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Are consumers rejecting giant restaurant chains?

McDonald’s has been in the news a lot lately between their slugging financials and the most recently announced pay increase. This article from Nation’s Restaurant News examines the possible reasons for the sluggish performance of 4 of the top 5 restaurant chains; McDonald’s, Subway, Wendy’s, and Burger King.

Burger King is the only one of the four that saw an increase in system sales growth, but it was very small at 1.6%. Subway saw decent unit growth adding 900 units, McD’s saw a .5% growth in units, while the other 2 lost units.

The article notes that large pizza chains are performing very well. With Domino’s and Papa John’s leading the pack.

Personally, I feel there are a few reasons for the changes (some mentioned in the article as well)

  • Consumers seems to be latching on to the “healthy” option these days. Subway, in recent years, was touting this marketing message, but there are lots of other options now that are speaking the same language.
  • The food and marketing message of the tops chains are going stale. They’ve been marketing and serving the same stuff forever and I think consumers are seeking out something different. Chipotle is crushing and it’s very different from the top chains.
  • The large chains are relying solely on marketing, and they have enough money to do so, but they also need to start investing in technology in order to stay relevant. Technology to interact with their consumers, but also technology that helps them run better operations. In large organizations it can be very hard to make a decision that will be a drastic change. They are big ships to turn and it takes time.
  • The newer concepts are embracing technology and are adapting to the “new” consumer. It appears to be working.

Would love to hear some other opinions so please comment. I have copied the full article below:

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This isn’t a good time to be a really big restaurant chain.

Three of the top five restaurant chains in the U.S., McDonald’s Corp., Subway and The Wendy’s Company, saw declines in system sales last year. A fourth, Burger King Corporation, had modest system sales growth at 1.6 percent, a year after its sales declined.

What’s more, most of these chains aren’t really adding units. Both Wendy’s and Burger King unit counts declined in 2014. McDonald’s unit count grew by 0.5 percent in 2014, according to SEC filings.

The weakness at the biggest restaurant chains in the country puts a damper on any talk of an industry comeback, at least for now. If the restaurant industry really was in growth mode, its biggest players would be showing more improvement, or at least some improvement.

“When brands like McDonald’s and Wendy’s and Subway and Burger King, four of the top five restaurant chains, continue to struggle, it’s hard to be optimistic about the growth rate for the industry,” said Darren Tristano, executive vice president at the restaurant consulting firm Technomic.

But is it also possible that consumers are rejecting the biggest chains in favor of smaller, more nimble competitors that are more able to respond to constantly changing consumer demands? Perhaps, though the explanation isn’t quite so simple.

For one thing, plenty of big chains in certain sectors are performing well. The pizza sector, in particular, appears to be shifting toward larger brands as Domino’s Pizza Inc. and Papa John’s International have seen flourishing sales in recent years — driven by technology that independents can’t quite match.

Chipotle Mexican Grill added $900 million in sales last year and is now a $4 billion restaurant chain that is probably a year away from breaking into the 10 largest restaurant concepts in the U.S.

And Starbucks Corp., despite its seeming ubiquity that has turned it into the third largest restaurant chain in the U.S., continues to add sales in a coffee market it dominates.

That said, coffee and pizza are commodities and those chains have done a good job of making life easier for their consumers through technology. Chipotle is almost an anomaly: A big chain that is able to enjoy double-digit growth in both same-store sales and unit count thanks to a business model that enables variety without complication and a marketing strategy that goes right at the heart of what many consumers want these days.

And it’s difficult to look at the weakness at McDonald’s and Subway, the largest restaurant chains in terms of system sales and unit count, respectively, and not come away with the conclusion that some customers are looking for alternatives.

Subway’s sales declined an estimated 3.3 percent, according to Technomic — even though the sandwich chain continues to grow, having added about 900 locations last year.

Subway might be the most dominant restaurant chain in its market — it has about 61 percent market share of the largest sandwich chains, according to Nation’s Restaurant News data. But the company’s competitors are growing fast, including Jimmy John’s and Firehouse Subs, which have been consistently among the fastest growing restaurant chains in recent years. They might be finally making a dent in Subway’s market share.

McDonald’s system sales declined 1.1 percent in the U.S. last year, according to SEC data, but its issues are more complex. Burger King might have taken some business from McDonald’s last year, but the Oak Brook, Ill., chain could well be losing market share to a host of other competitors — including, say, pizza chains that are appealing to McDonald’s core family demographic or convenience stores, which have aggressively courted the convenience customer.

In both cases, their size might be hurting them, making it more difficult to add menu items or make changes because there are just so many locations and franchisees.

Smaller chains can do things faster. They are generally newer, so they tend to appeal more to younger consumers that tend to reject their parents’ restaurants. And they have more specialized menus. They also can take advantage of social media and Internet advertising to offset the big guys’ marketing dominance.

“We’ve been seeing that for years,” Tristano said. “It isn’t just the attitude toward larger brands. It’s the ability of a smaller brand or independent to be more nimble, to utilize trends faster. While all these bigger chains are struggling to keep up and catch up, the smaller chains are able to add items consumers are looking for.”

Restaurant Inspections May Get an Overhaul

Another city, San Angelo, TX, may be moving to the letter grading system that has become so popular lately. San Angelo Live reported that they are looking at moving from the current demerit system to the letter grade instead in order to make it easier for consumers to understand.

The letter grading system requires establishments to post their grades in the front window/door of the restaurants. Interesting provision in San Angelo would allow the restaurant to pay a fee for a re-inspection within a 7-10 period. This allows restaurants that normally run great operations to recover if they were having a bad day when the inspector showed up. This seems like a fair alternative to some of the other options. Some critics of the letter grade system have said it can take up to 3 months to get a re-inspection. By implementing a fee based re-check the health department won’t get stretched thin doing re-inspections and the restaurants won’t have to keep a low grade in their window for very long, especially if the infraction really was a fluke.

It’s only a matter of time before this system is implemented everywhere. Already there are multiple apps available for consumers to easily search health inspection scores for restaurants in a specific area. Now more than ever running safe operations is critical to a profitable operation. You get a bad grade and it shows up on the local news, in your front window, and on a free consumer app.

