I heard an ad on the radio today for Subway’s new app. It’s another app aimed at making the dining/user experience better at Subway. There are a ton of apps being developed in the industry right now in this space. Interacting with the customers in a digital way to make things quicker and easier thus being able to cut down on labor costs.
At this point I think most people, in the US, know Subway. They are everywhere; the radio, TV, billboards, internet, unfortunately the news, and basically every single strip mall. I can’t imagine that they are still acquiring new customers at this point. It’s at the point now where people either go to Subway or they don’t. Fortunately for them a lot of people go.
Some people may go only in specific circumstances and others it’s a staple. For me it’s a convenience circumstance. There’s one right around the corner so if we’re in a rush we’ll just go to Subway. But if I have some time and really want a sandwich I’m probably going to go somewhere else for “a better” sandwich in my opinion. Not saying that it’s bad, just that I like other places better. I’m more of a deli kind of guy.
With as much market penetration as Subway has it would make sense for them to develop an app that works on getting their current customers through the line faster vs an app that is trying to capture new customers. Their pitch is that you order online and then walk in and go right to the register and pay vs. waiting in the line to go through the sandwich making process. I’m going to download the app. It makes sense for any restaurant really for take out to have an app because the last thing you want is for someone to walk through the door and leave because the line was too long. We all know how much it costs to acquire a customer and you want to capitalize once you do.
There’s also another huge benefit to the app that they aren’t necessarily advertising and that is the data aspect. These days data is everything. When you order online they know exactly who you are and what you have ordered every single time. They will start to see what you like, what your average spend is, and start ranking you as a customer in terms of how profitable you are to them. This is where they can start getting creative with targeted ads directly to you for things that they know you like vs. traditional shotgun approach marketing where you throw something out there to everyone and try to appeal to the most people. By using the data they can now market directly to me deals on turkey sandwiches. But they may not waste much money on me because I rarely get the “meal deal” so they aren’t bringing in much profit on me.
Data is at the root of most business decisions and actions. If you are interested in restaurant data, specifically operations data, check out the video below.
Read an article today on Blue MauMau regarding the decline in the number of restaurant units over the past year. Independent restaurants are the culprit as chain restaurants saw growth in the number of units over the same period.
It seems to be getting tougher and tougher on the independent restaurant operators to compete these days especially with the fast casual explosion. A number of factors are at play here from having the resources available to implement technology, economies of scale on ingredient costs, national/regional marketing, families seem to be “busier” hence the fast casual concepts are doing well vs. full service etc. Most of the new laws around the Affordable Care Act tend to only be applicable to chains, but the minimum wage hikes affect all businesses. All in all I don’t see it getting any easier for independents to compete.
Here are some of the highlights from the article:
- Total U.S. restaurant outlets down by one percent to 630,511 units
- Fast casual chain units increased by 7 percent
- Full service independent units were down 3 percent while quick service independent units remained stable
- Visits to total restaurants were flat in the year ending May 2015 compared to same period prior year
- Over a five year period, traffic has declined by 3 percent at quick service hamburger chain restaurants and at midscale/family dining restaurants (includes hotel midscale restaurants), respectively, and by 2 percent at independent restaurants
I have copied the full article below:
CHICAGO ─ According to a recent survey, the number of independent restaurant outlets in the United States dropped by three percent compared to a year ago. That shrinkage brought total U.S. restaurant outlets down by one percent to 630,511 units. The total restaurant count decrease was offset by a one percent increase in chain restaurant units. Fast casual chain units increased by 7 percent, based on NPD’s Spring 2015 census of U.S. commercial restaurant locations compiled in the spring and fall each year, which includes restaurants open as of March 31, 2015.
The drop in independent restaurants was concentrated in the full service segment, which includes casual dining, midscale/family dining, and fine dining. Full service independent units were down 3 percent while quick service independent units remained stable.
The overall decline in restaurant counts is a reflection of the stalled traffic growth experienced by the foodservice industry over the past several years. Independent traffic, quick service hamburger, and full service restaurant visit declines, particularly at midscale/family dining restaurants, are contributing to industry traffic not growing. Visits to total restaurants were flat in the year ending May 2015 compared to same period prior year, according to NPD’s ongoing foodservice market research, CREST. Over a five year period, traffic has declined by 3 percent at quick service hamburger chain restaurants and at midscale/family dining restaurants (includes hotel midscale restaurants), respectively, and by 2 percent at independent restaurants. Quick service restaurants, which represent 79 percent of total industry traffic, were up 1 percent and casual dining restaurants were flat after several years of decline in the year ending May 2015 period compared to year ago.
