Monthly Archives : June 2015

Supreme Court Ruling On Affordable Care Act

With the Supreme Court upholding the Affordable Care Act today the restaurant industry is still looking for some changes to be made as their situation is very different than most businesses. I’ll post a full article from nrn.com on the subject from today.

The provisions in the act that cause concern for the restaurant industry are:

  1. 30 hours/week or 130 hours/month being the threshold for providing healthcare
    • This can make it tougher to take advantage of a flexible work schedule as we have discussed in the past. As a server you tend to pick up shifts and give away shifts as your life dictates and that, for me anyway, was always a huge bonus of that job. But now I can see most management looking to keep everyone under the thresholds.
    • Management will have to make the decision on whether it’s worth having more employees that are not considered full time vs. ponying up for insurance.
  2. The 50 employee limit
    • This poses the biggest issue for franchise systems where a franchisee may only have 1 location with less than 50 employees, but since they are part of a larger franchise system with well over 50 employees they are getting lumped into the large business category. At least that is how I understand the situation.

Even if they are able to get some concessions they are still going to be fighting an uphill battle as competition for employees will be problem as well. If in retail people are able to get $15/hr plus healthcare it’s going to be tough to bring in good employees at less money and no healthcare. The Affordable Care Act is here to stay so I think we’re just going to have to work with it. If you can’t beat ’em, join em.

As consumers we’re just going to have to expect to pay more when we go out to eat. That’s a fact. I have copied the nrn.com article below:

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Five years after its passage, the U.S. Supreme Court upheld the Affordable Care Act Thursday, in a ruling on a case that challenged the law, but trade groups representing restaurant operators said the legislation needs to be changed.

In statements following the ruling, the National Restaurant Association and the National Council of Chain Restaurants continued to push for reform of the measure designed to expand health care coverage, which they say will increase cost and complexity for restaurant owners.

The statements reveal the groups’ frustration that little has been done to address these concerns amid a sharply divided government.

“While today’s decision by the Supreme Court is one of great importance to the dialogue on health care coverage across the country, there are issues with the current law that need to be addressed,” Dawn Sweeney, president and CEO of the National Restaurant Association, said in a statement.

“We are concerned that the issues impacting restaurants and the employer community at large have yet to move forward in Congress. Certain provisions within the ACA, like the definition of full-time employment at 30 hours, the lack of clarity regarding reporting requirements, auto enrollment, the inconsistency of defining ‘seasonal employment’ and the process of determining which businesses are considered ‘large’ under the law have placed an enormous amount of undue burden on American businesses large and small,” Sweeney said.

Likewise, the National Council of Chain Restaurants, part of the National Retail Federation, said that it wants the law reformed.

“NCCR opposed the ACA when it was passed by Congress, and we still do,” NCCR executive director Rob Green said in a statement. “The ACA’s employer mandate and unique coverage requirements inflicts negative impacts and unworkable costs on chain restaurants and its thousands of small business franchisees.

“Reform to our nation’s health care system is desperately needed, and now that the court has ruled we look forward to Congress revisiting the law to bring about greater health benefit affordability and improved access to affordable health insurance coverage for employees. Several commonsense measures are pending that would help bring down the cost of health insurance, and NCCR stands ready to work with lawmakers on bipartisan reforms to achieve that result,” Green said.

The U.S. Supreme Court ruled 6-3 Thursday in the case of King v. Burwell, which challenged ambiguous terminology in the law regarding tax credits paid to residents in states that refused to set up their own health insurance marketplaces.

The plaintiffs, four Virginia residents, argued that phrasing in the law should have kept residents in states without their own exchanges from getting tax credits that would enable them to buy insurance. Millions of Americans could have lost health insurance coverage if the Supreme Court ruled against the federal government.

Opponents of the ACA, often called Obamacare by critics, hoped the ruling would damage the law, which has been a major source of political tension since it was passed in 2010.

Restaurant owners, as well as the trade groups, have been among the ACA’s most vocal opponents, because restaurants have substantial labor costs and employ many part-time and low-wage employees, who often don’t have health coverage. The law’s coverage mandates could increase their costs considerably.

Still, restaurant companies have been implementing the law for years now, and many are preparing for next year, when companies with 50 or more workers will be required to provide employees coverage.

That has trade groups pushing Congress to make changes to the law. In particular, groups want to see the law’s definition of “full time” changed to employees who work 40 hours per week. The law currently requires businesses with 50 or more workers to provide coverage to “full-time” employees who work 30 hours or more per week, or 130 hours per month or more.

Bills have been introduced in Congress that would change the law’s definition to 40 hours, and the NRA, along with the International Franchise Association and other groups, have joined together to push for the measure.