I have copied the full article below:

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The Health Department in San Angelo may soon be changing the way they grade local restaurants for inspections. At the request of Rodney Fleming, at a past city council meeting, the Health Services Director, Sandra Villarreal researched the grading system and presented her findings to the council on Tuesday at the Mc Nease Convention Center.

“Our current system is a demerit system,” said Villarreal. “A lower number score is a better score than a higher score.” When using a demerit system, earning demerits is not a good thing as it denotes an area where an establishment is failing. The current numerical grading system is on a scale from zero to seventeen, zero being the absolute best, seventeen being the absolute worst.

“In the last two days I have had a lot of phone calls,” said Fleming. “Normally when I get a lot of phone calls it’s a negative, I get a lot of people that are very mad at me. Every person that called me in the last two days has been very positive, they would love to see a letter grading system,” said Fleming.

“In several cities nationwide they have postings of the grades above the doors. Everybody that I talked to on the phone was for that. When I did my research on it I found that in the bigger cities when they do the inspection, you would get your score and then have a 7 to 10 day period to have a re-inspection. Let’s say you are normally a grade A establishment, and you had an off day and got a C; you would have seven to ten days to pay for a re-inspection fee, then they would come re-inspect it, and that would be your final grade. So, it’s not a deal where you get killed right there.”

The idea of posting these inspection grades on the front door or window of local restaurants is what brought Bernay Sheffield; co-owner of Zentner’s Daughter Steakhouse to Tuesday’s meeting.

“Food safety is non-negotiable, and a priority issue to the restaurant-and-foodservice industry,” Sheffield read from a written statement. “The industry is committed to professionalism. The industry certainly does not condone restaurants that violate good sanitation procedures or health codes,” he said. “However, snap-shot, isolated inspection examples (like grades posted in the window) do not present a picture of the entire industry. It is important to educate the public about what grades mean before requiring restaurants to post them publicly.”

Sheffield is concerned that the posting of the letter grade will be misconstrued by the public and reflect poorly on the industry.

Fleming says implementing the letter grade system A through D would provide the public better indication of the establishments’ standings according to the Health Department. Copies of the 2014 retail food establishment inspection reports are posted on the city website.

“For me I know that we post these grades, but I know that no one goes and looks at those. I don’t even know where it’s at on our website, honestly I probably wouldn’t know more than the general public out there,” he said. “So I like the idea somewhat of posting on the storefront, but I’m not hung up on that, what I would like to see though is the letter grade system be put in place. We at least should post that on our site where they could go and they would know if it’s an A, it’s an A, if it’s a B, it’s a B,” he continued. “And still giving them the 7 to 10 days to re-inspect, and we can decide that as a council, and I think that’s a fair thing to do for the general public out there.”

Fleming said he would at least like to see the letter grade system be implemented on the website.

When asked her personal opinion of the grading system, Villareal hesitated for a moment, then said, “The grade is good because it actually gives the public a way to interpret what the score is. Demerit system is a little different. It is just a more simplified version of what we are doing, it just makes it easier,”she said. “Now as far as posting it, that doesn’t really matter.”

The city of San Angelo has over 500 food establishments. The Health Department has two inspectors. This has created another conundrum for the issue; leaving council to table the topic pending more information, sending Villareal back to the drawing board.

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Report: Industry may be entering new cycle of growth

We’ll tag on to yesterday’s blog with another article from Nation’s Restaurant News about the current state of the restaurant industry. This report is from TDn2K (Transforming Data into Knowledge). I’ll copy the full article below, but here are some of the highlights that I found interesting:

  • Same-store sales rose 2.8 percent during the first quarter, the best quarterly performance since the recession
  • Year-over-year growth in number of jobs in restaurants increased by 2.9 percent during February
  • “Service” was the only attribute that increased its share of mentions during the month, rising from 8.8 percent to 12.4 percent
  • The percentage of positive mentions for “service” dropped significantly, from 33 percent in February to 18 percent in March
  • The best performing industry segment based “service” in terms of its percentage of positive mentions was Upscale Casual/Fine Dining, a significant shift from the best performing segment during February, which was Family Dining

I have copied the full article below:

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Restaurant industry same-store sales rose 2.8 percent during the first quarter, the best quarterly performance since the recession, indicating that the industry may be entering a new cycle of sustained growth, according to TDn2K’s Black Box Intelligence, through its Restaurant Industry Snapshot based on weekly sales from over 20,000 restaurant units representing over $45 billion dollars in annual revenue.

Same-store sales rose 0.8 percent in March, a significant drop from the 2.2-percent increase reported for February. However, the unusually cold weather experienced by many regions of the country impacted results.

“We continue to be optimistic about this new cycle of opportunity for the restaurant industry. For the first time since the recession, the industry has reported three consecutive quarters of same-store sales above 1 percent, and the last two quarters have both been above 2 percent, also a first in over six years,” said Victor Fernandez, executive director of insights and knowledge for TDn2K. “Though job gains slowed down during March and the unemployment rate remained at 5.5 percent, we believe our economy is already at full employment levels. Moreover, the unusually cold March experienced by many regions of the country may be an important factor behind the job growth slowdown, which hints at a recovery during April.”

“Consumers also seem to share our optimism, as shown by the rebound of consumer confidence in March after a small decline the previous month,” Fernandez added. “Although the March and Q1 same-store sales growth results are somewhat obfuscated by the effects of the extreme winter conditions experienced this year, the economic foundation underlying the strong sales growth reported for Q1 supports the idea that the industry’s growth goes beyond just having some relatively favorable weather conditions during the first half of the quarter.”

According to TDn2K retained economist Joel Naroff, president of Naroff Economic Advisors, “the outlook for the restaurant industry remains extremely positive. While the March jobs report was soft, rising job openings and low unemployment claims point to rebound in payroll growth.  More importantly, wage gains are accelerating and the low energy costs are leaving more money in peoples’ wallets. There is a lag between rising incomes and increased spending as households first put their financial houses in order. Then they start spending on those little things, such as eating out, they have given up. We should start seeing demand speed up by late spring.”

