Monthly Archives : September 2018

Home2018September

High Turnover = Lower Ops Consistency

The number one issue facing restaurant operators over the last couple of year, as told to us by restauranteurs at all levels in the business, is staffing and turnover. It is so hard to find good people to work in your restaurant and to keep them for any length of time.

I’m sure you are familiar with Maslow’s Hierarchy of needs, thank you grad school.

 

Maslow’s Hierarchy of needs basically lays out a pyramid of human needs. Stating that you must fulfill the needs at the bottom of the pyramid first, food and water before you can move your way up to the top which is Self Actualization. To put it another way, you can’t become Self Actualized and achieve your dreams if you are huddled, starving, and cold, living in a damp dark cave not knowing when or if you will ever eat again and worried about being killed by an animal. Neanderthals weren’t self-actualized, they most likely spent 99% of their lives in pursuit of basic Physiological Needs. That is why there were no great works of art or literature that came from the caveman.

If there was a Maslow’s Restaurant Hierarchy of needs, then staffing would replace Physiological needs. You can’t run a restaurant without a team of people. We need good people to show up, work and take their jobs seriously. I remember when I was a restaurant manager at a large high volume P.F. Chang’s in the early 00’s. I was the floor manager and the worse part of my job was dealing with night shift call outs that took place every day. I would find myself on the phone after the lunch shift between 2 and 4 calling people to come in and cover shifts that people had called out of. Now a lot has changed with scheduling programs and that is great. It was hell.

What exacerbates the staffing problem in the restaurant industry is that we are always open. If you are a typical restaurant you are open at least 2 shifts a day 363 days a year. When you lose a person, and you don’t have anyone to back them up, customers don’t care. They want food and they want to eat it now. When you can’t find people or the people you have aren’t operating at full capacity because they are new and just out of training, it is the equivalent of your restaurant being deprived of oxygen and water. You can’t do anything else. You have to fill those shifts because the customers are coming.

One of the biggest consequences of not having a fully staffed and trained restaurant team is Restaurant Ops Consistency.

Let’s define Ops Consistency, it is the ability of the restaurant team to execute the daily operations of the restaurant to service guests.  It is running the restaurant. It is sidework, it is prep, it is making food and drinks and delivering them to guests, it is menu knowledge, providing tasty and safe food in a clean and inviting environment.

Think about going to a restaurant on the day that it opens, huge mistake. The team is new, they don’t know how to do everything yet, new employees tend to make more mistakes and they work slower,  they are green. The guest experience these teams are creating is the product of being brand new at their jobs.

Take this one step further, you could manage a restaurant that has been opened for years but if you have high turnover then you are constantly staffed with a mix of new employees and seasoned employees, in some restaurants the seasoned employees have only been there for a couple of months. The guest experience you are able to provide is going to be inconsistent and less than what an experienced team could provide. Your Ops Consistency, your guest experience, and ultimately your sales and profits will all go down.

OPERATIONS ARE WHAT THE GUEST IS PAYING US TO DO, IT IS THE CORE OF RUNNING A RESTAURANT, IT IS BASIC BLOCKING AND TACKLING. IF YOU DON’T OPERATE WELL YOU WILL GO OUT OF BUSINESS!!!

Operations consistency is probably the biggest challenge that is facing operators behind staffing and turnover and because filling shifts is the immediate fire that must be put out on a daily basis, it doesn’t get as much attention as it deserves, to the detriment to the business and the industry.

How do you make your operations more consistent in this staffing market?

Understand what your Employees are Costing You and create employee retention incentives:

How often do you give your restaurant employees raises or other incentives to stay with you? Executives in big companies get golden handcuffs, usually in the form of stock options or bonuses, to prevent them from leaving. As an industry, we have to figure out ways to create affordable golden handcuffs for our restaurant employees. If we know the average cost of hiring and training a new restaurant employee is $5,864 based on a report from the Center of Hospitality Research at Cornell University. Then we know that if we can spend less than that number and retain an employee for longer then we are winning. We have already agreed that a more veteran staff is capable of providing better customer experiences than a greener staff and that when you lower turnover it gives management more opportunity to proactively grow their business vs. focusing only on how are they going to get enough bodies to work the next shift.

