today’s episode of Hospitality Hangout, Michael Schatzberg “The Restaurant Guy” and Jimmy Frischling “The Finance Guy” are joined by Herb Ring, National Foodservice Director of The Hershey Company.

You can tune in on SpotifyAppleAmazoniHeart, or your favorite listening platform!

20 Years Of Hope

Join national non-profit CORE: Children of Restaurant Employees in celebrating 20 years of supporting food & beverage families.

Learn More

This week the tri-state area had a snow day and with it, not only a day off from school, but the winner of this week's WITW is Branded contest!

Congrats to Zachary & Joshua Zucker playing in the snow and showing off their Branded winter hats!

Schatzy may create these designs, but no one has worn them better than Zachary & Joshua!

Make your drinks go viral!

Craft personalized drinks for an unforgettable guest experience!

Drink Ripples


The Future on Tap: How Self-Service Is Shaping the Beverage Industry

By:  Josh Goodman - Founder & CEO of PourMyBeer

Imagine walking into a bar where, instead of waiting for a busy bartender to notice you, you head over to a self-pour tap. Within seconds, you're sipping your favorite craft beer. That's the magic of PourMyBeer. We're not just selling technology; we're selling experiences, freedom, and control.

Digital Restaurant Association 

We champion restaurants to thrive in a digital world

Join the DRA today


Winning the Battle, Losing the War: The Mystery of Superior Products Failing

By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures

Great products often fail in the market. Let's explore why.

Welcome to the new IFMA

The future of food-away-from-home is evolving—and so is our membership structure.

Learn More


All Your Influencer Marketing Questions Answered

By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures

As someone who helps restaurants with their marketing but is also a content creator / food influencer, I get asked a lot of questions about influencer marketing. So to help you, I've put together an INFLUENCER MARKETING FAQ

About ACG New York

Founded in 1954, ACG is the premier M&A deal-making community with a mission of driving middle-market growth. ACG’s global network operates within 61 local markets worldwide and comprises more than 100,000 middle market professionals who invest in, own and advise growing companies. ACG provides events, conferences, bespoke meetings, deal-sourcing forums, unique experiences, educational seminars, and numerous benefits to non-members and members alike.

Learn More


🔍 Got Questions? We've Got Answers! 🌟

Satisfy your thirst for knowledge? Look no further! It's time to dive into our brand-new segment: "Ask The Headline"! 🎉

📅 We'll be answering YOUR questions every week. And here's the best part: you can choose to stay anonymous or receive a fabulous shout-out when we feature your question!

That’s it for today!

See you next week, (about the) same bat-time, same bat-channel.

It takes a village!

Jimmy Frischling
Branded Hospitality Ventures
235 Park Ave South, 4th Fl | New York, NY 10003

Branded Hospitality Ventures ("Branded") is an investment and advisory platform at the intersection of food service, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its portfolio companies through investment, strategic counsel, and its deep industry expertise and connections.

Learn more about Branded here: Branded At-A-Glance February 2024

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