Traffic continues to challenge the industry. Although the 0.6-percent decline in same-store traffic reported for the first quarter is the second best quarter in the last two years, it represents a 0.4-percent decline from the fourth quarter. It is also evidence that even with the improved economic conditions, the industry continues to lose customers on a year-over-year basis. Same-store traffic fell 2.4 percent in March, impacted by the unseasonably poor weather this year, and contributed to the drop in traffic during the quarter. By comparison, traffic fell 1 percent in February.

In terms of job growth, the restaurant industry continues to reflect the increased activity of the national economy. Year-over-year growth in number of jobs in restaurants increased by 2.9 percent during February, based on the latest numbers reported by TDn2K’s People Report.

The industry has grown its number of jobs at about 3 percent or more for the last 15 consecutive months. The increased number of job opportunities being created within and outside the industry has also meant restaurant hourly employees and managers have been more inclined to leave their current positions than they were in previous years. This has been proven through the rising turnover levels that have been reported for hourly restaurant employees for the past 18 months, with February becoming the latest month in which rolling 12-month turnover has risen. Although annual turnover had also been rising for almost a year, February saw a small decline in this metric.

“Given the current job market and overall economic conditions, we expect management turnover, which is already at levels not seen since before the recession, to remain flat or even continue increasing in the next few months,” Fernandez said.

Restaurant guest satisfaction, measured by TDn2K’s White Box Social Intelligence, reported that during March, “food” continued to be the top attribute (out of food, service and intent to return) that generated the vast majority of online mentions when people talked about restaurant brands on social media. However, “service” was the only attribute that increased its share of mentions during the month, rising from 8.8 percent to 12.4 percent. The results come from a sample of 4.9 million distinct social media mentions tracked during the month.

Although “service” mentions increased overall in March, this increase was not necessarily a good thing for restaurants. The percentage of positive mentions for this attribute dropped significantly, from 33 percent in February to 18 percent in March. The best performing industry segment based on this attribute in terms of its percentage of positive mentions was Upscale Casual/Fine Dining, a significant shift from the best performing segment during February, which was Family Dining.

The percentage of positive mentions regarding food dropped during the month, from 34 percent in February to 29 percent in March. The percentage of positive “intent to return” mentions remained flat, at 46 percent for both months. The best performing segment regarding positive food mentions was also Upscale Casual/Fine Dining, while based on positive service mentions it was Casual Dining. Overall, this month’s results show a departure from February’s top performers of Quick Service and Family Dining, with the industry reverting to having predominantly Upscale Casual/Fine Dining as the segment that generates the highest percentage of positive mentions.

TDn2K (Transforming Data into Knowledge) is the parent company of People Report, Black Box Intelligence and White Box Social Intelligence. People Report provides service-sector human capital and workforce analytics for its members on a monthly basis. Black Box Intelligence provides weekly financial and market level data for the restaurant industry. White Box Social Intelligence delivers unparalleled consumer insights and reveals online brand health. Together they report on over 30,000 restaurant units, one million employees and 45 billion dollars in sales. They are also the producers of two leading restaurant industry conferences: Summer Brand Camp and the Global Best Practices Conference, each held annually in Dallas.

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Report: Restaurants primed for growth in 2015

Today we are highlighting a report by AlixPartners that was featured in Nation’s Restaurant News on the state of the industry and the outlook for 2015. As with most reports recently there’s good news for the restaurant industry. But what I found most interesting about the report were the findings around technology. You may or may not find some surprises, but I was enlightened on a few. Here’s a quick glance at some of the highlights:

  • Only 12 percent of consumers said loyalty programs were “very influential” or “extremely influential” on restaurant choice
  • More than half of consumers said they didn’t use loyalty programs at all, and 33 percent used one or two loyalty programs
  • Only 30 percent of those surveyed have eaten at a casual-dining restaurant with a tablet in the last year
  • Only 3 percent said they would only eat at a restaurant with a tablet
  • 56 percent of consumers cited the ability to use tablets to pay for their meal as the top benefit of the technology
  • Only 18 percent have used mobile payment technology at all

What are your thoughts on technology in your restaurants? We always hear a lot about technology on the consumer side of the business. Is technology on the operations side a top priority for you? Please feel free to engage in some conversation around this topic.

I have copied the whole article below:

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Restaurants have spent the post-recession years shoring up their balance sheets and are now ready to grow, as consumers appear more willing to spend, according to the 2015 State of the Restaurant Industry report from the consulting firm AlixPartners.

Industry distress levels are near all-time lows, due to efforts by companies to reduce debt levels following the credit crisis of 2008. And now, with sales improving, the industry has shifted into growth mode.

“Folks spent time holding back dry powder to make sure they didn’t have liquidity concerns,” said Adam Werner, a managing director at AlixPartners. “They’ve got some cash. They’ve got stronger balance sheets. Now they’re thinking about growth.”

The report painted a rosy picture of the restaurant industry in 2015. Consumers are more likely to have jobs, as unemployment fell to 5.5 percent in March. Gas prices have fallen and consumer confidence has risen.

According to the study, dining frequency has increased 16 percent over the past year. Consumers appeared to shift their dining preferences from quick service and casual dining to convenience stores, grocery stores and fast-casual restaurants.

Fewer consumers are dining out on a deal. According to AlixPartners, 36 percent of consumers said coupons and discounts were important to their dining decisions, a decrease from 60 percent in 2012.

“For the last seven years that we’ve done this study, it’s as healthy as it’s been,” said Eric Dzwonczyk, a managing director at AlixPartners.

Still, customers are demanding value. Consumers said they were more likely to dine out for less than $5 per person, according to the study, and less likely to dine out for between $10 and $20 per person. Consumers said they would spend an average 6.2 percent less in 2015 than they did in 2014.

“Consumers aren’t saying they’re willing to pay a lot more,” Werner said. “People like the amount of time they’re going out to eat today.”

The market value for many restaurants is high. Companies have been sold in recent years for high prices. Stock values for many companies are high, and restaurant company initial public offerings have performed well, even if many companies have struggled to maintain that value over time.