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St. Louis Minimum Wage Increase

Here locally in St. Louis, like many other cities in the country, the discussions around the minimum wage increase to $15/hr have been going back and forth for some time now. The St. Louis Business Journal posted an article today on the subject, “Facing business backlash, the city plans tweak to minimum wage hike“. I’ll post the full article at the bottom of the post.

The original bill proposed moving to $10/hr immediately and then working up to $15/hr by 2020. The “tweaks” that the city is looking at are moving those down to $8.25/hr immediately and working up to $15/hr by 2024. That change seems pretty drastic so I’m guessing they got some pretty heavy backlash from the local businesses.

I do feel like the press doesn’t cover this correctly as they are looking for the big headline like “local businesses oppose minimum wage hike”, etc. But when you actually do research you’ll see that the local businesses, especially restaurants, have some good arguments in that if the wage increase only affect St. Louis City they’ll lose business to neighboring St. Louis County restaurants who are not affected, currently, by the increases. Especially here in St. Louis where the city is trying to increase the amount of business downtown I can see how this could have a negative affect. So it’s not that these business owners are against paying higher wages, necessarily, but rather worried about trying to compete with other nearby businesses that aren’t being affected by the wage increases. With higher wages will come price increases to consumers and that will affect traffic.

The increase is coming across the board soon enough, some areas will be slower to adopt than others so there will be this in between time that will cause some debate. I have copied the full article below:

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A proposed bill to increase minimum wage in the city of St. Louis to $15 an hour by 2020 could get a tweak in committee to extend its timeline for implementation, a move aimed at easing concerns voiced by some businesses.

The bill’s sponsor, Alderman Shane Cohn, said at a hearing of the city’s Ways and Means Committee Tuesday that he planned to introduce substitute language that would increase the minimum wage to $8.25 an hour immediately — down from $10 an hour in the original bill — and gradually increase it to $15 an hour by 2024, rather than 2020.

The proposed new language would also give exemptions for nonprofits, student workers and tweak language in the bill regarding restaurant franchises, Cohn said.

Cohn has in the past described the $15 threshold as a “goal.”
Tuesday’s meeting brought out a capacity crowd, many with T-shirts and signs with slogans such as “Show Me 15” supporting the increase. Speaking before the committee both in support and opposition to the bill were residents, business owners and organization leaders.
Among them was Robert Bonney, CEO of the Missouri Restaurant Association, whose organization announced earlier in June that a study it commissioned found that a $15 an hour minimum wage would lead to a loss of 3,100 jobs in the city’s restaurant industry. At Tuesday’s meeting, Bonney said that restaurants typically have low profit margins, at about 3 percent. In the first year, the wage increase, to $10 an hour, could lead to a loss of $27,200 for what Bonney described as a typical restaurant owner, he said.
Maggie Crane, a spokeswoman for St. Louis Mayor Francis Slay, said in an interview that the mayor’s office found that 74 percent of restaurants in the city would be exempt from the new wage because they fall below a $500,000 sales threshold outlined in the bill. Research out of the mayor’s office also disputes some of the economic models the restaurant association’s study uses.

John Iovaldi, owner of Pietro’s Restaurant in south St. Louis, called the proposed $15 an hour minimum “totally ridiculous” and said, “It’s not a sustainable thing.” With about 25 full-time employees plus part-timers, he said in an interview that he might have to cut jobs to make up the loss. He added that the increase would put city restaurants at a “competitive disadvantage” to those in nearby St. Louis County.
Another business owner, Sonny Saggar, founder of the Downtown Urgent Care clinic, said the wage hike would be good for businesses by adding income to the city’s population base. “Some companies are fighting this bill so they can continue paying low wages,” he said. “When workers have more money, businesses have more customers.”
Some local business groups have openly opposed the wage hike, including Downtown STL Inc. and the St. Louis Regional Chamber, which said earlier this month that more than 65 percent of its members were against the proposal.

State Sen. Kurt Schaefer, R-Columbia, has said that even if St. Louis preempts a bill that would prohibit municipalities from raising the minimum wage beyond the state’s, other laws prevent the city from taking action.
Slay, who originally proposed the increase, and his allies have said the move is legal and needed because some workers and their families are forced to use public assistance to get by.
The Ways and Means Committee will discuss the proposed wage increase again at 1 p.m. Wednesday.

More Tech Is An Expectation From Consumers

NRN.com posted an article highlighting early results from a survey currently being conducted by Technomic out of Chicago. The survey focuses on how certain restaurant brands are performing as it relates to using technology to better the consumer experience. The four categories the survey focuses on are; loyalty programs, free WiFi, online ordering, and mobile payments.

