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Wall Street Journal

12/03/09 In Lean Times, Restaurants Barter for Trade Services By JULIE JARGON Independent restaurants are turning to an old-fashioned method to fill tables, barter. As they struggle to keep customers and pay the monthly bills, restaurants are swapping food for services like oven-hood cleaning and pest control. Bartering helps restaurants fill seats, reassuring prospective customers who might be turned off by the sight of a vacant eatery. It also attracts new customers when tradespeople bring friends along, reduces some costs, and helps retain employees who can't scoop tips off empty tables. It's hardly a permanent fix for ailing restaurants, which still need cash to cover such expenses as rent, mortgages, taxes and utilities. But bartering is an especially useful tool for independent restaurants that, unlike some chains, lack access to corporate credit lines or cash. .Many restaurants are using barter exchanges that track and manage the transactions, which count as taxable income and must be recorded for tax purposes. Rather than traditional bartering, in which services are swapped directly between vendors, most barter exchanges use a "round robin" approach that offers flexibility for both restaurants and service people. For example, a plumber uses trade credits accumulated at an exchange to pay for a restaurant meal. The restaurant owner can use the credits spent by the plumber to "purchase" a variety of services offered by appliance repairmen, electricians and other exchange clients. The exchange acts as a bank, keeping track of credits and collecting fees on each transaction. Tony Romano, owner of Marcello's Pasta Grill in Tempe, Ariz., where business is off 40% from three years ago, joined the Arizona Trade Exchange in October. Since joining the exchange, he says he's been averaging $2,000 per week in trade credits from tradespeople, which has allowed him to pay for almost all of his monthly expenses,from laundry to fire-extinguisher maintenancewithout writing a check. Although the restaurant doesn't receive cash for the food, the tradespeople usually tip well, Mr. Romano says, which keeps his wait staff happy. He says his traffic has increased 10% in the last month. New exchange clients also have led to catering jobs. "A lot of small businesses can't afford to take their employees out for a Christmas party, but they can barter it," he says. "I've booked two lawyers' offices and three dentists' holiday parties." Restaurants like the Iberian Pig in Atlanta are swapping food for services. .Independent restaurants have fared slightly better in the last year than chain restaurants, though it's hard to say how much bartering has helped. Same-store sales at independent restaurants declined 9% for the year ended Sept. 30, while same-store sales at chains declined 9.7% during that time, according to restaurant consulting firm Technomic Inc. Rob Miller, president of the Arizona Trade Exchange, says he now has more than 30 restaurants involved in his exchange, up 20% from a year ago. The exchange charges a one-time $495 membership fee as well as a $12.50 monthly fee, and takes a 12% cut of each transaction from the person making the trade purchase. Ric Zampatti, chief executive of The Barter Company, an Atlanta-based trade exchange with clients in South Carolina, Florida and Georgia, says his business is up 10% in the last year, due partly to signing up 35 new restaurants. Tradespeople also appear to be spending more when they go out to eat. A trade credit is worth a dollar; Mr. Miller says he used to see tradespeople buy restaurant credits in batches of 100 or 200; lately, he says people are buying restaurant trade credits worth $300 to $500 at a time. Cody Smith, owner of Dynamic Pest Control in Mesa, Ariz., has been cashing in his trade credits at restaurants more frequently in the past six months. "It's a great way to take the family out, enjoy a meal and walk away with very little cash out of your pocket." Trading his pest control services for restaurant meals and other services has brought in new clients and boosted his sales by 15% in the last year, due partly to new cash-paying clients who aren't part of the exchange, Mr. Smith says. Atlanta restaurateur Nancy Castellucci recently opened a fourth eatery called the Iberian Pig in an historic building that needed to be brought up to code. She used barter credits to cover 60% of the refurbishment costs. "We would have had to go to the bank otherwise and we didn't want to go to the bank. When you have barter dollars, it's a much cheaper way to borrow money because you're not actually borrowing money, you're borrowing goods and services and not paying interest." Mr. Zampatti of the Atlanta exchange says he's seeing restaurants increasingly use barter for routine maintenance costs. "In the past, restaurant owners would use barter to upgrade their lifestyle, like to go on vacation or buy jewelry, but because of the economy, now they're using it to pay for their business expenses."