Activism among shareholders has also driven up valuations, forcing companies to unlock hidden value and focus on cost discipline. Companies such as Darden Restaurants Inc. and Bob Evans Farms Inc. have recently faced proxy contests. Activist investors have targeted several other companies like Jamba Inc. and Famous Dave’s of America Inc.

“So many restaurant chains fall into the mid-cap space,” Werner said. “It isn’t as expensive to get in and have influence on the board of directors in one of these types of chains.”

There are some concerns. Margins, in particular, remain an issue, even though commodity costs have eased. Beef and poultry prices have both risen over the past year, although the entire commodity basket has fallen 13 percent during that time.

Labor costs have replaced commodities as a margin concern. There’s mounting labor pressure on the industry due to minimum wage increases in many states, as well as market-based increases like Walmart’s $11-per-hour starting wage announcement. Benefit costs are rising, too, due to the Affordable Care Act.

Restaurants have raised prices to deal with increasing costs. But they’ve also been far more aggressive in using technology to combat cost pressures. They’ve added tabletop tablets and scheduling software, and have upgraded mobile technology.

The study noted which types of technology efforts may or may not be effective. For instance, loyalty programs might not be as important to consumers as many restaurant operators think.

Only 12 percent of consumers said loyalty programs were “very influential” or “extremely influential” on restaurant choice. More than half of consumers said they didn’t use loyalty programs at all, and 33 percent used one or two loyalty programs. Eighty-eight percent of consumers used two loyalty programs or fewer regularly.

“Loyalty is not a huge influencer of dining decisions,” Dzwonczyk said. “We’re not saying that restaurants shouldn’t invest in loyalty programs. But the way they’re developed and executed needs to be thought through. And it’s just one part of a comprehensive strategy.”

Tabletop tablets don’t necessarily have an impact on casual-dining restaurant selection. Only 30 percent of those surveyed have eaten at a casual-dining restaurant with a tablet in the last year. Only 3 percent said they would only eat at a restaurant with a tablet.

But 56 percent of consumers cited the ability to use tablets to pay for their meal as the top benefit of the technology, according to the study.

Mobile could be important — particularly to locate or research a restaurant, or make reservations.

What consumers are not doing, at least at the moment, is paying for their meal with mobile. Only 18 percent have used mobile payment technology at all.

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Secrets to Self Inspection by Sysco – Part II

Here is part two of the Sysco article from yesterday around implementing a self inspection model. Click here to check out part one.

This part of the article highlights the idea of using local resources that are available to you through your local health departments. For example:

  • Florida’s Department of Business and Professional Regulation, for example, has developed the Hospitality Education Program. HEP employees are dedicated to training foodservice professionals in how to conduct self-inspections.
  • Wyoming’s Department of Agriculture also trains operators in food safety.

This was the most interesting to me, also in Wyoming: “Operators who take part in the “Blue Ribbon” program, the state’s voluntary HACCP program, are exempted from routine inspections, according to Chuck Higgins, manager of the consumer health services section. Instead, inspectors do a yearly verification of an operation’s HACCP procedures by checking HACCP logs, conducting informal interviews with managers and employees, and observing employees in action.”

That’s a great program! It would be great if more health departments had similar programs. A nice way for them to reduce the amount of inspections that their inspectors have to perform all the while maintaining standards.

I have copied part two of the article below:

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You can supplement self-inspections by tapping into the resources of your local health department. Not only do health departments have all the local regulations at hand and inspection forms you can use as a blueprint, but many also offer training.

Florida’s Department of Business and Professional Regulation, for example, has developed the Hospitality Education Program. HEP employees are dedicated to training foodservice professionals in how to conduct self-inspections.

Wyoming’s Department of Agriculture also trains operators in food safety, as well. Operators who take part in the “Blue Ribbon” program, the state’s voluntary HACCP program, are exempted from routine inspections, according to Chuck Higgins, manager of the consumer health services section. Instead, inspectors do a yearly verification of an operation’s HACCP procedures by checking HACCP logs, conducting informal interviews with managers and employees, and observing employees in action.

The state gives program participants public recognition as an incentive to join, including issuing press releases and letting operators use the program logo and consumer brochures to tell customers what they’re doing.

Outside consultants also can help by doing a baseline evaluation and customizing a self-inspection program to your operation. Dingbats still uses a consulting group to conduct monthly “inspections” and help with training issues. The inspections also keep managers and employees on their toes.

When you’ve identified what needs to be inspected, get input from employees on how often things need to be done. Some areas will require daily inspection, others weekly or even less often. Make sure what you’re asking people to do is practical and reasonable.

“To distribute the workload, tasks should be spread out throughout the week,” says Beezley, “and it shouldn’t be just one person doing a task.”

“If there are too many charts, and inspections are too complex to log, they won’t get done,” Grottenthaler adds.

Getting Results

Ultimately, employees are integral to the process. Since they’re responsible for making sure everything passes muster of self-inspections as well as official health department inspections, it pays to get them involved in a variety of ways.

“The key is follow-up,” says Taylor. “It does no good to have a self-inspection form that sits in a drawer.”

Employees should be trained both in food safety techniquesÑreceiving, storing, time and temperature control, food handling and personal hygieneÑand how to inspect their areas of responsibility.

Since he implemented self-inspections, Taylor has taken ServSafë and “Train-the-Trainer” courses. In turn, he has taught food safety techniques to more than 200 employees.

Employees also can provide valuable feedback. When training, divide them into teams and ask some to play the part of inspectors and others to set up “violations” that should be detected, Grottenthaler suggests. The dinner crew also can give feedback to the lunch crew, and vice versa, creating more of a sense of teamwork.

“If you let employees be part of the solution rather than having a manager dictate the rules, they’ll take ownership,” Beezley says. “People would rather work with clean, well-maintained equipment in a pleasant workspace.”

To ensure compliance with your new system, however, it makes sense to implement a system of incentives and/or disciplinary actions.

Do self-inspections work? They can’t help but raise awareness of food safety issues among employees and managers. At Dingbats, health code violations decreased immediately after implementing the self-inspection system, according to Taylor.