“It’s a tough road for independent restaurants particularly in a down or even ‘soft’ economic climate,” said Greg Starzynski, director- product management, NPD Foodservice. “Independent operators do not have the resources of a chain to sustain themselves in slower times.”
I would like to thank Chef Russell Furdell from Chef Resources for sending me this Slate.com article on GMO’s. We usually like to cut and paste these types of articles so you can just read them here, but this one is so long and has so many pictures that it wasn’t going to look good.
Here is the URL to the original article: Unhealthy Fixation: The war against genetically modified organisms is full of fearmongering, errors, and fraud. Labeling them will not make you safer.
I feel like the case on GMO’s is similar to other modern issues, global warming, that have become so politicized that it’s hard to find the truth.
I thought the article was informative, it cited scientific studies and did a nice job of showing the history of GMO’s. It is a long article, but I think it worth a read.
I had the opportunity in 2002 to go through hospitality and customer service training similar to what the Ritz Carlton organization uses. This program was implemented at one of the premier shopping malls in the country, The Grove in Los Angeles. I was a Concierge Services Manager at the mall. Our concierge team was so good that we won the 2002 Wall Street Journal Battle of the Concierges. We beat the W Hotel in San Francisco and the Ritz in NYC.
- Intense customer service training before new employees interact with guests.
- Wallet card with customer service guidelines on it.
- Memorization of customer service guidelines.
- Customer service test, must pass before assuming position.
- Daily Pre-shift Meeting for all employees including managers.
- Customer Service Tenant
- This is one of 10 to 15 customer service tenants that you train and hold your team responsible for implementing.
- Quick explanation of the service tenant as a story.
- Make the story relatable and short.
- Team member Experience
- A team member shares a real life experience where they discuss a time when they gave or received service highlighted in the service tenant.
- How did that make them or the guest feel?
- Important shift Information
- 86’d items
- Quote or Joke of the day
- Share a quote or joke of the day.
- Make sure joke is appropriate for your audience.
- Shift contest
- Every shift you should run a contest to motivate the team and you reward the winners with a meal, or credit, or post shift drink, etc.
- You can run longer contests, like bottles of wine in a month but you really have to work to keep the team motivated and the prize has to be a lot bigger. Sometimes distributors will provide the prize.
- Serving guests can become monotonous, use contest to motivate your team and to focus them on high contribution margin or items that are nearing expiration. By using contests to move these types of products you can lower waste and increase profits.
- When I worked at Changs over a decade ago the food cost on Chicken Lettuce Wraps was $.39 an order and they sold for $6.95. Chicken Lettuce Wraps had a 6% food cost. Don’t you want to be incenting your servers to sell items that have high contribution margins?
- Make sure you announce the winner of last shift’s contest at the next Pre-shift meeting.
- Examples of server games:
- Server Bingo
- Ticket times contests
- Food or drink Item contest
- Compliment contests
- Comment card contests
- Every shift you should run a contest to motivate the team and you reward the winners with a meal, or credit, or post shift drink, etc.
This past week or so we have seen a lot in the news about Restaurant CEO’s speaking out on the $15 minimum wage push. The one that got the most press was Nigel Travis of Dunkin’ Brands, calling it “outrageous”.
CNN Money posted an article today on the subject with thoughts from Sally Smith of Buffalo Wild Wings. Here are some of the highlights from the article. We’ll post the full article below as well.
- Smith feels that $15/hr will hurt teens the most as she feels that is too much to pay an inexperienced worker and that more seasoned candidates will start applying for fast food jobs at that rate.
- She also echoed the sentiment that the whole industry has been touting in that the restaurant industry has always been an avenue for teens to enter the workforce and gain valuable, entry level work skills.
- Teen unemployment is currently at 18.1%, down from 20.7% a year ago, but it’s started to tick higher again in recent months.
- BWW reported a more than 20% rise in labor costs in their 2nd quarter earnings report, but didn’t have a negative affect on the stock price which rose 10% today on strong sales outlook. Sales don’t guarantee profits however.
- Smith doesn’t feel like companies will cut back on hiring as they will just raise prices, but again thinks most will hire more seasoned talent over teens at $15/hr.
- Panera also saw a 10% spike in share price despite a 13% increase in labor cost last quarter.
From the article it seems that almost all chains have a strong sales outlook, except for McDonald’s who are still struggling. It’s going to take some time for them to turn it around.
Are Smith’s thoughts around hiring more experienced workers at $15/hr vs. teens in line with your operations? We’d love to hear how you are preparing for the future.
