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Pencil Whipped Checklists Steal Sales & Profits

We did a survey and asked over 100 restaurant managers and owners a very simple question. “Do you think your teams are completing their paper checklists accurately?”

94% of those surveyed said that their teams WERE NOT completing their checklists accurately.

I used to think that the industry just didn’t care about pencil whipping. Now after five years in business I realize I was wrong. It’s not apathy, it is a lack of data and visibility into daily restaurant operations.

What is pencil whipping?

Pencil whipping, for our purposes in this blog, is defined as not using and completing a checklist accurately. Pencil whipping includes missed checklists and checklists where the employee just fills it in to get it finished without checking the items as they are supposed to.

What does pencil whipping look like?

The superficial view is the temperature log in a restaurant, hanging on a clipboard, where it is obvious that one person simply went down the list and filled it in day after day. Same pen, same color, same handwriting, the same temperature on all cold hold, and hot hold items.

We have all seen that pencil whipped checklist at some time in our career’s but most of us have never thought about the checklist’s impact on our bottom lines.

What Pencil Whipping actually looks like:

Pencil whipped checklists lead to slower speed of service and lower QSC and Customer Satisfaction scores. This is directly correlated to lower sales and profits.

How much pencil whipping is happening?

Through conversations with our clients and analysis of our own data. We believe that only 25 to 30% of paper checklists are completed accurately.

Which means that 70% of the time, paper checklists are pencil whipped or not completed accurately.

According to Yelp, the average score for all restaurants in the United States is 3.71 out of 5 or 74.2%. Restaurants in America are solid C students according to consumers.

I know that some operators discount Yelp reviews but they are statistically significant and they are the best gauge of what our customers truly think. A 1-star increase in your location‘s Yelp Score can lead to a 5 to 9% increase in sales.

Pilots are famous for using checklists. You can’t turn on a plane’s engine without a checklist. Surgeons also use checklists to make sure they don’t make a catastrophic mistake.

Would you feel safe flying on airplane or getting surgery from a doctor that was only completing their checklists 30% of the time? Why is that ok for restaurants?

The Operators Nightmare

The Operators Nightmare, is when you are doing everything you are supposed to be doing. You are training, investing in your employees, you have systematized everything you can, you have checklists/logs/documented procedures, state of the art technology, great food, and good locations.

Yet your stores feel like they could be doing better and that the day-to-day management of them is just way harder than it should be. You know that something is off but you can’t put your finger on it.

Underperformance in the restaurant industry can be directly tied to pencil whipped checklists. I know a lot of you don’t believe this, and it’s not that I’m incorrect, because I’m not. It’s because if you are using paper you have no data to the contrary and no idea how bad your pencil whipping problem really is.

Paper checklists, which are the most widely used checklist system, are never reported on. It’s simply too arduous to collect all the red books and analyze them and get any real operations data out of them.

Most restaurant executives have never seen any data that would suggest that their restaurants aren’t following their procedures and that by pencil whipping their checklists that it is costing them any money.

We did a study a couple of years ago and we found that in a QSR chicken finger franchisee that had high process compliance, the teams were doing their daily checklists accurately and on time, increased sales by 3.2%, and reduced food cost by 1.2% during that period.

How did this happen you are asking yourselves?

The restaurants ran better or more accurately ran how they were supposed to run. Issues were corrected in real-time before they had a chance to affect guest experiences. This lead to higher QSC Scores and Speed of Service times which led to an increase in sales and at the same time a reduction in comps led to an increase in profits.

Death by 1000 Cuts

The other problem with pencil whipping is that it isn’t a clear cut 1 thing you have to fix. If you have a broken sprinkler pipe, that is a singular problem which you can address and get solved.

Pencil whipping is a singular problem but the symptoms of pencil whipping are not. Pencil whipping shows up operationally as a lot of different things. Refer back to the chart above. Pencil whipping shows it’s ugly head in poor execution on things that were supposed to be handled.

There is nothing more frustrating than a customer having a bad experience at your restaurant because of something that got missed but was part of your training and managed on a checklist that was supposed to be completed before service.

Pencil Whipped Data is Worse than no Data

We have a client that recently made the above comment to us. Pencil whipped data is worse than no data at all. He believes this because he is in Ops Services and he saw the executives of his company making million-dollar decisions on garbage data.

There has always been a lack of good daily operations data in restaurant companies. Especially, large multi-unit operators. Most restaurant companies don’t even have a direct operations data feed that they can analyze.

Restaurant chain executives are forced to back into operations effectiveness at their restaurants by looking at ancillary data: sales, costs, customer satisfaction scores, and if you are lucky audits.

All of those metrics are trailing indicators of operations effectiveness or with the audit a snap shot that is out of date the next day.

Looking at falling sales, higher costs, or bad customer satisfaction scores to identify operational issues is what most of us have had to do. If you are seeing bad indicators in those data sets, it’s already too late.

The goal is not to run bad operations for a long period of time until it finally shows up in a trend line 6 months later when you have done a ton of damage to your brand and those location’s viability.

The goal is to exercise active managerial control over your operations, follow your systems, and avoid bad experiences altogether by executing your systems consistently.