Here are some of the initial findings, I’ll post the full article below:

  • Pizza chains are leading the pack with some offering the ability to order from your watch, TV, or car
  • I thought this was really interesting: tracking loyalty points and rewards was the most important tech amenity for consumers across the limited-service and full-service segments
  • I feel like fine dining is worried about losing the connection to the customer so I thought this was interesting as well: The Capital Grille, which offers its wine list on an iPad, ranked highest among full-service brands, with 54 percent of respondents deeming its ordering technology very good
  • only 13 percent of consumers across all segments said the brand they visited recently excelled at using tech to improve the customer experience

No huge surprises, but the restaurant industry is definitely behind the curve when it comes to implementing tech. The consumers want it so they’ll have to do it and it they’ll be happy they did. Implementing the right technology can pay huge dividends, especially as labor and food costs continue to rise.

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I have copied the full article below:

Pizza chains are leading the industry with cutting-edge technology, but American consumers expect more tech features from all restaurant segments, according to a recent report by Technomic Inc.

Chicago-based Technomic surveys consumers regularly as part of its ongoing Consumer Brand Metrics survey. For the first time, at the end of 2014, consumers were asked how different restaurant brands were performing in terms of technology.

While only about a quarter of the data is in, with about 175 respondents per brand, an initial look indicated that tech features are essential and strongly influence the restaurant selection decision, particularly for Millennials, the report found.

“Technology-friendly service in restaurants has become important to consumers broadly, and to Millennials and Generation Z customers, it’s essential,” said Colleen Rothman, manager of consumer insights for Technomic. “Consumers will continue to look to pizza chains and fast-casual brands for the latest and greatest digital platforms, but they also will expect all restaurants to integrate many technologies that have become a fact of daily life everywhere.”

The survey asked consumers about four specific tech-based amenities: loyalty programs, free Wi-Fi, online ordering and mobile payments.

Pizza chains ranked highly on all attributes related to technology, with Domino’s leading the pack. Three-fifths of Domino’s customers praised its integration of technology into the ordering process, according to the report.

Domino’s customers can place orders by text or emoji, by Twitter or on their Samsung Smart TV. The chain also has an ordering app that works on a smartwatch, and some customers can order from their car using the Ford SYNC AppLink.

Papa John’s Pizza also received a top rating, as did quick-service chicken chains Chick-fil-A and Pollo Campero, and frozen treat brands Pinkberry and Ben & Jerry’s.

The survey found that tracking loyalty points and rewards was the most important tech amenity for consumers across the limited-service and full-service segments. But it was more important to Millennials, who also placed heavier emphasis on the availability of online and mobile ordering.

Although mobile payment is currently less common among restaurant chains, more than a third of Millennials ranked it as an important tech amenity.

The survey also asked consumers to rate 134 brands on three tech-related attributes: integration of technology into the ordering process, the ability to pay using technology and whether technology improved the guest experience.

Not enough chains offered payment technologies to merit inclusion in the report this quarter, but Rothman said it will likely be included in future reports.

Considering brands ranked highest for their integration of technology into the ordering process, limited-service chains showed strength.

Once again, the quick-service leader was Domino’s, with 60 percent of respondents saying its integration of technology for ordering is very good.

Among fast-casual chains, The Habit Burger Grill, which offers online ordering, ranked highest, with 58 percent of respondents calling its ordering technology very good.

The Capital Grille, which offers its wine list on an iPad, ranked highest among full-service brands, with 54 percent of respondents deeming its ordering technology very good.

But when asked to rate restaurants on their use of technology to improve the guest experience, only 13 percent of consumers across all segments said the brand they visited recently excelled in that area.

“That’s strikingly low,” Rothman said, but it offers restaurants an opportunity, “especially as consumers, and particularly Millennials, are saying technology is something important to them.”

Ben & Jerry’s was ranked highest among quick-service chains on that attribute, with 25 percent of the vote. The ice cream chain has a mobile loyalty program called Euphoria Rewardia that lets users earn rewards.

Pollo Campero was the highest ranked fast-casual chain, with 26 percent. The chain, whose U.S. division is based in Dallas, offers online ordering, and customers can sign up to receive emailed coupons.

Cheddar’s Casual Cafe, which has an e-club loyalty program called The Cheddar’s List, won for full-service brands, with 22 percent.

Ratings on all of the tech attributes are expected to grow in importance as restaurant operators step up efforts to integrate technology into the guest experience, the report found.

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Simple things that make an impression

It’s interesting what you notice when you are out eating or having a drink with friends or at Disneyland with the family. I took my kids to Disneyland for the first time last week. I have always heard that it was expensive once you start adding up admission, food, and extras for the kids. But I learned that the legend is true in that Disney are masters of being able to take all your money and still leaving you satisfied.

