New guidelines require calorie count for food and drinks

An article from WIVB 4 in Buffalo highlights the upcoming federal requirements to post calorie counts on drink and food menus. The federal requirements only target restaurants and bars with more than 20 locations.

The restaurant/bar owners quoted in the article don’t feel that it will affect their business negatively. They feel that most people realize that they will be consuming more calories when they go out to eat and look at it as more of a treat. I think there can be a negative affect in that average check per person will go down and that deserts will be the first to get ignored more often than they already do now. Depending on the type of restaurant that can significantly hurt profitability.

The hope from the government is that this will help with the obesity problem in the US. I don’t see it having much of an impact. There’s a lot more education that needs to go into eating healthy than just looking at calorie counts. Plus all this info is usually available now online and people that care about it look it up prior to going out to eat. But most of us just go out to eat and order what we want then deal with the consequences.

What are your thoughts? Do you see this having a negative affect on your business? Do you think it will make a positive impact on obesity in the US?

I have posted the full article below:

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UFFALO, N.Y. (WIVB) — New federal guidelines will soon require many restaurants nationwide to post calorie counts for food and drinks on their menus. The menu labeling rule is part of the Affordable Care Act.

The FDA wants to make you more aware of the calories that you are not only eating, but drinking.

At Gramma Mora’s- a Mexican restaurant on Hertel Avenue, the message is: “It’s fun to go out to eat- and it’s even more fun to have a margarita with your meal,” says Owner, Liz Giovino.

Come December, many restaurants nationwide will be required to post calorie counts on their drink lists. It’s something some restaurant go-ers say they plan to ignore.

Irinia Arias from Buffalo says, “I think they put it there for a reason, but i don’t think anybody is really going to pay attention to it.”

The regulations will apply to all chain restaurants and bars with at least 20 locations. But Giovino doesn’t believe it will impact Buffalo’s restaurant industry.

“There are going to be people who are watching calories, but when most people go out to eat they are going to realize there are going to be calories they are going to have. You just have to be smart to decide what choices you’re going to have,” she said.

Health experts say these new requirements will help combat the country’s obesity epidemic by showing just how many calories lurk in your favorite food and drinks.

Owner Charlie Giovino says the impact should be minor, since people who eat out already know they’re indulging.

“If people are going to go out to dinner and they are going to come to our restaurant, I don’t know if they’re really going to be interested in that,” he says.

New York City began requiring chain restaurants to post calorie counts on menus in 2006, and now the rest of the country will soon follow suit.

Whether menu labeling has any effect on health is still an open question; some studies have shown it has no impact. But a 2008 study at Starbucks showed a drop in average calories purchased after calorie content was posted.


Busy Work the Profit Killer

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Everyday restaurant managers transcribe data from one system into another manually. This manual busy work is a massive waste of time, it keeps manager’s off the floor where they belong, it is soul-crushing and incredibly expensive.

Here are some common examples:

1. Take labor numbers from the register system and enter them into a labor or expense tracking spreadsheet.
2. Conduct inventory on printed inventory forms and data enter them into a program or spreadsheet.
3. Data entering restaurant inspections or temp logs into a spreadsheet for scoring and record keeping.

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A lot of people think that because managers are salary employees “who cares” if they do a little busy work, it doesn’t cost any extra. That is a short-sighted way of looking at things.

You need to look at manager’s time from an ROI perspective. Every minute I’m paying this manager I should be getting a return on that investment. If there are two things, and there are always ten things in a restaurant, that need attention, then you should have manager’s focused on the activities that drive the most ROI in sales and guest satisfaction.

Use our Busy Work Calculator to determine what an activity is costing you and then determine if there is a solution that costs less than what you are paying for your manager’s time over an acceptable time period. If there is than you have found a positive ROI.

All of these individual 5 and 10-minute tasks add up over time. A restaurant that has 20 minutes a day of busy work built into their processes is wasting 121 hours or 3 weeks of manager work time over the year.

Here is another quick example, three waiters that stay on-the-clock 10 minutes longer than needed three shifts per week cost the company 78 hours of pay a year. Do you see how small things add up fast in restaurants?

We have a client, an area manager; that inspects his restaurant’s every month. He was spending an hour per inspection transcribing notes and scoring the inspection; we have found this to be a pretty common measure in transcribing inspections.

Because he conducts 16 inspections a month, that hour is actually two days a month of busy work or 24 days a year, at a cost to his company of $5,352 per year. With our system, he was able to save that hour. Imagine what you could do with an extra 24 days a year to focus on important stuff that drives sales and increases guest satisfaction.

