Just because you're short on cash doesn’t mean you have to go without. More and more pizza restaurant owners are turning to bartering--and finding that it can be good for business. Restaurants are now using barter to accumulate trade dollars to buy the things they need and to attract new business.

How Does it Work?  
In its simplest form, bartering involves an equal trade. One business swaps a good or service for another. A lawyer, for example, may swap a few hours of legal assistance for a stay at an out-of-town hotel.

Through professional barter exchanges, where members pay a commission for goods or services traded, more complicated trades are possible. Here’s how it works: A restaurant lists itself as a trader through the exchange. In return, the restaurant receives a trade credit based on the dollar value of the food items purchased. The restaurant can then use its trade credits to “purchase” goods or services offered by other members. The result is that the restaurant business is hooked up with a network of actively bartering businesses.

Bartering enables pizza dining establishments to trade menu items for the products and services they need. Some restaurants will barter food but not delivery. Restaurants typically barter meals anytime but some may select to trade only on specified days they pre-select, usually slow nights like Monday-Thursday. Some will cater events and host parties in the restaurant as well. For higher-priced events, they may trade 50/50 or barter the whole amount up to a certain point.

In order to attract more barter business at times favorable to the restaurant, some owners host special daytime cooking classes and luncheons or wine tastings paired with pre-planned meals on weekday evenings. By using their downtime, the restaurant remains full and income is being generated. Some restaurants will agree to barter only a certain dollar amount per month. In that way, the trade is controlled and the restaurant knows what to expect each month.

By bartering, restaurants can acquire the goods or services they need without tapping into their cash flow. A hotel, for example, can fill empty rooms during its off season, a print shop can run jobs during what would normally be a slow time or a newspaper can fill up its advertising space.

Promotion
Bartering also provides another way of promoting your business. By bringing together buyers and sellers who may not have used each other’s services before, bartering can introduce your establishment to new customers. These may be one-time customers or people who come back to purchase food once they’ve become acquainted with the business.

Trading meals can be a great way for restaurants to supplement their advertising budgets. Take a radio station that wants an economical way to entertain its top advertising clients. The station may offer advertising time and trade its barter credits in for meals at a local restaurant. The restaurant might trade its credits in for computer equipment. And the computer company might trade its credits in for radio ads. Three separate businesses have taken part in a buy and sell transaction without ever exchanging a dime. Restaurants that actively barter may do as much as 5 to 10 % of their business annually through trades. That adds up.

The Fine Print
Barter exchanges typically charge a one-time membership fee. Barter exchanges offer the advantage that they don’t require an even trade. You can use credits accumulated for one item to trade for several different items that together add up to your total credits.

Restaurant owners who want to get involved in trading should remember that there is no tax advantage to bartering. Barter and cash transactions are the same in the eyes of the Internal Revenue Service--both are taxed equally. In fact, bartering exchanges must report goods and services sold through barter to the IRS.

Bartering also offers no guarantees. Some trades may happen quickly, others may take some time. An item a lot of people want, such as airline tickets, may be snapped up right away.
And you can’t always count on getting what you want when you want it through barter. The amount of certain goods and services available for trade may fluctuate during the year. For example, a computer technician trading his services may not be available to fix your computer on a moment’s notice. He’s going to be offering his services during his downtime, which might not coincide with your computer breakdown.

But you have to weigh the disadvantages against the advantages. Bartering turns your meals into valuable commodities. It increases your sales while enabling you to purchase goods or services you need without dipping into your cash.

Don’t think that you have to limit bartering to business. Bartering may be a great way for a busy restaurant owner to take a vacation. You can trade those credits in for an out-of-town hotel stay--just for the fun of it!

Bartering Companies
(For additional listings, visit www.barternews.com)
BizXchange, 206/447-9933, www.bizx.com
International Monetary Systems, 800/559-8515, www.imsbarter.com
Metro Trading Association, 248/244-0000, www.metrotrading.com
National Trade Association, 847/588-1818, www.ntatrade.com
Pittsburgh Trade Alliance, 412/279-2499, www.pghtradealliance.com
Southern Barter Exchange, 501/376-2278, www.southernbarter.com
TradeAmericanCard, 714/532-1610, www.tradeamericancard.com
Tradesource, 602/996-1557, www.tradesource.net  

Don Mardak is CEO of International Monetary Systems, one of the largest barter organizations in the United States. He can be reached at 800-559-8515, www.imsbarter.com.

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