There are 4 of us and we were there for 2 days and we got the park hopper option so that my son could go to Cars Land. My son is under 3 so he was free, but it still wound up being around $650 just to get into the park for the 2 days. So I had a little sticker shock. We had a great time, the kids loved it. We went on a bunch of rides, met a ton of the characters, and ate a lot of popcorn, cotton candy, and ice cream. Oh and who can forget waiting in line, but we did take advantage of the fast pass a few times.

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The first day we started out on later side so that we could stay late for the parade and the fireworks. They put on an excellent show. I would love to talk to someone about how technology has helped them with both of those displays. With all the LED lights and screens the parade was top notch. I would also love to know what their fireworks tab is every night as they seemed to go on forever. During the Frozen song they had snow falling. Real snow in southern California in June. A very nice touch and everyone was blown away. My daughter looked at me with wide eyes and said “Elsa’s real! She made it snow”.

But with all that amazing stuff and more that happened over the course of 2 days there was something very simple that blew my mind and set them apart from any other amusement park I’ve ever been to, the spotless trash cans. Now I know that Disney is king of the amusement park hill, but the cleanliness of the park was very impressive. Not once did I ever go to throw something away and was petrified to push in the flap on the trash can to throw my garbage out. I never even saw a dirty one. Any other time in those situations whether it’s an amusement park, ballgame, or even some restaurants; there’s ice cream, soda, or nacho cheese running down the front, side and back. Trash is usually overflowing so you can’t even fit another napkin.

Disney obviously put a lot of focus and emphasis on cleanliness and I imagine it pays dividends for them day in and day out. I can guarantee that I was not the only person that day that noticed it and raved about to everyone that they talked to for the next couple of weeks. It’s those simple things that can be easily overlooked and pushed down the priority list that can make a huge impression on your guests.

With all that being said we left feeling very satisfied with the value we received for our money. So it is true that Disney are masters at getting you to part with your money happily.

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How to Handle the Press after a Bad Health Inspection

On the OpsAnalitica blog, we have written about this trend of local news stations reporting on restaurant’s health inspection scores.  It makes sense for the news stations to do these reports because the data is readily available, it advertises well, it’s easy content to produce, and my guess is that it drives viewership.  In Denver, Fox 31, has their restaurant report card segment and website.  As we have been following this in the media, we have seen a ton of these restaurant health inspection segments all around the country. If you operate a restaurant in Florida, watch out, they seem to have these reports in every major city.

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For the restaurant industry this good and bad.  I believe that more transparency around health inspections and health inspection scores puts pressure on the industry to do better, and it increases the restaurant cleanliness standards in that area.  When LA moved to letter grades system, one of the results was that there were less foodborne illness cases over time.  What they found is that bad letter grades affect revenue, a C resulted in a -1% sales dip and an A resulted in an 5 to 6% increase in sales.  The market rewards clean restaurants and punishes dirty ones.  We got this data from a grand jury report when Orange County was looking at moving to the letter grade system, click here to see the report.

I also understand the concern of restaurant owners when it comes to making this data public, it affects their business and sometimes it is hard to get a reinspection promptly.  I don’t feel bad for restaurant owners that lose revenue for being dirty, they should. I do feel bad for restaurant owners that fixed their issues, but have to wait a considerable amount of time to get reinspected.  Counties have to provide the ability to get reinspected very quickly even if they have to charge a convenience fee.

I’ve embedded the Fox 31 report from June 12th in this blog.  There are three restaurants mentioned in the report.  2 of the restaurants got F’s, and one got an A.  According to the Fox website you have to have 5 critical violations on your last two health inspections to get an F.  To get an A you have to have 0 critical violations on your last two health inspections.  This video is amazing and shows you how to and how not to handle an inquiry from the media at your restaurant.  It is 100% worth watching to see how the Blue Bonnet handled their bad score compared to Chubby’s.  

Here are my feelings after watching their segments:

  • Chubby’s
    • Didn’t answer repeated phone calls – could have been trying to evade reporters
    • Manager had face blurred – guilty and wrong
    • Written statement that was summarized – too little too late
    • Verdict:  I probably will never eat at that restaurant after seeing that report. In fairness, I don’t live close to that restaurant so my chances of popping in were low to begin with.
  • Blue Bonnet
    • Owner got interviewed – She was taking responsibility
    • She showed the media her kitchen – open nothing to hide
    • She mentioned the all the staff meetings – she took action
    • Verdict:  I may eat there again in six months or so after they have had a chance to be inspected one more time.  In fairness, we used to frequent Blue Bonnet when we lived close by and really like the food.

I hope you find this video helpful in crafting your crisis plan and how you would handle this type of interview. Also, kudos to Johnny Rockets in the Cherry Creek Mall for getting an A, I’ve eaten there several times and will be back.