Restaurant Managers need to understand the ROI for every new employee and job role:

  1. Calculate how much sales and profits an individual employee in a job role is responsible for creating per hour based off of past sales. The easiest way to do this would be to look at what a fully staffed restaurant looks like from a total hours perspective and divide that number into an average sales figure over a time period. The number you are ultimately trying to get to is how much profit per hour is an employee generating for your business, it is that number that you have to divide into your costs to determine the payback period and ROI for an employee.
  2. Then calculate your current new hire training costs, employee costs, etc. for each job role. Average out any slight pay differences.
  3. Look at what the payback period is for each employee, or how long do they have to work for you before they start to generate an actual return on your investment.

Once you have the number of hours an employee has to work before you make a dime on them, you will be able to make smarter decisions. Create incentives for them to stay longer, get rid of bad employees faster.  Every restaurant manager tracks labor cost % but very few know how many hours a new employee has to work for them to break even on that investment.

Remember that incentives don’t always have to be monetary but monetary ones will be more effective. Thanking people and buying them a drink or a meal can go a long way. If they make 100 bucks a shift with you and could make 200 a shift across the street, you probably won’t keep them.

One way to approach incentives is to create certifications or levels within their job role, tie skills acquired to pay raises, recognize longevity with raises and privileges. I will start you at $10 an hour and every 90 days that you stay with us, I will give you a $.25 raise. More senior employees get the best shifts, etc..

Be creative and know the actual cost of an employee leaving. Also, carry out exit interviews with no judgment, either over the phone or on an online survey tool. Try to understand why people are leaving so you can correct those problems. Also, if a person reports a reason for leaving that is an improper conduct issue, make sure to report it to HR to protect the company.

Invest in systems more than training:

I’ve said before, in other blogs, and I will say it again. I’m not advocating not training people. We have to train our teams to do their job functions but everything that is a repeatable daily task we should systematize.

Be Aware: The LMS companies will tell you that training is the answer to everything because they want you to buy an LMS system. In reality, training is important but paying people to remember things that are repeatable in nature is waste of time and money.

The culture systems people will tell you that high performing cultures are the most important thing and that you should buy a system that focuses on your culture. Culture has to be experienced by the team at the restaurant and provided by management not preached about.

There is that famous saying ” The beatings will continue until morale improves.” I always think about that when people talk to me about culture. I’ve worked at restaurants where we went through tons of culture training and then the management team wasn’t very good and didn’t live the culture they were preaching.

The reason historically the restaurant industry has put all of our eggs in the training basket when it came to operations consistency wasn’t because it was the most effective way to drive operations consistency it was the only thing you could really control in a multi-unit restaurant operation.

The technology didn’t exist to see what was happening in your operations or to hold your team accountable for following your procedures until the last few years. So everybody just pretended that the reason people weren’t following a procedure was that they didn’t know how to do that task. In reality, it was because they didn’t want to or didn’t remember or didn’t care about following the procedure as there was no consequence for not.

Things don’t get done in restaurants because management isn’t holding people accountable for following procedures. I’ve seen it myself, some set-up item isn’t done at the restaurant, if you walk up to the employee responsible and ask if they know how to do it, they can do it. They don’t need to be trained, they need to be reminded to do the task and held accountable for getting it done.

We as an industry have to break away from how we used to run restaurants and look at this situation critically. If you know that an average employee is only going to stay 6 months would you train them as if they are going to be with you for 10 years? Of course not. The reality is this; your employees will leave if they can make more money across the street. Stop training them on stuff that they don’t need to do their immediate job to lower your risk and cost.

Instead, invest in systems that can help employees become more productive quicker and that also increase your Ops Consistency. OpsAnalitica is Shift Readiness and Ops Consistency platform that allows you to script out the perfect shift in every location. It allows you to define what needs to be done every day from the manager to each job position so that those employees don’t have to think or remember what needs to be done.