“If you control your own risks, you control your own destiny,” says Grottenthaler. The message is clear: Foodservice, inspect thyself.

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Secrets to Self Inspection by Sysco

Today we are going to highlight part one of a two part article by Sysco on Self Inspections. We at OpsAnalitica of course believe in and preach the self inspection model. It just makes sense to inspect daily for a number of reasons:

  • You need to be ready every day for the health inspector to show up
  • You need to be ready to serve guests before every meal period
  • By “inspecting what you expect” you drive desired behavior from your staff
  • Bottom line, if you run better operations you will increase profits

Sysco is a giant in the industry so this information is coming from a very credible source. The article suggests 3 types of self inspections:

  • A daily walk-through
  • Employee food safety practices
  • A scheduled inspection to check everything from proper stock rotation to chilling practices to equipment cleaning and maintenance

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Like with anything else, as the article suggests, you need to develop a system that works for your organization. The article recommends that you should “follow the flow of product through the operation and note critical points that should be monitored”, but should always include the following in your checks:

  • Receiving
  • Storage
  • Preparation
  • Cooking/serving/cooling/reheating
  • Cleaning and sanitation
  • A good inspection sheet will include some details-such as what the temperatures of various equipment and foods should be and what strength sanitizing solution should be to be effective-to take the guesswork out of the inspection

I have copied part one of the article below:

If, as the old adage suggests, physicians ought to know how to heal themselves, then the mantra of every foodservice facility’s operations bible should be “Foodservice, inspect thyself.”

No one should know more about serving safe food than those in the business of preparing and providing it to customers. But the biggest dangers posed in a foodservice operation are the things we can’t (or don’t choose to) see microorganisms and habits we take for granted.

“People tend to be blind to the things that happen every day that can cause foodborne illnesses,” says Robert Grottenthaler, a food safety consultant and former health inspector. “You have to set up a system against which you can check things.”

The best way to make sure that you’re doing everything you can to serve safe food is to inspect your own operation.

Why do it yourself? “You can’t rely on government to do your job,” Grottenthaler says. “Uniformity of health codes from state to state just isn’t there, and inspectors can be very subjective.” And state and local inspection agencies only conduct inspections an average of twice a year, too infrequently to ensure consistent food safety.

To avoid the potential damage a foodborne outbreak can cause, operators need to set their standards as high or higher than the FDA Model Food Code, he says.

“We started a self-inspection program about seven or eight years ago,” says Glenn Taylor, executive research chef for Foodservices Management Associates in Pittsburgh, operator of Dingbats and two other concepts. “We got nailed for things on several occasions, including a pizza oven that was not maintaining temperatures, using hands instead of tongs to transfer raw meat to the cooking surface, and some routine cleaning of walls and dumpsters, for example, and so we decided we needed to police ourselves.”

What to Inspect Self-inspection offers a way to improve the efficiency as well as the safety of your operation. “Fresh eyes looking over your operation are good, but if you rely on outside inspections, you miss opportunities to take corrective action and correct employee behavior on the spot,” says Julie Beezley, principal of Training & Development Resources, La Mesa, Calif.

To help spot and correct problems, Beezley suggests three types of self-inspections.

  • A daily walk-through. First thing in the morning, check to see how things were left from the night before. Was food covered and stored properly? Is the food at proper temperatures? Are coolers and freezers at the right temperatures? Is equipment cleaned and sanitized? Are work areas clean?
  • Employee food safety practices. Observe the food handling and personal hygiene practices of employees on a daily basis. Are employees clean and healthy? Are they washing their hands between tasks and after coming out of the restroom? Are they cleaning and sanitizing prep areas after each use? Are they storing wipedown cloths and cleaning rags in buckets of sanitizing solution? Are they checking food temperatures on the cooking and serving lines?
  • A scheduled inspection to check everything from proper stock rotation to chilling practices to equipment cleaning and maintenance. More formal than the morning walk-through, regularly scheduled inspections, held weekly, bi-weekly, monthly or however often managers feel it’s necessary, are a good way to encourage employees to make food safety practices a habit.

Setting up a self-inspection program first requires identifying potential trouble spots and how to minimize the risks they pose. “We targeted items that were most critical,” says Taylor, “The foods and preparation practices that, not handled safely, could result in making someone sick.”

Develop a System

Taylor used the local health inspection form as a blueprint to create a rudimentary self-inspection sheet covering areas like cooler temperatures and organization, hamburger prep, and a cleaning checklist. Then he implemented bi-weekly self-inspections. The process doesn’t have to be complex or overwhelming. In fact, the simpler it is, the better. Target high risk foods first and work backwards. Three factors that greatly minimize risks are temperature control, sanitation and personal hygiene.

Develop a self-inspection form in the same way you would create a HACCP plan. Follow the flow of product through the operation and note critical points that should be monitored. Here are some of the things to check.

  • Receiving. Assign dedicated employees to receiving. Train them to inspect vendors’ trucks to ensure they’re clean and that they separate raw meats and produce. Check package integrity and product temperatures. Use invoices to log observations. Make sure employees take corrective action when products aren’t up to spec (i.e., send product back).
  • Storage. Put products away immediately. Check cooler (40°F or below) and freezer temperatures (0°F or below) and check for cleanliness. Make sure products are protected, labeled and stored properly (raw meats well covered on bottom shelves or in separate walk-ins, for example). Check stock rotation.
  • Preparation. Observe proper thawing techniques including thawing under running cold water or overnight in a cooler. Inspect prep surfaces, utensils and equipment to make sure they are clean and sanitized. Eliminate hand contact wherever possible-use clean gloves and/or sanitized utensils, for example-and ensure proper handwashing is practiced however food is prepared. Observe how employees handle product and their personal hygiene habits
  • Cooking/serving/cooling/reheating. Check the temperatures of food at each stage. Calibrate thermometers and equipment on a regular basis. Observe employee practicesÑare they using correctly calibrated thermometers to monitor that foods are chilling and cooking to proper temperatures?
  • Cleaning and sanitation. Label and store chemicals properly. Inspect handwashing facilities. Check dishmachine temperatures and sanitizer strength. Observe how trash is handled and disposed of. Inspect equipment and workstations.
  • A good inspection sheet will include some details-such as what the temperatures of various equipment and foods should be and what strength sanitizing solution should be to be effective-to take the guesswork out of the inspection

We’ll continue this discussion with part two later on this week.