I have copied the full article below:
Fast food workers are clamoring for a higher minimum wage. But the CEO of one big restaurant chain worries that boosting the minimum wage to $15 an hour could hurt teens looking for their first job.
Sally Smith, the CEO of Buffalo Wild Wings (BWLD), told CNNMoney Wednesday that her company and other restaurants may not want to hire teens for $15 an hour because that’s too much to pay for an inexperienced worker.
“It’s important to remind people that the restaurant industry trains a lot of people. Restaurants are often where a person gets their first job. They get it in high school or college,” Smith said. “So a $15 minimum wage could have an impact on youth employment.”
Buffalo Wild Wings isn’t actually on the list of 116 companies that would be affected by New York State’s proposal to raise the minimum wage for fast food workers to $15 an hour.
But laws to make $15 the minimum wage for all workers have passed in Seattle, San Francisco and Los Angeles. So higher wages are a reality for all restaurant companies.
Buffalo Wild Wings said in its second quarter earnings report Tuesday that labor costs rose more than 20%.
Smith said that some Buffalo Wild Wings franchises already refuse to hire anyone under the age of 21. One reason is because the chain serves beer. But Smith said the bigger factor is that franchisees can save money by hiring older workers who don’t need as much training.
“It may be hard to justify hiring a 16-year old for $15 an hour when you get can get experienced people,” Smith said.
That could be bad news for teens, who already have an unemployment rate of 18.1% according to the government. The teen unemployment rate is down from 20.7% a year ago, but it’s started to tick higher again in recent months.
Many restaurant CEOs are speaking out about higher minimum wages.
Dunkin’ Brands (DNKN) CEO Nigel Travis told CNN”s Poppy Harlow last week that $15 an hour was “outrageous.” McDonald’s (MCD) CEO Steve Easterbrook told investors that many franchisees are nervous.
Still, Smith did not think that a $15 minimum wage would necessarily cause companies to cut back on hiring.
In fact, she thinks that even more older workers may apply for fast food jobs if rates go as high as $15. That would make it even tougher for teens looking for fast food work.
Smith added that big restaurant owners should be able to offset some of the higher labor costs by raising menu prices. There are also ways to make the restaurants more efficient.
Buffalo Wild Wings, for example, lets many customers order with tablets. Smith said the company is looking to have all of its servers use handheld devices that would let customers quickly pay at their table.
Wall Street doesn’t seem too concerned about higher wages hurting profits for the top chains either. Buffalo Wild Wings shares surged 10% Wednesday thanks to a strong sales outlook.
Shares of another fast casual chain, Panera (PNRA), soared nearly 10% thanks to bullish sales forecasts for the third quarter, even though the chain has also had to deal with rising wage costs. Labor expenses rose 13% in the second quarter.
So it looks like successful companies — places where consumers actually want to go eat — will adjust to the fact that their workers may soon make more money.
To that end, Starbucks (SBUX), Dunkin’ Brands and Chipotle (CMG) all reported strong earnings and sales last week — despite increasing labor costs.
But McDonald’s (MCD) continues to struggle as it grapples with issues much bigger than worker pay.
CNNMoney (New York) July 29, 2015: 11:42 AM ET
I caught an article on Hospitality Technology talking about restaurants using data to make hiring decisions. The article, Hiring Seasonal Millennials: How Restaurants Can Rely on Big Data to Build a Better Workforce, suggests rather than the traditional hiring methods of scanning resumes and gut instinct that restaurant managers should look to data to take the guess work out of hiring the best person for the job.
Talent science as the refer to is the idea of copying the behavior traits of your best employees and trying to match that in the labor pool market. Most managers have said something to the effect of “I wish I could clone Bobby”. Cloning isn’t there yet so the next best thing could be using data to find employees most similar to Bobby. This is accomplished through assessments. Have all employees, or at least your best ones, take an assessment that will measure their drive, integrity, work ethic, etc. and then offer the same assessment to potential new employees. Talent science then says pick the candidates who score most closely with your highest performing employees.
The article talks about using this for temporary summer employment citing the following stats:
- More than 40 percent of restaurant employees fell between the ages of 16 and 24 in 2013
- The industry will employ a projected 1.8 million more people than it did ten years ago
- The restaurant industry was a primary source of employment for millennials who sought to obtain summer jobs this year
This practice does require some upfront leg work in that you need to assess your current employees in order to get the baseline. But then in theory you essentially eliminate the application/resume screening process because you have them take an online assessment and then wait for the results. You’ll of course want to interview them to make sure that they are presentable, but the assessment should capture most of what you need.
Just another area where data is helping companies make better decisions. Data is being used everywhere for everything.