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Operations, Data, & Reporting in Restaurants Part III

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Thank you for following this blog series on restaurant operations, data, and reporting.  In Tuesday’s post, we discussed BOH data collection and what items you could be tracking that could help you improve operations and run more profitable businesses.  To read Tuesday’s post click here.

One last thought on BOH operations data collection.  A lot of the BOH data that we should be collecting has a CYA benefit and potentially a financial benefit associated.  You should be looking at everything that would constitute a critical violation on a health inspection every shift.  There probably isn’t a huge financial benefit to ensuring that all of your dry-goods are being stored six inches off of the floor, but there are safety and brand protection benefits.  Most health departments these days make health inspections available on their websites.  In cities like Denver, our local Fox affiliate, dedicates a lot of energy to reporting on Denver restaurant’s bad health inspection scores.

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As we continue to explore restaurant operations and data, let’s discuss manager accountability and how that plays into the data collection.  Accountability management is engineered into the OpsAnalitica Inspector, and we track additional meta data on the person inspecting.  For instance, we track inspection duration, looking for pencil whippers.  Manager accountability and ability to identify good and bad managers quickly is one of the best reasons to use an automated inspection platform and to have manager’s conduct inspections.  When you collect this data online, and then you can go in and verify what you are being told, that is a powerful tool.  It gives you the data to identify your great managers, to elevate them and give them the appropriate praise.  It also allows you to identify your bad managers and take corrective actions.

From an accountability perspective you should be collecting the following types of data each shift:

  • FIFO:
    • You should be checking Day Dots and the food on the line each shift.
    • Value:
      • Reduce food waste and lower food cost.
      • Ensure that customers are being served a fresh and safe product.
  • Pars:
    • You should be checking that you line cooks have the proper stock levels of items on the line.
    • Value:
      • Keep ticket times down and ensure that you can maximize service during the rush.
      • Frozen Burger vs. Thawed Burger Example
        • If a thawed 1/4lb burger patty takes 3 minutes to cook well and a frozen patty takes 4 1/2 minutes to cook well.  A frozen patty takes 50% longer to cook.  If you sell a lot of burgers and you run through your thawed patties quickly, and you aren’t stocked to par, you now have to use frozen patties. That one difference is adding 90 seconds per burger to your cook time.  That extra 90 seconds of cook time starts to cascade to every order as those frozen patties are taking up grill space, and you can’t get you next orders down until they clear, etc.  All of a sudden every ticket in the kitchen with a burger on it starts to come out a little slower.  That cascades to the front of the house as people are sitting at tables longer, the line gets longer because through put in the restaurant has slowed. People who are on a time crunch may start leaving because they don’t have time to wait. Tips could go down for servers because the meal service was slow, and you could lose a turn of your tables.
      • The frozen burger patty is a simplified example, but it is meant to illustrate how the entire restaurant is connected and if one part of your operation lacks it can affect the entire operation and sales.
  • Line Check
    • You should be temping and tasting your soups, sauces, and LTO items each shift.
    • Value:  Quality control
  • Server Stations:
    • Just like food pars, server stations and service counters should be stocked to par before each shift.
    • Value:  Better guest experience.
      • I worked at Changs that didn’t have enough glass racks in the server station.   Every time you went back to get drinks; you invariably were running to the dish pit to grab glass racks.  That added a minute or so of time to each initial drink order.  These things add up and slow down service, which affects your ability to get that last turn for the meal period.
  • Building:
    • Tracking the cleanliness and appearance of your building specifically: bathrooms, entry way, dumpsters, dining room, and parking lot.
    • Value:
      • Puts the manager in the guest’s shoes and allows them to see the restaurant from their perspective.
      • Allows you to catch and correct things that could potentially stop guests from coming into your location or that could negatively affect their experience.

Restaurant operations are the drivers of sales and customer satisfaction.  Collecting operations data consistently across all of your locations can provide you with a treasure trove of insight into how your operations are doing.  Ops data coupled with sales, customer satisfaction data can help you identify cost cutting and profit increasing opportunities. Whether it is average walk-in temperature or identifying a bad manager faster so you can take corrective action.

There is also value in making manager’s complete these checklists in addition to the data.  The simple act of walking your location and looking at critical success areas of your business is like the pilot performing the pre-flight inspection.  Focusing managers on what is important and hopefully will allow them to identify and fix issues before they affect the guest.

One thing that I’ve learned working with automation and data over the last seven years is that once you get a taste for the power of data and how much it can help you in decision making.  You will want more of it.

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Operations, Data, & Reporting in Restaurants Part II

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Yesterday we explored the importance of operations data, different ways to capture operations data, and where it could be used to make better decisions. If you didn’t see, yesterday’s blog post clicks here.