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Moneyball for Restaurants. It ’s Here. On Your Tablets and iPads. Part III

Here’s part three, the final installment, of the Moneyball article. Part one was posted on Monday, click here to read. Part two was posted on Wednesday, click here to read.

Make no mistake, daily line checks and temp logs are important. But they are not the only thing that a restaurant manager should be looking at. In fact, a great deal of that data is collected on a CYA basis, and it doesn’t really affect the bottom line of the operation.

However, every day, every restaurant generates data points that can be recorded and measured. So, our SMART Pre-Shift Inspection Protocol covers all of the basics of an operations review and captures key data points that can provide deep insight into operations…all in an expedited fashion that provides ample opportunities to look for operations issues before they become issues.

Here’s a sample of just one of the protocols from our SMART Pre-Shift Inspection Protocol, but you have to imagine this running as an app on a tablet or iPad. The app itself walks the worker through the paces of a “pre-flight ” inspection.

Sanitation

  • Sanitizer buckets
    • Number of
    • Location
    • Rags present
      • How many
  • Signs of cross contamination
  • Chef and prep staff drinks put away
  • Hand sinks free and clear
    • Soap present
    • Paper towels present
  • Chemicals stored safely away from food prep areas
  • Dishwasher
    • Sanitizer ppm
    • Rinse water >= 180 degrees
  • Sign of pests
    • Yes/no

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Just that list will prepare you to pass more than half of the most common health inspection issues, where a “fail” – which is a matter of the public record – can doom your sales for weeks, or maybe tank the restaurant entirely.

Want another example? Here ’s another pre-flight protocol, for management:

Management

  • Pre-shift staff meeting
    • 86 ’d Items/Substitutions
    • Wait Staff ready to go
  • Drawers

Accountability

  • FIFO
    • Day Dots – Ensure that food online is stocked to par
    • Ensure that food items that have a longer remaining shelf life are not being used first.

Now imagine this level of thoroughness – checked multiple times a day; as often as you desire – were also applied to your kitchen readiness, readiness for guests, building, server stations, kitchen, dining room, host stand, and temperatures. The list of sub protocols is only limited by your imagination, because custom protocols for SMART Pre-Shift Inspection Protocol are easy to create and “app-ify” on your staff’s tablets or iPads.

As data is collected, it is time-date-location stamped. And that ’s where the real force and power of big data can be brought to bear. The data can be reviewed in correlation to such data points as labor cost, food cost, Yelp reviews, TripAdvisor comments, or even the weather and road work or the frequencies of area traffic jams. By gaining perspective, using data that can be sliced and diced and compared, restaurants can optimize their operations…and their profits.

Why not bring the same rigors to a pre-shift inspection that airlines bring to flight safety? The same type of approach that surgeons bring to pre-op review, that NASA and SpaceX run with their flight crews? Given the complexity of restaurant operations (which just might be so complicated as to baffle the best NASA engineers!) we are really well situated to make data, big and small, work for making our locations cleaner, smarter, and more profitable.

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McDonald’s CEO: Why we’re raising wages

You had to know that this was coming. Once Walmart committed to raising wages it’s only a matter of time before others have to follow suit in order to remain competitive in attracting employees as well as public perception. Walmart employs roughly 500,000 people so when they unilaterally raise their base wage it’s going to move the market.

McDonald’s CEO Steve Easterbrook wrote a commentary piece in the Chicago Tribune explaining their reasoning for raising wages. McDonald’s has been in the press recently with their announcement around ending the use of human antibiotics in their US chicken supply.

McDonald’s has committed to raising their minimum pay in their corporate owned US restaurants $1 over the locally mandated minimum wage starting July 1 of this year. They estimate that their average wage will be over $10/hr. The main reasons that Steve Easterbrook sites for the wage increase are:

  • To make McDonald’s a modern, progressive burger company on many fronts, focusing specifically on the consumer perception of our food, and our people
  • The time is right to take a first step in rewarding our team members who work so hard every day

He also talks about providing training opportunities for their employees to gain job skills and high school or college credit. He was very clear that this was just for the corporate owned stores obviously because the franchisees make their own decisions on compensation etc. But I suspect in order for them to compete with talent they are going to have to be very close  in order remain competitive for hiring talent. We’ll be seeing more and more of this from now on, but obviously will only hear about the giants like McDonald’s, Walmart, etc.

I have copied the full article below:

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Amid the continuing national dialogue on wages, benefits, job creation and providing marketable skills to our nation’s workers, we have challenged ourselves as to whether we can do more to make a real difference in the lives of our employees. Specifically, what can McDonald’s — as the restaurant industry leader — do right now?

McDonald’s raising its minimum wage, but some say it’s not enough

As the new CEO of McDonald’s Corp., I’m taking action to make McDonald’s a modern, progressive burger company on many fronts, focusing specifically on the consumer perception of our food, and our people. I believe the time is right to take a first step in rewarding our team members who work so hard every day. Wage is just one part of the equation. Getting people started on the road to success by providing the skills, training and opportunities they need to continuously improve is also important.

Our first step will impact the more than 90,000 employees at McDonald’s 1,500 company-owned U.S. restaurants. On July 1, we’re raising starting wages by $1 over the locally mandated minimum wage and adjusting pay for existing restaurant employees. By the end of 2016, we project that the average hourly wage rate for McDonald’s employees at company-owned restaurants will be in excess of $10. In addition, we’re offering paid personal time off for any reason to restaurant crew members who have been with us for at least one year. If they choose not to take the paid leave they’ve earned, they will get a check for the value of that time. We understand that life balance is important and believe that this will make a difference for our people.

McDonald’s plunges on Fortune’s list of most admired companies

In addition, in partnership with our independent owner-operators, we are offering new and enhanced educational opportunities to employees at all McDonald’s restaurants across the U.S. Eligible employees who want to advance their education will have an opportunity to improve their language skills and earn a high school diploma or college credit.

