Tag : employee motivation

HomePosts Tagged "employee motivation"

Why Getting Rid of Tipping in Full Service Restaurants is Stupid

Chef Instructing Trainee In Restaurant Kitchen

Full-service restaurants are unique in American business in that the incentive systems for service employees are perfectly aligned with the goals of the business.

It is an amazing sight to see employees working to benefit themselves and simultaneously benefitting the owners and managers of the establishment. Allow me to explain.

Servers in restaurants make a small minimum wage, mostly for taxes, and tips. Those tips are a percentage of their sales and that percentage in my experience can range from 10 to 30%. I was a really good server, and when I was on, I could easily make 30% per table, though 20% is the norm and occasionally you would get less than that.

Screenshot 2015-08-09 08.41.41

When a server is compensated by tips, they are driven by their personal benefit to provide great service to their guests in the hopes of making a higher tip percentage. Maximizing the servers personal revenue per shift and the ROI for their time.

The servers are also incentivized to make recommendations and to upsell their guests to enhance the guests experience and to get the maximum check value on each table. In my experience if you sell the table too much food or super expensive items that they weren’t expecting it can hurt your tip percentage as the guest feels that they have been taken advantage of or scammed.

Servers also get paid on volume. Meaning that a server on a busy shift wants to turn each table as many times as they can without rushing their guests out of the restaurant. Once again there is a fine line between pushing someone out the door, which if the guest feels rushed could affect the server’s tip percentage vs. being very efficient at delivering the check and processing payment so the guest leaves and the server can get another party at that table.

To sum up servers are incentivized to deliver great service, to maximize check value without going overboard, and to move customers in and out of the restaurant as quickly as the guest allows. When servers work toward these incentives, they maximize their earnings for that shift.

The restaurant owners benefit from servers that take great care of guests, increase sales by upselling, and move guests efficiently through the restaurant maximizing throughput and sales each meal period.

Both groups incentives are properly aligned with each other, and they both win and lose together.

Another point that needs to be made is that both teams lose together as well.

If servers provide horrible service and guests stop coming both the servers and owners of the restaurant will suffer. The owners will suffer more as the servers will eventually leave and the owners will be stuck with a business that has become known for bad service.

If the owners don’t do a good job of delivering a great product the servers and the owners will suffer because people won’t come to the restaurant, sales will be down, and the servers won’t make as much money.

In this relationship the servers and owners once again are linked at the hip.

There are other employees in the restaurant that are directly compensated off of the servers earnings. Bussers, bartenders, food runners, and sometimes hosts are all affected by server tips. When I was a waiter at P.F. Chang’s this is how we distributed our tips:

Total tips for night $200:

  • Busser: 15 to 20% or $40 – a busser usually served 2 to 3 servers, and I always tipped 20% because a busser can bury a server, or make it hard for the server to turn tables. It was important to me to make sure that I took care of my busser.
  • Food Runner: 10% or $20
  • Bartender: 1% Sales or $10
  • Bartenders and food runners, if there are more than one working, pool their tips from the servers and distribute amongst the team that was working that shift and are paid a higher minimum wage.

A lot of these cities are proposing a $15 minimum wage and getting rid of tips. When I was working as a server on a good Friday night, I planned on making $120 to $140 net in 5 to 6 hours. At $15 an hour and a 6-hour shift you are making $40 less a shift than you would have been if you were working for tips.

I’ve read an article that we blogged about in the spring that was pro no tips where the servers said they liked the paycheck but that they were making less money. I don’t know of a great server that would trade working for tips for an hourly wage because they know that they will make less money.

Another argument that is being put forth by people who don’t like tips is in regards to BOH staff: cooks, dishwashers, prep cooks, etc..

These are completely different jobs and have different risk levels and different rewards. A cook is guaranteed a higher base wage each hour of each shift. A cook gets paid their full wages for the hours they work if the restaurant is slow or busy. Therefore, a cook or BOH employee assumes no risk or variance in their wages shifts to shift.

An FOH staff member: server, busser, a bartender is completely dependent upon the level of business and their service for tips. The FOH staff assumes a large amount of personal risk and opportunity cost each day that they go to work.

I can’t tell you how many times I was sent home early because the restaurant wasn’t busy. Each shift the restaurant staffs themselves anticipating being very busy and if the business isn’t there the manager’s cut staff and send people home early.