One Smart Cookie

Published: 07/26/2009 Marietta Daily Journal EAST COBB - When the air conditioner broke at east Cobb's Cookies by Design in May as temperatures began to soar, owner Lisa Rish couldn't afford to shell out extra money for costly repairs in this economy. So, she turned to the Kennesaw-based Barter Company as she previously had done when her oven, refrigerator, sink and grease trap needed to be fixed. The company ties a network of businesses together to barter their services with each other, which allows them to save money. "I didn't have 500 plus dollars in cash to get it fixed and still be able to pay employees, taxes, bills or rent," said Rish, who's been using the Barter Company since 2001. "It's very helpful when it's something you have to have like an air conditioner." The Barter Company's network includes a variety of professionals, from lawyers and dentists to restaurant owners and house painters. Clients use barter dollars instead of cash in transactions. Businesses charge retail value for their goods and services in barter dollars, instead of selling them for reduced cash rates or having them go unsold. The Barter Company acts as a third-party records keeper. Barter Company President Ric Zampatti said business is up 15 percent this year. Founded in 1996, the company has 15 employees at offices in Kennesaw, Macon, Columbia, S.C., and the Gulf Coast of Florida. It has over 2,000 clients in the U.S., primarily in Georgia, Florida and South Carolina. The Barter Company's profit comes from charging a 7.5 percent brokerage fee of the total of each client's trades every month, said Scott Stinnett, the company's sales vice president. In this down economy, business owners are looking for ways to save money, the company said, and can find that they save more by bartering. For the past five years Susan Smelser, owner of the Book Worm bookstore on Marietta Street in Powder Springs, has traded with Barter Company clients for such things as pressure washing, landscaping and exterminating. She said it has been invaluable in saving her money to operate her store, which sells used books. "We've been able to save $60,000 to $70,000 out of our pockets," Smelser said. "And new customers recommend the store to others." Rish, who sells a variety of cookies from her store in the Providence Square shopping center on Roswell Road, said trades are based on barter dollars and not comparable services - though she has baked more than 60 cookies before in a barter. "But you're excited because you can use this money in trade for something," she said. For more information about the Barter Company, visit www.barterco.com.

WIS TV10

The barter system: An old business makes a comeback COLUMBIA, SC (WIS) - It may seem like a blast from the past, but an old system of getting what you want is back. Bartering is a way of exchanging things instead of cash that's growing in popularity -- again. The first kind of business was the barter system. A good stonecutter might make a few extra tools and simply trade them for furs or other things he wanted. It's so simple the cavemen did it. Today bartering is back, but it's a little more advanced. "It's one of the best things I've done for my business," says Sharon May, who owns Hennessy's restaurant in Columbia. She's been bartering for years. "You're not limited to bartering between just you and me. It's a whole group," says May. A group that's growing, as small business are having trouble keeping up their cashflows. May does her trading with The Barter Company, one of many groups that brings traders together. "It's an alternative form of currency," says Barter Company spokesman Randy Wolfe. Wolfe says for a fee, small businesses are added to a database stretching across the southeast. They can put anything up for a cashless trade. At Hennessy's, May can trade gift certificates and vacant tables for what the company calls barter dollars. She then uses those barter bucks at member businesses for things like carpet cleaning or a new awning, all cash-free. "I use to own a business, I've experienced both sides of this, there's no downside to barter," says Wolfe. Wolfe calls bartering the best way to move excess inventory without having to discount. "We bring you new business, you spend less cash. It uses up your excess inventory you bring in new cash business through members referring you. It's win-win-win-win. In this economy that's why we're growing so fast," he says. It might be a little dated, but when the times get tough old tricks might be the best tricks. Reported by Taylor Kearns

"Trade You For It" Article in Atlanta Magazine

Bill Warhop from Atlanta Magazine wrote an article "Trade You For It: Exploring the New Barter Economy" featuring The Barter Company. Check out the October 2008 edition and read why "...modern day Og's & Ug's are jumping on the barter train."

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