A quick summary of yesterday’s post, the restaurant industry needs to be collecting and analyzing operations data with the easily available register and customer service data. Operations are upstream and affect sales, profitability, and customer experience.  Until now, it has been incredibly hard to capture operations data as we are a people business with very little automation in the production and distribution of our products.

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We also discussed different methods for collecting operations data: pen & paper, spreadsheets, Survey Monkey, and apps like OpsAnalitica.  We discussed the pros of each solution.

Today we are going to talk about different types of operations data that you could be capturing and how that data could help you make better decisions and run better operations.  We are going to start in the BOH sanitation and temperatures.

  • Sanitizer Buckets:
    • You should be tracking the temperature and ppm of your sanitizer buckets every meal period.
    • Value:  CYA purposes – it’s an insurance policy if you are the source of foodborne illness.
  • Temperature Logs:
    • Following HACCP principles you should be taking temperatures multiple times a day.  Here is a HACCP resource
    • Value:  
      • CYA purposes – it’s an insurance policy if you are the source of foodborne illness.
      • Financial:  temperature is directly correlated with food spoilage, which can lead to increased waste and higher food costs.
        • Every walk-in and cooler has a sweet spot temperature based on the food that is being stored in it.
      • If you don’t catch a broken refrigerator quick enough you could have to throw away every piece of food in it.
    • At the NRA show this year I was able to see temperature data from a temp logger that is in a commissary.  The guys were able to show me the data right before this walk-in’s compressor failed and how they were able to notify the owner that his walk-in was having trouble before there was a problem.  It was awesome.
    • Imagine this scenario:  You are a chain of 100 restaurants, and you have temperature data from every cooler and walk-in in you chain for six months.  You start to run some analysis, and you determine that restaurants with a 36-degree walk-in temperature on average have a 25 basis point higher food cost than the units with a 35-degree walk-in temperature. If you correlation analysis is correct, and you can simply have those restaurants turn down their walk-in’s a degree, and that could save you 25 basis points of cost, how cool is that?
  • Dishwasher Rinse Temperature:
    • Making sure that your dishwasher rinse temperature meets the specifications for your local health department and your machine.
    • Value
      • CYA purposes – it’s an insurance policy if you are the source of foodborne illness.
      • Financial:  In this case you may be concerned with having rinse water that is too hot.  Temperature is directly correlated with energy costs and having your rinse water set at the minimum safe standard could save you money.

With the above areas of data collection, the primary value is CYA protection.  Health department’s like to see good management practices in place and more importantly that the restaurant management team is consistently following their policies.  Doing this work and taking the time to follow HACCP Principle # 7 in regards to record keeping will always pay off in a crisis.

I think it is also important to note that there is a financial component to a lot of this measurement.  The example about walk-in temperature is real.  Like any cost saving program, you have to weight the cost to implement and manage the program against the potential savings.  A lot of the money saving opportunities require some amount of analysis cost to research them, and they might not make sense for a single unit restaurant.  You will have to determine if it makes sense for you to spend the time to look at the data.

We talk about this in our eBooks and other blogs.  There is a reason pilots always do pre-flight inspections, no matter how experienced they are, it is because there is a name for pilots who don’t do them, dead pilots.  I believe that restaurant manager’s, confuse restaurant experience with restaurant management.  If you don’t ever collect the data on sanitizer buckets or rinse temperatures you won’t know that they are right, or they are wrong.  You won’t be able to take corrective action, or you won’t know until it’s too late that something was wrong, and it is going to cost you a lot of money.

In tomorrow’s blog, we are going to continue with management accountability data.

If you didn’t see, yesterday’s blog post clicks here.

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Operations, Data, & Reporting in Restaurants

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This week we are going to be doing a deep dive into restaurant operations, data, and reporting in the industry.  We are going to be exploring areas of the restaurant business where operators could be collecting more data, what that data could tell them, and strategies to collect data.

The restaurant industry as a whole is starved for meaningful data and actionable reports.  We as an industry have gone without them for so long that we don’t even know what we don’t know about data-driven decision making.  In my last job, we worked with clients that had highly automated systems in other industries and were able to develop meaningful reports that made their decision-making easy and proactive.  The question is why don’t we, the restaurant industry, have better data?

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The answer, we are a people business.  We serve a highly variable product to people, and it is delivered by people in real-time, that makes it difficult to collect data.  In the corporate restaurants systems I’ve worked in, we only had access to formatted register and customer service data.  I will add food ordering and inventory data to that list if the company is running an inventory control system.

