Tax Incentives Blog

Serving Up Savings with Technology Incentives

Written by John Bohannon. Updated Jun 14, 2019.

RD_RestaurantA penny saved is a penny earned.

The premise behind the centuries-old idiom suggests that saving money you already possess is just as beneficial as earning more; that a person or business should not only focus on making money, but also secure and retain some of the money earned.

And those in the restaurant industry certainly could do well to pay heed to this notion.

Restaurants—fledgling and established alike—are well-known for surviving on exceedingly thin margins. Add to this the sector’s comparatively low barriers to entry, and you’re presented with a viciously competitive industry that covets any and every possible advantage over rivals.

Many industries are unaware of how they may qualify for R&D tax credits

Accordingly, restaurateurs secure top-tier staff, develop and offer innovative cuisine, or create a unique ambiance to attract customers. These critical measures work to establish distinction from competitors, expand market share, and remain relevant in an ever-shifting market.

As important as they are, these tactics often don’t possess the power to entirely stave off encroaching up-and-comers, prompting owners to compete on the back-end of its operations. However, this approach can sometimes wield a double-edged sword.

Cost-cutting, for example, may provide an immediate boost in a restaurant’s bottom line. However, it may also hamstring the business in the long run if cuts impact a restaurant’s quality and standards.

Have Your Cake and Eat it Too

But what if there was another front on which restaurants could compete? One that could provide a serious advantage over competitors on both the front-end and back-end of operations. The answer: untapped tax benefits from the research and development (R&D) tax credit.

Streamlining and improving operational efficiency through technological innovation—already a valuable form of competitive differentiation—can work double duty on a restaurant’s bottom line.

First, technology-based improvements to a restaurant’s operations and management systems can significantly improve efficiency, impacting business performance, as well as the dining experience for customers.

Secondly, the company can retain a substantial amount of qualifying expenses incurred in the development and implementation of many tech-based processes or applications through both state and federal R&D tax credits.

Frequently overlooked as an avenue for savings in this industry, the research credit further lends itself as a unique way to gain an advantage over competitors. Thanks to the digital revolution, a wide range of companies previously unable to capture this lucrative credit can now do so when they develop digital and technological improvements for its business.

For restaurants, the creation and betterment of automated processes, digital platforms, or other software development efforts that improve its operations can potentially qualify for significant tax savings.

Beyond the increased ability to use the credit through software development, a restaurant owner could reap substantial savings for expenses relating to the establishment and integration of efficiency-improving equipment as well.

Incentive for a Penny, Incentive for a Pound

In the cutthroat arena of the restaurant sector, every little advantage matters and can parse the difference between surviving or thriving.

Contact CTI and get paired with an R&D consultant who can help navigate the process and secure critical savings. Budding restaurants just entering the fray can quickly realize potential benefits through the credit even without income tax liability.

Why stop there? Get a second helping of savings through other incentives that can greatly improve a restaurant’s bottom line.



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Topics: R&D Tax Credit

John Bohannon

Written by John Bohannon

Graduating from South Texas College of Law Houston, John acts as CTI’s chief R&D legal researcher. His focus on tax law research combined with his years of experience performing R&D tax credit studies and providing audit support affords unique insight into the research credit’s application and other evolving areas of tax law.

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