Calculate how much your company is spending on you to do busy work by clicking here and using our Busy Work Calculator.

Spending at Restaurants Tops Grocery Stores for First Time

For the first time since the commerce department started tracking this stat in 1992 consumers have been spending more in restaurants than they have in grocery stores. This happened in March of this year. Again more promising news for the restaurant industry. sites that “experts” believe it’s a combination of the sign of consumer confidence and a sign of the times.

According to the article today’s busy lifestyle is a driving factor and “takeout, drive-throughs and other quick and easy meals are driving growth for the industry”. Here are a few other interesting points in the article:

  • Millennials are going out more often and restaurants are catering to their likes and dislikes
  • Millennials represent 23 percent of total restaurant spending
  • NPD Group says that baby boomers also would rather eat out and that the industry is missing the boat on them as they aren’t spending as much effort on their wants
  • The cost of restaurant meals are rising faster than in home meals

I have copied the full article below:

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What’s for dinner tonight? You’re more likely to find the answer on a restaurant menu than you are on your grocery shopping list.

New government figures show American consumers spent more at restaurants and bars in March than they did at grocery stores — the first time that’s happened since the Commerce Department began tracking in 1992.

Experts say it’s a sign of confidence in the economy — and a sign of the times. Consumers are looking for convenience, which means a lot of the industry’s growth is coming from areas other than the traditional sit-down meals. Hudson Riehle, senior vice president of research at the National Restaurant Association, says takeout, drive-throughs and other quick and easy meals are driving growth for the industry. He says “consumer usage of restaurants has become an important element of their lifestyle.”

Younger millennials, those 18 to 28 years old, are going out more often, and restaurants are increasingly catering to their likes and dislikes. According to the market research firm NPD Group, millennials represent 23 percent of total restaurant spending. However, that’s still below their spending level in 2007, just before the Great Recession began.

At the same time, baby boomers have the means and the time to enjoy eating meals that someone else prepares for them. And NPD says many restaurant operators aren’t paying enough attention to this group.

Empty Nesters Enjoy Eating Out

Carol Macknin says she and husband Alan are eating out more. ” Most of it is spur of the moment. We don’t have the kids to worry about any more. As a result, we don’t spend as much.” The couple, with four grown children, recently moved from the suburbs into downtown Philadelphia. She says both factors give them the feeling of having “a new-found freedom.”

Whoever is doing the ordering, young or old, restaurants are becoming an increasingly important sector of the economy. The National Restaurant Association says industry-wide sales this year are projected to total a record high $709 billion, up nearly 4 percent from 2014. There are 1 million restaurants nationwide, accounting for 14 million jobs, representing about 10 percent of the U.S. workforce. And even though the big chains get most of the media attention, about 7 in 10 restaurants are single-unit operations, according to the association.

The cost of restaurant meals (averaging $6.96 last year) are rising faster than the cost of in-home meals ($2.24), the NPD Group says. NPD also notes that even though we are spending more of our food budget on restaurants, four out of five meals come from food bought for the home.

There is one important asterisk about the trend, as Bloomberg notes. The government figures on grocery stores don’t count stores such as Walmart (WMT), Target (TGT) and Costco (COST). Instead, they are considered “general merchandise retailers,” even though they account for an ever-increasing proportion of food sales.

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Not Going Paperless Costs Money Too

It was 4:30pm on a typical weekday around our house and we had no idea what we were going to have for dinner. So my wife decided to go online and order Garbanzo. Garbanzo is a Colorado chain; they are like the Chipotle of Middle Eastern food. They make their pita bread fresh to order and their falafels are delicious. She placed the order and I went to pick it up.

When I arrived they had our digital order printed out, like most restaurants they only have a desktop in the back office, so they have to print out the online orders. Websites are hard to print from in general, and their printer was low in ink, the order page was very hard to read.


The order being hard to read caused them to make one of our plates wrong and when they realized it they tossed it in the trash. The manager was viewing the order on his smartphone telling the cook what to make on the second go around.

The entree’s price is $7.49 assume a 25% food cost and that is $1.87 of food that was wasted. I think it is fair to say the paper bowl and labor cost of the manager and the cook cost .13 cents, and we are looking at a $2.00 loss. Assume that happens once a day at their 25 locations, and that is an annual cost of $18,200.

I get that purchasing tablets and cloud apps cost money, money that restaurants aren’t necessarily used to paying. Don’t believe for a second that restaurants aren’t incurring other costs today by not going paperless or investing in technology.

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.


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.


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.


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.


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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