Providing opportunities is essential for fostering professional growth and advancement in the workforce. Employers need to create more programs and pathways to help people stretch and develop — and to give them the tools and guidance necessary to succeed. At McDonald’s, we have seven Hamburger University campuses around the world where restaurant managers and corporate employees can build on their talents and find new opportunities to keep them competitive in today’s marketplace. They can also earn college credit. McDonald’s is one of only eight Fortune 500 companies that already award college credit for certain training courses and e-learning modules.

I worked to redefine the term “McJob” when I ran the McDonald’s United Kingdom business because we saw firsthand how these front-line jobs can bring out the best in people — embodied by what we call the Three C’s (commitment, competence and confidence).

At McDonald’s, we must recruit and retain talented people and motivate them to bring their best to the job every day. We must provide them with valuable skills that they use at McDonald’s or wherever their career might take them. Our challenge is the same as other large companies that seek to close the skills and education gap America is confronting.

This is an initial step for our U.S. business. I understand that some may believe it doesn’t go far enough. These actions demonstrate meaningful progress, and it is what we can do right now in our company-owned stores. We remain committed to regularly reviewing the total employment experience we offer our people.

This is not a one-size-fits-all approach, and cannot be for a company like McDonald’s, which is based on a franchise model. McDonald’s is a very large system that also includes 3,100 independent owner-operators in the U.S. who make their own decisions about how they run their business and pay their employees, based on their local market environment.

As I mentioned earlier, I am committed to taking the actions reflective of a modern, progressive burger company. In that spirit, we recently announced that we’ll stop using human antibiotics in our U.S. chicken supply. We understand that when we improve in key areas like food, our restaurants and our employees, it can have a tremendous and positive impact — both within our industry and in communities across the country. Our energy is focused on making even more meaningful changes to benefit our customers and employees.

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Moneyball for Restaurants. It ’s Here. On Your Tablets and iPads. Part II

Here’s part two of the Moneyball blog. Part one was posted on Monday, click here to read part one if you haven’t already.

SMART Pre-Shift Inspection Protocol™ is a checklist system, not unlike the pre-flight checklists that pilots run through to ensure safe operations. Except that the restaurant data that’s captured is not viewed in isolation, nor just logged and stored and never looked at again.

With the SMART Pre-Shift Inspection Protocol, you can leverage your workforce to collect data, which will let you draw correlations between operations, sales, and costs. That will help you determine your shortest path to optimized profits.

The SMART Pre-Shift Inspection Protocol is performed by your workers at any skill level, using a tablet or iPad to log in the restaurateur’s most valuable assets: “in-game data.”

Since this approach is a protocol (a programmatic workflow, based on a pre-established critical path), the SMART Pre-Shift Inspection Protocol is not dependent on the skill levels of your workers. The intelligence is embedded in the protocol itself. Literally anyone can run the protocol.

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Baselines are covered first. The SMART Pre-Shift Inspection Protocol captures data that is essential to operations and inspections (fridge temps, food temps, locations of sanitizing buckets… everything you need for CYA moments and health inspections).

But the SMART Pre-Shift Inspection Protocol also collects the seemingly extraneous data that could be far more telling than the fact that the cooler maintained a <41F temperature, as required, or that cleaning chemicals were safely separated from potential contact with food.

“Seemingly extraneous data.” What’ s that?

Well, we all know that restaurants succeed and fail as much on human interactions / human discretion as on the wholesale price of a salmon steak or a plate of wings. Much depends on the intangibles, which are really not intangibles at all, if they are recorded and examined.

Imagine if you have a protocol checklist for how well dressed the wait staff is. (Crisp shirt? Check. Spotless tie? Check. Clean apron? Check. Finger nails clean? Check. Tattoos covered? Check.)

Or if the protocol checklist checked that the side work has been done.
Or if you had a check-off system to ensure that your workers didn ’t take all the parking spaces nearest the entrance, when that act alone could attract (or deter) enough customers to get a solid second turn at brunch.

Or that you were aware that the ice machine is undersized for the required volume of glasses, which delayed the refills, which caused half of your patrons to skip dessert, which triggered spoilage, which made your dumpsters full one day too soon, which turned away another 30 diners who thought the establishment just looked filthy when they circled around back to park.

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Click here for part III.

Dozens sickened at banquet

So probably not the best banquet to have a foodborne illness outbreak at considering the attendees. With 100 of the 250 attendees being lawyers and law students this is not going to go away anytime soon.

This article from Philly.com will be forever and will pop up decades from now if you Google search “foodborne illness Philly” (I just searched and a version of this article shows up as number 5). There are social media and Yelp! reviews that are out there as well, but there are ways to get those “expunged” if you will, but news articles don’t go away.

Although it appears from the article (copied below) that the restaurant providing the food has a track record of violations with the health department. The health department legally can’t publically talk much about the restaurant other than posting the publicly available information, but the lawyers and law students aren’t holding any punches.

It doesn’t appear that this restaurant is practicing a due care approach to their health and sanitation standards and it could wind up costing them their business this time. More and more data and apps are available to consumers to check on restaurant scores etc. Now more than ever, restaurateurs need to make sure that they are running safe operations. There is so much competition that most can’t afford to bear the cost of the brand damage that results from this type of press.

There are tools available that are simple to implement that can help drive accountability and prove to health inspectors that you are taking a due care approach to health and sanitation. It’s worth investing some time investigating what’s available. It could wind up saving your brand.

I have copied the full article below:

In one of the largest outbreaks of suspected foodborne illness in Philadelphia, nearly 100 lawyers and law students were sickened last month after attending a banquet celebrating the Lunar New Year in Chinatown.

But even though the restaurant has a history of food-safety problems stretching back several years, the city Health Department says it cannot publicly discuss details of its investigation, citing a 1955 state law.

That law hasn’t silenced the outbreak’s victims.

About 250 people attended the feast Feb. 27 at Joy Tsin Lau, the venerable dim sum restaurant at 10th and Race Streets. Dozens of the diners reported that they felt the first symptoms two mornings later.