What is amazing about sending people home early is that it isn’t looked at as a bad thing by most restaurant employees. I would say that schedule flexibility is one of the main reasons people chose to work in the hospitality industry.

Managers ask the staff who would like to go home early, and there are usually volunteers who have something else they want to do and they leave and the people who need money stay.

In my experience if you get cut and sent home early too often you will probably go and look for another job at a different restaurant.

The argument that BOH employees aren’t treated fairly because of tipping is wrong. Salary is based on upon risk and reward and in my experience working in both the BOH and FOH it isn’t an issue for the employees working those jobs.

Also, we live in a free country, and we are all employed at will, nobody is forced to work anywhere or in any position people choose their jobs and employees and can quit at any time.

What happens if we get rid of tipping across the board?

When you work for an hourly wage, your incentives change and, therefore, your behavior will change as well.

In the examples above we discussed how servers are incentivized to take great care of their guests because that level of service will influence their tip percentage. That incentive no longer exists because the level of personal service you give doesn’t directly affect your wages.

You can make the case that a bad server who gives bad service will eventually be fired.

We discussed how servers were incentivized to upsell and make recommendations to increase the check to a level that will enhance the customers experience without going overboard. That incentive is now gone because the one thing that we didn’t mention earlier is that upselling and making recommendations requires more work of the server.  The server has to think, react, ask questions, put themselves out there if the recommendation isn’t liked, deliver more food, and do more work.  It is much easier to be an order taker and not do any of that stuff.

On an hourly wage system, you are not incentivized to do more work. Hourly workers that don’t get compensated by output are incentivized to do the least amount of work per hour.  An example: why would you go through the hassle of selling a bottle of wine, presenting it, opening it, letting the guest taste it, and then serving it if it doesn’t directly enhance your bottom line.  If a server is in the rush and they have to do a wine service it can take a couple of minutes and can throw them deeper into the weeds.  Why tipped servers sell bottles of wine today is because a $30 bottle can enhance your tips by 5 to $6 dollars for that table.

Enjoy these excerpt from Office Space the Movie

Peter Gibbons: The thing is, Bob, it’s not that I’m lazy, it’s that I just don’t care.
Bob Porter: Don’t… don’t care?
Peter Gibbons: It’s a problem of motivation, all right? Now if I work my ass off and Initech ships a few extra units, I don’t see another dime, so where’s the motivation?

Finally, we discussed that servers working for tips are incentivized to turn tables quickly to maximize their tips per shift. This incentive is removed as turning tables is once again more work for a server with no reward. The server that is paid an hourly wage only incentive is to stay on the clock as long as possible per shift to maximize their personal revenue.

If you think that I’m making this stuff up, or I’m overly dramatic, eat at a restaurant in France or any other country where the service staff is paid hourly and not by tips. There is a reason that French waiters are stereotyped for horrible service it is because they majority of them deliver horrible service. The service in other countries doesn’t compare to the level of service that we get every day in the America.  Check out this blog from a Frenchman about service.

These are my predictions for the industry if we move to no tipping policies:

  1. Restaurant owners that move to a no tipping policy will make less money than they did when they had employees that were compensated with tips.
  2. Servers who work for an hourly wage will make less money than they did when they worked for tips.
  3. Full-service restaurants that are less expensive will have a harder time with no tips than more expensive fine dining restaurants because they are more dependent on volume than price premium.
  4. Americans will enjoy worse service in restaurants that don’t have tips then they will in restaurants where tipping is still the norm.

At the end of the day, the American full-service restaurant is a highly successful social experiment that demonstrates that when you have alignment of incentives and goals employees and ownership can win together.

One last thought:  why do you get better service at Nordstroms then Macy’s when the job is exactly the same?  My guess is that the Nordstrom employee gets a % of their sales.

How to Drive Consistent Daily Execution

There are two ways that you can drive consistent daily execution in your operations:

  1. You can nag and set reminders for your staff to do things, basically micromanage every aspect of your operations.
  2. You can hire and train the right staff then integrate them into the operations, teach them why you do certain things and their importance to the success of the business.

Number 1 will work, but there are a plethora of problems associated to this management style. First off it’s annoying to have to be that manager. You don’t want to be a babysitter. The employees hate it because they don’t feel empowered.  This is the farthest from mutually beneficial as it gets and you will wind up with very high turnover.