OpsAnalitica can provide on the spot training and detailed instructions which will get employees productive quicker and ensure that all crucial tasks can be completed in a timely manner. OpsAnlitica provides you with real-time visibility into your operations so your location and above store management can see what is happening in the restaurant and take immediate action to ensure that Ops Standards are being executed and that guests are being taken care of. Most importantly it provides leadership with a feed of restaurant operations information so they can make data-driven decisions about their businesses.

This is one of the toughest restaurant labor markets in history. A combination of generational demographic changes, a strong economy, and overstepping government interference has made it harder and harder to find, train, compensate and retain good employees.  In addition to the stress of having to constantly find, hire and train new employees to keep the restaurant staffed. The second biggest consequence of this tight labor market is Operations Consistency.

Restaurants that suffer from high turnover always have a large complement of new employees who don’t have as much experience and aren’t as capable of delivering the same level of service as more experienced employees. The restaurants aren’t able to get ahead because all efforts are spent just keeping the restaurant fully staffed, leaving management little room to make the strategic decisions needed to grow their businesses.

Restaurant managers have to invest the time to create an ongoing and increasing incentive program to keep employees for longer to maximize their ROI on each employee. Restaurant companies need to invest more into systems, OpsAnalitica, that can take the guesswork out of running the restaurants for each position every shift and to focus on holding their teams accountable to following their procedures. By providing a system that can dictate what needs to be done and when, managers can get employees more productive quicker and reduce onboarding and training time, reducing those costs will increase employee ROI.

Your restaurant’s sales and profits and your strategic goals are going to suffer if you aren’t able to find, train, incentivize employees, and provide them with the systems that are going to make them better faster while ensuring that your operations consistency in every location is maintained. Ops consistency systems and retention incentives have to be your top priority for the long-term success of your restaurant.

 

 

 

Everyone has a Letter Grade in Their Window Now

If you haven’t heard yet, Yelp is now displaying health inspection scores on your restaurant page. Which means, every restaurant in the country could have a health inspection letter grade in their online window. Make sure you read the whole blog as I put together a list of things all restaurant operators should start doing in regards to this move by Yelp.

There is a great Forbes Article entitled Yelp To Display Health Inspection Ratings On Restaurant Pages Nationwide that I encourage you to read. To save you a little time I will summarize the big bullets from the article below:

  1. Yelp will be posting your Health Inspection Score on your business page.
  2. They plan to have 750,000 health inspection scores posted by the end of the year. There are about 1.1 million food service establishments in the US.
  3. They are getting the data from local governments and a startup named HDScores.
  4. HDScores has 1.2 million scores in 42 states
  5. Yelp gets 30,000,000 unique mobile visits a month, 50% of those are restaurant searches.
  6. “A Harvard Business School study, in collaboration with Yelp and the City of San Francisco, found that displaying restaurant hygiene scores on Yelp led to a 12% decrease in purchase intentions for restaurants with poor scores compared with those with higher scores.” – Forbes Article

What does all this mean to restauranteurs? It means that you have to actually take Yelp and your restaurant’s cleanliness more seriously than ever before because not doing so could affect your revenues and profits.

A lot of operators have scoffed at Yelp reviewers and Yelp the company for years. Thinking that every bad review was a competitor trying to steal your business or some snobby know-it-all that thinks they are a professional restaurant critic.  In addition, Yelp hasn’t always been the best corporate partner, accusations of review placement manipulation and strong-arm advertising tactics have been lofted at the site.

The fact is this, by posting health inspection scores, Yelp just made itself more relevant for restaurant patrons than it ever was before. With Yelp displaying health inspection scores, right next to customer reviews, pertinent data about the business, links to making reservations, and links to the menu. Most savvy customers are going to look at Yelp before they even visit the restaurant’s website.  Because the restaurant’s website isn’t going to advertise that they got 70% on their last health inspection, but it will be right there for the Yelp customer who is reviewing your Yelp page.