The problem with making decisions based off of customer service and sales data is that those data points are downstream of operations.  A company spends money on marketing with the goal of reminding people that they exist and trying to get people to come to their restaurants.  Then the people come to their restaurant, and they experience operations that result in sales.  If you are lucky 1 to 2% of your most vocal customers, happy or mad, will give you their customer feedback for a bribe of a cookie or future discount.  Where your business is winning or losing is in your operations, the quality of the food, service and experience.  A bad restaurant that does a promotion will drive immediate sales but because they are bad will ultimately have lower sales at the end of the promotion than they did before because they didn’t take care of their guests.

It is in that operations data where you can fill in the blanks between marketing, sales and customer feedback.  It is in the operations data you can search for causality in how you operate and look for cost saving profit increasing efficiencies.

We know that ops data is important but before we can go deeper into what data we should be collecting, let’s talk about how we can collect it.  There are several ways to capture operations data they boil down to automated, fewer options, and human entered.

An example of automated ops data capture comes from temperature loggers; temp loggers can collect temperatures every 15 seconds and send the data to the cloud.

Unfortunately, there is no sensor that will tell you if your bathroom is clean and pleasant or that your waitstaff is perky vs. being hungover.  Those kinds of datapoints require a person to make a judgement call and get the data entered into a system.

The most common way to collect data in the restaurant industry is also the cheapest, pen & paper.  Pen & paper is also the worse way to collect data because you can’t do anything with it easily.  You pay to have the data entered on paper.  Then you will have to pay a second time to have the data entered into a spreadsheet so it can be used in the most basic analysis.

Spreadsheets are better than pen and paper and ok for single unit organizations but they can be hard to use on tablets and walking around with a laptop is not recommended. Spreadsheets also don’t allow you to take advantage of other types of data like pictures.  We have seen several small chains where they send their Area Manager’s out into the field with a paper inspection.  Then their Area Manager has to spend about an hour per inspection entering the data from the paper form into a spreadsheet for scoring.

Another limitation of spreadsheets is aggregating data across several locations.  It becomes difficult to bring spreadsheets from multiple locations together into a master spreadsheet and you start to run into some data limitations very quickly.  A Microsoft Excel Spreadsheet can only have 65,536 rows in it.  That sounds like a lot of rows, but it isn’t.

One of our clients has 18 restaurants and runs a 52 question line check for lunch and dinner service daily.  So you can see how quickly data add’s up, that is 1,872 rows of new data being created daily.  At that pace, they could fill up an Excel spreadsheet in 35 days.  Now you have to create a new spreadsheet tab, and you start to loose your ability to do any historical analysis easily.  Also, as spreadsheets get bigger with more data they slow down your computer, and I have seen them become unstable and prone to breaking and causing errors.

Databases are ideal for storing and managing large data sets, but you need to have a way of getting the data into the database to make them useful.  Capturing data requires an app that can directly insert the data into the database.  When you move from a spreadsheet to a database, you now need an entire new set of skills to manage the collection app and databases.  You are becoming an IT shop instead of a restaurant.

Survey Monkey(paid) and Google Forms offer a unique solutions for small chains, in which you can get a web front end for collecting data that is easier to use than a spreadsheet. You could export your data to a spreadsheet and then if you wanted get it imported into a database. You are still stuck with the limitations around spreadsheets and the additional costs of database management, but they are better than a spreadsheet.

Services like OpsAnalitica that are built to collect, aggregate, and display data from many locations are probably your best bet for capturing operations data for the following reasons:

  • We don’t require your company to become a database and programming company.
  • Our Inspector  is made to collect restaurant data and aggregate it across multiple locations into one reporting platform.
  • The app allows you to collect more than just the answers to questions, allows pictures and additional comments.
  • Our reporting portal and data warehouse allow you to view reports of your most important data on any device.
In tomorrow’s blog post, we will start to explore the different types of operations data you could be collecting and how that could help you run better restaurants and make better decisions.
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How much will minimum wage hikes hurt restaurants?

CBS News posted an article today “How much will minimum wage hikes hurt restaurants?”. They site a Moody’s Investor Services study that took a look at the effect on the industry.

They mention in the article that the restaurants are going to have to eat this costs out of their profit. I don’t see that being the case. You can’t expect them to do that as their margins are so thin as it is with the study stating about 12%. In reality what’s going to happen is consumers will pay more and receive worse service. The industry will raise prices and, at least in the beginning, cut staff. Once the market stabilizes and everyone starts to figure it out they’ll start hiring again. The near term will be a little rocky, but it will work itself out over time.

Here are some interesting points from the article that stuck out for me (I’ll post the full article at the bottom):

  • One thing that I’m not hearing a lot of, and it’s true, that there will also be an increase in other non-minimum wage labor in order to keep the spread between entry level and experienced workers
  • A restaurant operator in which 20 percent of its workforce gets a minimum wage hike will see its operating margins contract by 2.3 percentage points, to 9.7 percent from 12 percent.
  • NELP makes the point that overall employee costs will decrease over time as training and hiring costs go down due to higher employee retention rates because of the higher wages.
  • Walmart announced that they have seen this result since increasing their low end wage to $9/hr.
  • The CBO in 2014 projected that increasing the federal minimum wage to $10.15 an hour from $7.25 would result in the loss of 500,000 jobs as companies tried to offset the increase by cutting costs.
  • CBO also estimated it would lift 900,000 low-income workers out of poverty.