Also before too long the nagging and reminders just become background noise that gets tuned out. The manager will get yes’d to death and employees will just start telling them what they want to hear, but in the end the bare minimum gets accomplished to keep their job.

Recently I was backing out of my garage and hit a car that was parked in my driveway. In my defense there’s very rarely a car parked in my driveway, but it still shouldn’t have happened because I have a backup camera and sensors that beep when I get close to things.

So why did this happen still with all these warnings/reminders telling me that something was in my way? I had trained my brain to tune out the sensors beeping when I pull out of my garage because they go off every single time I pull out of the garage.

When I go through the garage door jamb it goes off because I’m close enough. Then right outside the door on the driver’s side there’s a large shrub that sets off the sensors and then when I get towards the back of my driveway my neighbor’s bushes set them off. So it has just become noise to me that I tune out because they have “cried wolf” so many times. So now my brain ignores the sensors when I pull my car out of my garage. This will happen to any requests or tasks that have no perceived value to the person that’s supposed to act on these requests/reminders/tasks.

Now with number 2 you will develop a reliable, consistent team that executes every shift because it’s second nature to them and they feel that the required tasks are meaningful and contribute to the overall success of the business. As a manager rather than nagging or reminding them to perform pre-shift inspections or line checks, you instead train and explain to them the importance of performing the tasks. Then you follow up that they are getting done. In other words you inspect what you expect.

If they aren’t getting done then you have a training opportunity where you give feedback and again explain the importance of these checks. Show them that you are using the data drive business decisions that will make the operations better and more profitable which will show in their bonus. If you keep having this discussion you should probably find a new manager.

This is where an automated checklist/inspection platform is so valuable. You now have time/date/user stamped audit trail of when checks were started and completed and by whom. You can access the data from anywhere without having to ask someone to send it to you. You can now manage by exception and spend the bulk of your time with the locations/managers that need you the most. Over time you will be able to draw correlations between your best and poorest performing locations. Now you use that data to drive decisions to run better operations and increase profits.

Click here to learn more about how OpsAnalitica helps our clients across the country automate their checklists/inspections and run better operations.

Is Tipping Near Extinction?

I’ve noticed a ton of press recently about restaurants going moving to an all inclusive menu or no tipping policy. Back in February we posted a blog, Time to End Tips?, on the topic and it got heated to say the least in the comments and on our social media channels. Click here to read that blog.

It’s now 7 months later and a lot of the changes mentioned in the original blog are starting to happen. ie minimum wage increases are being implemented in cities all over the country. The Affordable Care Act isn’t going anywhere either.

It seems that most of the restaurants that are testing out the no tipping policies tend to be on the higher end as far as price. Haven’t seen anything on a low to mid tier full service restaurant trying it out yet. This is probably due to the fact that a price increase can be absorbed easier at the higher end establishments.

There are a couple of different scenarios I’ve read about:

  1. Just a blatant price increase and explaining that the gratuity is included in the price
  2. An added service charge of 18-20% added to the bill. This is essentially an auto gratuity that in the past was typically reserved for large parties
  3. In both those scenarios they are paying their servers anywhere from $15-$25/hr

Some of the feedback from the restaurant owners/managers seem to be similar:

  • Most would like to do away with tipping because of the government mandated paperwork that is required for reporting. Would certainly make their lives easier from a bookkeeping standpoint.
  • They feel they can more “fairly” distribute money between the BOH and FOH if a “service charge” were added to every check
  • I saw one scenario where they added an 18% service charge, but that wasn’t enough so they bumped it up to 20% and still had to dip into owners profits to cover the additional costs for labor
  • A few tried it, but the backlash from the customers forced them to change back. The perception was that they were too expensive even though when you include a tip at the end it would be the same. But when you go to your favorite restaurant and the filet was $35 last time and now it’s $42, in your mind that’s a big jump and I don’t think you automatically make the connection that you aren’t tipping.
  • In one scenario they had to keep the tip line on the check even though they explained that tip was included because some customers complained that they couldn’t leave a tip even if they wanted to, unless it was cash of course.

In the near term it’s going to hit the industry pretty hard, but over time the market will correct itself this new way will become the norm. A big issue with the no tipping policy is that server goals and the operator goals are not aligned.