The fact is that we all see the impacts of pencil whipped processes every day in our restaurants and the restaurants that we frequent as guests. We as restaurateurs speak restaurant, we see the stressed employees, the customers having bad experiences, the lost sales, increased costs, and the bad reviews.

We also know that the most successful restaurant companies not only have systems and processes but their culture manages them and holds all team members accountable for following them. Consistent execution of systems is the difference between highly profitable restaurant machines that print money and operations that struggle and barely break-even.

If you work in an organization that is still using paper to manage your operations processes and you would like to fix the biggest nagging issue in your business, please click on the chat icon in the bottom right of the screen and reach out.

I’m going to leave you with this thought.

An employee that pencil whips a checklist is stealing from you. Is there any real difference between taking 10 dollars out of the register or willfully not doing the job you are being paid to do and causing a customer to not come and spend that same 10 dollars at your restaurant? In both cases, you are out $10 dollars.

This hospitality business doesn’t have to be this hard and stressful. You have already figured out what everyone needs to be doing, you just need a better way of managing your team to ensure that they are following your SOP’s.

We have helped thousands of restaurants in 19 countries increase sales, profits, and QSC scores, we can help you.

Written by

I've been in the restaurant industry for most of my adult life. I have a BSBA from University of Denver Hotel Restaurant school and an MBA from the same. When I wasn't working in restaurants I was either doing stand-up comedy, for 10 years, or large enterprise software consulting. I'm currently the Managing Director of OpsAnalitica and our Inspector platform was originally conceived when I worked for one of the largest sandwich franchisors in the country. You can reach out to me through LinkedIn.

6 Comments Published

by Tina , post on 6 June 2020 | Reply

HI, this is interesting to me. What can be done to get rid of lists etc?

by Erik Tversland , post on 9 June 2020 | Reply

Hi Tina! Please reach out to info@opsanaltiica.com and we’d be happy to share some best practices with you. You don’t necessarily need to get rid of all of them, but make them smarter, more efficient and customized down to the location, shift and user. We look forward to hearing from you!

by Kate M. , post on 27 July 2020 | Reply

I was with you until the last. Saying that an employee is stealing from you is extreme. It reinforces a negative stereotype that many managers use against their people, ultimately causing high turnover – huge expense! Instead you could have suggested that retraining is in order. When your people understand the importance of your lists, maybe because you have incentivized accuracy and completion, your much better off.

by Tommy Yionoulis , post on 27 July 2020 | Reply

That is a fair point. The point I was trying to make is that if an employee is paid to spend time doing something and they don’t do it but say they did they are lying to you at the bare minimum. Now if that thing was a readiness checklist and that results in a restaurant not being as ready and that results in lost sales or poor customer satisfaction, that is stealing profits.

Now, I completely agree with you, I wouldn’t call that employee a thief or suggest that you fire them. The appropriate course of action is to retrain them on the Why of doing the checklists. How important they are, etc.. We don’t want to do things that result in increasing labor or turnover costs.

Ultimately, what I was hoping to achieve with this blog post is to get managers to think about these readiness and food safety checklists as must do items. To take them more seriously than they have in the past and to realize that not being fully ready costs them money.

I really appreciate you taking the time to comment on the blog and thank you for reading it.

by DB , post on 15 August 2020 | Reply

Something to look at though as a counterpoint is overuse of checklists. They are useful and are a good tool if done right it when you have multiple lists with 20 or 30 things on them, all of a sudden you spend as much time on a list as you do the work itself. This also translates into cost issues, lost revenues, etc. Not to mention, from an employee side of things, having to stop after every single task to check a box breaks my flow, even if it is a small list constantly starting and stopping to do a list properly slows me down even worse. There is a balance to be struck here. Even insinuating that an employee is stealing from an employer is putting all the blame on the employee which causes yet again, it’s own cascade of problems that affect margins. The blame needs to be placed on both sides, an employee for not completing task lists properly and the management for not properly supervising, training, explaining importance. When an employee fails, the blame is not always on them and perpetuating any information that makes it seem that way is one of the components that leads to high turnover which leads to training new staff, which in the current climate of hospitality is often new to industry staff, which as any manager will tell you is extremely expensive.

by Tommy Yionoulis , post on 15 August 2020 | Reply

I totally agree with you. Checklist design is one of the things that here at OpsAnalitica we put a lot of time and effort into. In my job I see the stupidest checklists you’ve ever seen. There has to be a balance between capturing every piece of information and what’s actually happening in the restaurants. I see people with 45 and 90 minute long line checks. Which kitchen manager/cook has 45 to 90 minutes before the rush to do a line check?

To many checklists can do more harm than good.

The trap a lot of these restaurant companies have fallen into is that they created checklists and no one was doing them and they weren’t getting the results that they needed. So instead of fixing the process and training on the Why the checklists were important, they just added more questions and more checklists. So they thought the original checklists were broken and that is why they weren’t seeing the results and getting the data they wanted. They fixed the Wrong issue, they fixed the checklist and not the real problem which was the process and that is why you will see too many checklists and checkless that are way too long.

At OpsAnalitica, we have added a ton of functionality to our platform to help make checklists shorter and more efficient. In my opinion, you don’t get extra credit for having the longest checklist. The best businesses have short focused checklists that accomplish a goal.

Thank you so much for reading the blog and taking the time to comment.