Chi Mabel Chan, who has owned Joy Tsin Lau for more than 30 years, denied that the diners had suffered food poisoning from the banquet.

“It was not a problem with my restaurant,” she said, theorizing that chilly weather or festivities at a karaoke bar after the dinner might be to blame.

“Maybe they got cold or drank too much,” she said of the victims.

The eight-course dinner – well-documented on social media – was a fund-raiser for a group of Temple University law students, the Asian Pacific American Law Student Association.

“This was the worst case of food poisoning I’ve ever witnessed,” Antima Chakraborty, a Philadelphia assistant district attorney, wrote on Yelp, a restaurant review site. “Many individuals had to go to the ER.”

City inspection reports show that Joy Tsin Lau has long had a problem maintaining food-safety standards.

Just 17 days before the banquet, a Health Department sanitarian was at Joy Tsin Lau to check back on an earlier problem. In a report dated Feb. 10, Kyria Weng wrote “that current management practices have allowed unacceptable public health or food-safety conditions.”

An Inquirer analysis of city inspection reports found that the average eat-in restaurant in Philadelphia last year had 2.3 risk factors for foodborne illness, the more serious of the two main categories defined by the Food and Drug Administration.

Weng cited Joy Tsin Lau for five such risk factors. Several of those – dumplings held at a bacteria-friendly 57 degrees, and a lack of soap and paper towels in the employee restroom – were noted as repeat violations. Weng also found nine lesser violations, called “lack of good retail practices.”

But that was an improvement over Weng’s Dec. 22 visit, when she cited the restaurant for seven risk factors for foodborne illness (including a chicken held at unsafe temperatures) and 13 lesser violations.

Back in 2010, the city Health Department filed suit against Joy Tsin Lau after deeming it a “public nuisance” and issued a cease-and-desist order for “failure to ensure that public-health standards for a safe and sanitary operation . . . are being maintained.”

City legal officials did not respond to questions asking if the city ever acted on the order or if the restaurant ever was forced to close.

David S. Haase, a Center City lawyer, said he began to feel nauseated about 30 hours after the banquet. Contrary to Chan’s theory, he said he was warmly dressed and did not go to the karaoke bar.

A combination of nonstop puking and explosive diarrhea kept him bedridden for four days.

“It was freaking terrible,” Haase said. “I’d crawl back into bed and curl up into a ball, moaning like a child with the cramps.”

Organizers, in a post-banquet e-mail to attendees, said multiple guests had sought medical attention.

Thursday, nearly four weeks after the banquet, Health Department spokesman Jeff Moran would say only that a “food source” had been identified for the outbreak.

“We are not permitted, by law, to publicly release the findings of outbreak investigations,” Moran said.

He cited the Pennsylvania Disease Prevention and Control Law of 1955, which prohibits health authorities from disclosing reports or records of diseases. Though the law primarily addresses patients with venereal diseases and tuberculosis, its confidentiality clause keeps secret the details of all health investigations.

Most states have similar laws, according to Scott Burris, the codirector at Temple University’s Center for Health Law, Policy, and Practice.

“It’s pretty typical,” Burris said. “Pennsylvania is not an outlier.”

Investigators need some secrecy to collect sensitive information, he said, but the laws may go too far when it comes to alerting the public of potential threats.

“That’s a price we pay,” Burris said of secrecy laws. “It’s probably worth working on our privacy laws to see if we can find an approach that lowers that price.”

But there is no law silencing the sickened.

“If you enjoy being on your back for the 48 hours post-dinner writhing in pain, burning up, and exploding out of all orifices, then this is the restaurant for you,” wrote Jack Jiang, a University of Pennsylvania researcher who attended the banquet with his girlfriend.

In an e-mail to a reporter, Jiang said he had been bedridden for three days and suffered lingering effects through the end of the week.

Haase, who missed his daughter’s championship track meet due to the illness, said he had contacted a Health Department coordinator, who told him the outbreak was likely brought on by norovirus.

Norovirus, the most common cause of foodborne illness, sickens about 20 million people a year in the United States, according to the Centers for Disease Control and Prevention. The pathogen is often spread by contact with an infected person or by ingesting food or water contaminated by fecal matter. Acute gastroenteritis strikes usually between 24 and 48 hours after exposure to norovirus.

Caroline Johnson, director of the city’s division of disease control, said she couldn’t talk specifics, but in general said the goal of investigations “is to find out what happened, correct that problem, and move on.”

As for the secrecy, she said, “We don’t want to drive underground the facts we want to uncover.”

Her agency told Haase about the norovirus because “we feel that by telling them, they won’t need to have the wrong antibiotic prescribed to them or have unnecessary testing. It’s the right medical thing to do. I wouldn’t withhold information from them because it might have medical significance to their situation.”

Foodborne illness outbreaks in Philadelphia are relatively uncommon – about 10 a year – and when they do occur, they usually strike fewer than 20 people, Johnson said.

“They’re not always as impressive as this one,” she said.

“These foodborne outbreaks can happen to the finest of restaurants and it doesn’t necessarily mean that the restaurant did anything wrong,” Johnson said.

None of the lawyers or the Temple group said they were planning to sue Joy Tsin Lau. They have two years before the statute of limitations runs out.

Haase, whose law firm sponsors a table at the banquet each year, said he would continue attending under one condition.

“It will have to be at a different place,” he said.

In the meantime, Haase said he won’t collect the two raffle prizes he won at this year’s banquet: two dim sum dinners at Joy Tsin Lau.

Banquet Menu

Full menu for Temple APALSA’s 8th Annual Lunar Banquet, Feb. 27, at Joy Tsin Lau:

Chicken sweet corn soup

Walnut shrimp

Stir-fry beef celery

Peking duck

Spare ribs

Deep-fried fish Hunan

Veg fried rice

Veg spring rolls

Sautéed string beans

Black bean eggplant

Braised bean curd

5-spice bean curd bean sprouts

Kung pao vegetables

Lo mein

Chinese vegetable with hearts of greens in light gravy

Fresh oranges

Fortune cookies

Tea

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