When servers make basically all their money on tips it’s in their best interest to provide great service and serve as many guests as possible while doing so. This aligns perfectly with the operators goals. But when the server is paid a straight hourly wage regardless of how many guests they serve or how good/bad the service there’s no incentive to do otherwise.

Why try to get another table turn in before your shift ends? It’s a lot easier if your tables camp and all you have to do is stay on top of water and coffee refills. If a guest is complaining that the food is taking too long there’s no reason to go to the kitchen and hound the expo for their food. Why deal with it? This does not align well with the operators goals at all.

Now that is assuming that the industry shifts in this new direction while management keeps managing to the old way. There’s going to have to be fundamental changes to managing restaurants to align the staff with the overall goals of the owner/operator. But there’s going to be a learning curve and I think that’s going to be a tough time for the industry.

Would love to hear any comments, concerns, ideas, etc.

You Are Only As Good As Your Staff

In our business, the people business, we rely heavily on our vast staff who service our customers with the same passion that we do when we’re on the front lines. 
 
Guest perception will make or break your business. You need to make sure that each and every customer interaction is at it’s highest level of service. You can have the best food on the planet, but if your service is sub par or your staff is disengaged you will lose business. You have worked very hard and spent a lot of money to get customers in the door, now you need to make sure they keep coming back. The way to do that is with good food and exceptional service. 
 
Customers will rave about the food only if they had a good dining experience. The last impression customers have typically is paying/tipping and then the host saying good bye on the way out of the restaurant. You want to make sure that those are lasting impressions. 
The best way to do this is to make sure that your staff is motivated and enjoy working at your restaurant.
 
In the spirit of this thought, and with some help from Careerbuilder, we put together a list of 5 Ways To Keep Restaurant Employees Motivated.
 
Encourage involvement.
Solicit ideas for improvements or brainstorm together on how to solve problems. Workers who feel vital to the restaurant’s success stay engaged, and their firsthand experience could provide you with fresh insight.
“We try to get the staff invested in our offering so they take more ownership in our brand strength and overall performance,” says Teri DeVito, executive vice president of the Greene Turtle.
For example, the company’s beverage development director is looking for new adult beverages to add to the cocktail menu and is encouraging bartenders to develop and submit their signature drinks. The winning cocktail will be featured on the Greene Turtle’s next drink menu. “The bartenders really have fun with it,” DeVito says.
Share responsibility.
Foster a “we’re in this together” attitude by promoting mutual responsibility. If every action from cleaning the bathroom to cooking the food is valued as contributing to an ultimate goal, workers feel their efforts have purpose.
“In my restaurant, there was one phrase that was never allowed to be uttered by my staff or me. We never said, ‘That’s not my job.” says Danny Fisher, former co-owner of Gup’s Place restaurant. “I never asked my employees to do anything I was not willing to do or had not done myself. They were not there to serve me. They were there to serve my customers, and that’s a job we all shared.
Be clear and fair.
Inconsistency and favoritism can kill employee morale. Treat workers equally, and do things as promised so they know what’s expected. “The industry is ever-changing, which means that your rules cannot,” Fisher says. “Too often, I’ve seen good restaurants struggle because the rules are
arbitrary and ineffective.”
Offer support.
From childcare duties to class schedules, workers often have a full plate outside of the restaurant. Consideration for those responsibilities can inspire employees to go the extra mile for you. “It’s important to to create a culture where employees know you are there for them, that you care, and
that you are approachable and supportive,” says Etai Cinader, managing partner of Pounds & Ounces in New York.
Have some fun.
Organize a special event to break up monotony. A challenge to sell the most of a particular item or a community night with percentage of profits donated to charity can rejuvenate a sluggish staff.
“We have server and back-of-house incentives and contests,” DeVito says. “An example is Greene Turtle Bingo, where servers and bartenders receive cards with numbers replaced with our menu items. The staff vies to complete cards based on items their customers order, with a prize going to
the one who gets Bingo first.”
This content was provided by CareerBuilder.
– See more at: http://morestaurants.org/keep-restaurant-employees-
motivated/?utm_source=MONewsletter+07%2F30%2F2015&utm_campaign=MRA+Newsletter&utm
_medium=email#sthash.7gdtzfBE.dpuf