Only time will tell the true story, but it’s been coming for a long time and there’s no avoiding it no matter how much money the National Restaurant Association throws at lobbying. Operators will have to figure it out, and they will, and consumers will have to get used to higher menu prices.

I have copied the full article below:

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Hikes in the minimum wage in cities and states around the U.S. will dent profit margins at restaurants, particularly at casual-dining chains, according to Moody’s Investors Service (MCO).

“Clearly the restaurant industry is going to pay a price, or be among the sectors most affected by this,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, a nonpartisan research group, citing the large numbers of restaurant workers at or below the minimum wage. “The question will be to what extent it will only bleed into margins or whether the prices will go up, and whether we still have the 99 cent burger.”

Seattle helped set the stage last year by approving a $15-an-hour minimum wage, and the mayor of Los Angeles on Saturday signed an ordinance gradually raising the city’s minimum pay to $15 an hour, making it the biggest U.S. city to do so.

The biggest challenge for the industry could be the prospect of having to increase pay for valued employees already earning more than the minimum wage, as they would likely expect the spread between them and entry-level employees to continue. “Do you maintain the gap with the rest of your employees — that’s a decision that companies will have to make,” Fahy said.

Olive Garden, Applebee’s and other casual restaurants are likely to take the greatest hit because they are typically more labor-intensive than fast-food outlets, Moody’s said. Such restaurants must also often make up the difference for servers between the minimum wage and tipped wages, which are lower.

For instance, a restaurant operator in which 20 percent of its workforce gets a minimum wage hike will see its operating margins contract by 2.3 percentage points, to 9.7 percent from 12 percent, should the baseline wage climb to $10.10, Moody’s found.

“Increases in the minimum wage will result in fewer jobs being created, higher prices for consumers and fewer opportunities for people to become small-business owners as franchisees,” Matt Haller, a spokesman for the International Franchise Association, said. “You need to have employers in order to have employees, and as the Moody’s report demonstrates, the profit margins in the restaurant industry are razor thin. Something is going to have to give.”

The Moody’s report offers an “overly simplistic view of the situation” in that it fails to take into account the decreased costs that come with higher employee retain and productivity rates that result with increased pay, said Judy Conti, the federal advocacy coordinator for the National Employment Law Project, or NELP.

At an event related to Walmart’s (WMT) annual shareholder meeting earlier this month, CEO Doug McMillon offered anecdotal evidence, saying the discount retailer’s decision to increase wages for 500,000 of its workers to at least $9 in April has already yielded dividends, with job applications rising and turnover on the decline.

The Congressional Budget Office in 2014 projected that increasing the federal minimum wage to $10.15 an hour from $7.25 would result in the loss of 500,000 jobs as companies tried to offset the increase by cutting costs. The nonpartisan CBO also estimated it would lift 900,000 low-income workers out of poverty.

For McDonald’s and other publicly traded companies, “their margins are appropriate for the industries they are in,” said Fahy, who added that individually owned franchisees are harder to gauge since the numbers are not public. That said, the restaurant industry is already contending with weak sales, which could weaken further if menu costs climb, he added.

The Peterson Institute’s Kirkegaard believes the increased labor costs will initially eat into restaurant’s margins, but in the longer run will be covered largely by higher prices.

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Restaurant Operations Survey

I caught this on the Missouri Restaurant Association website.

The National Restaurant Association and Deloitte are looking for participants in the Restaurant Industry Operations Survey. By completing the survey you will receive, free of charge, a copy of the next edition of the Restaurant Operations Report.

The Restaurant Operations Report is a “must have” for any restaurant. With crucial data on cost of sales, gross profit, direct operating expenses and other performance measurements to help restaurateurs see how their business compares with those of a similar profile, this is really essential information.

The report helps restaurant operators sharpen their financial performance and quickly identify cost categories where data could significantly vary from similar operations. By analyzing operating costs, restaurateurs can detect potential problems, determine how to cut costs, and become more efficient.

Additionally, if you complete the survey before the June 22 deadline, you may also enter a drawing to win one of three $500 American Express® Gift Cards. The information you submit will be kept strictly confidential, and your contact information will not be shared.

They say the survey should take about 15 mins to complete. To complete the survey go here: https://deloittesurvey.deloitte.com/Community/se.ashx?s=3FC11B2638EC363C

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