At first glance, Mr. Mike’s 3 stars and captioned reviews would not stop me from trying this restaurant, Their 58 out of 100 health score would. 

One thing restauranteurs have to acknowledge is that patrons have always cared about restaurant cleanliness, they want to eat in clean restaurants that serve safe and delicious food.  In the past, there was never an easy way for them to add health inspection scores into their decision-making process because it wasn’t easy to get them.

Now that this information is available, look at bullet point 6 above – a 12% decrease in purchase intent for low hygiene scores, you better believe that it will enter into their decision-making process. If you have a low Yelp star rating and a bad health inspection score, you could be in real trouble.

Another thing to consider with Yelp posting health inspection scores, it’s going to be a flawed process. HDscores and Yelp are dependent on county health departments to provide them with the inspection data. Each county is staffed differently and they all have different procedures for handling health inspections, critical violations, scoring, reinspections, etc..

In some cases, a restaurant might get a bad health inspection score with a lot of critical issues but they might correct all critical violations while the inspector is on site. They have a low score but have fixed their issues and are technically safe for business, it won’t matter because the low score is what is going to be recorded by the health department.

Another nightmare scenario for restaurant owners, you get a bad health inspection score and can’t get reinspected for 90 days because the county is backed up. Who knows how many times HDScores or Yelp query the health department databases to update their info or how quickly the health departments get their data updated from their inspectors? All of these time lags could affect how long a bad score stays up on Yelp’s website.

Normal people outside of the food service industry don’t understand the nuances of health inspections and they don’t care. Click here to see a summary of the health inspections for Mr. Mike’s above, I got to this page by clicking on the Health Score link right next to their health score on their Yelp page. The general public isn’t sanitarians and won’t know why bumpy surfaces on walls or the lack of a thermometer could be huge issues.

The general public assumes that all health inspections are equal, they are fair, and that they happen in a timely manner. They trust that the health inspector is looking out for their best interest and they are willing to believe them. My point is this, you aren’t going to be able to educate the general public on the in’s and out’s of health inspections and defend a bad score, they could care less about all the injustices in this system, they are just not going to eat at your restaurant.

The only way to make sure that these health inspection scores don’t hurt your business is to get A health inspection scores every time. The only way to do that is to implement basic sanitation and food safety programs in your restaurants and hold your teams accountable on a shift-by-shift basis to following those procedures so you are 100% ready for every health inspection.

For years, we at OpsAnalitica have been preaching for an increased emphasis on food safety, restaurant cleanliness, and increased hygiene. To be honest, this messaging has never worked for us. Restaurant Operators haven’t been reaching out to us saying, help make me safer so I can protect my customers and my brand. The reason why is because, before this move by Yelp, a bad health inspection score didn’t affect most restaurants in the country. You got inspected maybe twice a year and probably corrected most issues while the inspector was on-site. The score wasn’t posted anywhere that your customers could easily find, only a few jurisdictions post letter grades in the window, so a bad score didn’t affect customers perceptions of the restaurant. That has changed.

Here are some steps that restaurant operators need to take immediately to ensure that their restaurants aren’t negatively affected by their Yelp Rating and Health Inspection Score.

Yelp:

  1. Claim your Yelp page. An unclaimed page makes it seem that management is disengaged from its customers.
  2. Respond to good reviews by thanking the customer for their patronage.
  3. Try to contact customers that wrote bad reviews and handle customer complaints that show up on the site within 24 hours. This shows that management cares about its customers. Offer restitution for angry customers in exchange for getting them to remove or amend their reviews to show that you addressed their issues. Some people will abuse this, but in the long run, it is better to not focus on the negative scammers but to focus on wowing every guest that comes to your restaurant and to protecting your Yelp Reputation.
  4. Flood Yelp with good reviews of your own. Incent customers to review your restaurant on Yelp to ensure that you get a high star rating. Hand out cards with a shortened URL to your Yelp page or send an email with a link for a review. Offer a free dessert and have an iPad in the store, have them check-in and give you a good review and then buy them a piece of pie or cake. Every Yelp star is worth a potential 5 to 6% increase in sales. My guess is that sales stat is lower for chain and franchise restaurants but now that Yelp is showing health inspection scores, I will bet that those restaurants will start getting searched more.
  5. Accept that Yelp is a necessary evil and that it adds value to you and your customers. They provide guests with a way to learn about your business and communicate with you about their experiences in a more open way than you typically get from a one-on-one interaction or a guest satisfaction survey. In addition, they provide you with a free business web page that is on one of the most searched websites in the world. Search your restaurant and I guarantee that your Yelp page will be prominently featured on page 1 of your search results.  According to the Forbes article, Yelp is the 25th most visited website in the US. I’ve said this before many times, I was a traveling consultant for years, I used Yelp all the time to find restaurants in the cities I was visiting, I’ve never had a bad experience at a 5 star rated restaurant that I found on Yelp.

Better Health Inspection Scores:

  1. The only way to ensure that you are going to get A’s on your health inspections is to run an A restaurant every day.  It’s not hard to do and it is what you should be doing.
  2. There are two major components to running A restaurants. Proper Procedures and Execution. Most chain restaurants have food safety procedures in place and that doesn’t guarantee that they will get an A.  Procedures aren’t enough you have to hold your team accountable to executing on those procedures every shift.
  3. If you have procedures in place focus on execution. Focus on getting your teams to follow your procedures every shift in every location. It is better to focus on high compliance for a couple of critical checklists than to try to get low compliance on a lot of checklists and procedures. High compliance on critical checks!!!
  4. If you don’t have procedures in place at this time, take critical items first approach.  Look at your local health inspections, identify the critical violations, and build procedures that check those violations every shift. If you just focus on critical violations, you will run better restaurants and you will ensure that you are not going to get dinged on an inspection.
  5. Ditch the paper. Most companies still use paper checklists, you can’t get any accountability on paper checklists. You don’t have any visibility into whether or not your procedures are getting completed if your teams are doing them accurately, or that they are identifying critical violations.  Running restaurants using paper checklists is harder than it needs to be for managers at all levels of the operation. Using a digital checklist platform, like OpsAnalitica, can provide you with effortless accountability, real-time notifications, and digital record keeping of your safety procedures.
  6. One more note on ditching the paper, digital record keeping is coming to restaurants. It has already been mandated for food manufacturers and everyone is expecting that it will be implemented by the government in the next 1 to 3 years. If you are looking to focus on execution, run better restaurants, get an A on your next health inspection, and be ready for the future, you should look at moving from paper to OpsAnalitica, a digital record keeping and shift readiness platform.

Yelp has made itself more relevant than ever by posting health inspection scores on their site. I predict that this is going to change how people decide which restaurants they are going to visit by putting more emphasis on food safety, which is good for consumers and ultimately good for the industry. For restaurants to be competitive and to not have their health inspection score affect their sales, they are going to have to focus on cleanliness and food safety as core values of their operations because if they don’t their failure is going to be on their Yelp profile.

One of the core values of the OpsAnalitica Way, our guide to multi-unit operations, is control what you can control. Restaurant operators need to realize that they are in complete control of what happens in their four walls. Food safety and clean restaurants aren’t just under their control they are their responsibility to their customers and their brands.

We know that this is going to be an imperfect process and a lot of restaurants are going to get hurt in the short term as they get bad health inspection scores and those scores stay on their Yelp profile longer than they should due to inefficiencies between all the parties involved.  This is going to sound like a jerk thing to say, I don’t care. I don’t care one bit. Don’t have dirty restaurants, that is what we should be focusing on.  Focus on being great and doing what you are supposed to do and this change will not affect you at all and may even help increase your sales.

One last prediction, I bet that Yelp will see an increase in monthly restaurant traffic over the next 6 to 12 months because of showing Health Inspection Scores.

If you want to learn more about the OpsAnalitica Shift Readiness and Digital Record Keeping platform, please go to OpsAnalitica.com.

Good luck