I have copied the full article below:
Did you get the restaurant help you were hoping for this summer? Did you rely on your gut to put it together? There’s a better way–namely, in Talent Science–perhaps to approach this year’s holiday help, and certainly in time for next summer’s workforce.
More than 40 percent of restaurant employees fell between the ages of 16 and 24 in 2013, according to the National Restaurant Association’s 2015 Restaurant Industry Forecast, meaning that a large number of its employees are also likely high school or college students. Restaurant sales are anticipated to “hit a record high in 2015” in response to economic improvements, which will allow the industry to employ a projected 1.8 million more people than it did ten years ago.
Based on this analysis, it is logical to conclude that the restaurant industry was a primary source of employment for millennials who sought to obtain summer jobs this year. Most hiring managers selected and trained their summer workforce utilizing traditional resume scanning and “gut instinct” screening methods. However, these restaurant organizations may already be discovering that some of the millennials employed in such positions as hostesses, waiters and line cooks are not as good of a fit as they originally hoped. If decision-makers had looked to technology as a primary resource for pinpointing the best applicants, more effective methods could have been utilized to help create a successful summer employee base.
In industries where the most impactful factors on revenue are service and customer experience, the commitment level and effectiveness of employees plays a crucial role in an organization’s success. When considering an applicant for a job, it is easy to evaluate their skills and past work experience utilizing the usual interview methods. While certainly important, these techniques do not provide visibility into the individual’s core behavioral attributes, which are the most reliable predictors of their potential success. Talent science technology offers an innovative option to help restaurant decision-makers assess these traits to better select candidates for each unique role.
Talent science utilizes a combination of big data, analytics and performance metrics to make hiring recommendations that take the guess-work out of selecting the right applicant. Restaurant organizations first evaluate the existing employee base to draw parallels between certain behavioral, cognitive and cultural characteristics and superior performance in a particular position. Then, all future applicants complete the same assessment, and results are compared to automatically identify the best fit candidates. This allows hiring managers to weed out any potential high-risk applicants before the interview process even begins, narrowing it down to the select few that the technology deems a good match for both the organization’s culture and the daily requirements of the job.
By filling open positions with employees that are most likely to succeed in a given role based on their unique behavioral attributes, restaurant organizations stand to experience benefits in two different capacities. Primarily, talent science allows organizations to save time and money by reducing employee turnover. By correctly matching the right person with the right position from the onset, managers will not waste resources repeatedly filling the same positions. Increasing employee retention also helps to generate cost savings, as replacing an employee is equally as taxing on an organization’s monetary resources.
Investing in the right people also allows restaurants to provide an exceptional dining experience for patrons. In this increasingly competitive industry, even the best food will not keep a restaurant organization profitable if the service is sub-par. Each interaction with a customer impacts their brand loyalty and the likelihood that they will return, and with a higher performing workforce, companies are positioned to provide this superior level of service. Patron satisfaction also has a direct impact on revenue, so establishing a reputation for excellence will help to attract new customers and promote repeat business, ultimately leading to larger profits.
With total employment in the restaurant industry projected to hit 15.7 million by 2025, according to the same forecast from the National Restaurant Association, it is likely that restaurants will continue to be a major source of employment for millennials over the next decade. Hiring managers have an opportunity to utilize this year’s summer workforce to gather data on who performed best, thereby establishing a benchmark for hiring during the next summer season. If restaurant organizations discover that a particularly efficient summer staff is in place, a similar approach can be taken with talent science to identify desirable behavioral characteristics for year-round staffing.
Next year, instead of simply choosing the first students who inquire about open positions for the summer, hiring managers can rely on big data and analytics to make decisions that are based on predictive models. This will ensure that the right people are selected for the right positions, helping restaurant organizations to create a top performing workforce that will keep customers coming back long after the summer months have ended.
The insights above were provided by Infor Software Solutions, specialists in Talent Science.
The NRA posted this article today where Dunkin’ Brands CEO Nigel Travis was critical of NY State lawmakers. Below are excerpts and you can view the entire article by clicking here.
- Dunkin’ Brands Group Inc. CEO Nigel Travis criticized New York State lawmakers Thursday for “choosing to skirt the legislative process” by appointing a wage board to decide on increases to the minimum wage.
- On Wednesday, the New York Fast Food Wage Board voted to recommend a phased-in increase of the minimum wage to $15 per hour at limited-service restaurants with more than 30 units by 2018 in New York City, and by 2021 for the rest of the state. The three-member wage panel will make its recommendation to the state labor commissioner after a 15-day comment period.
- The wage board’s resolutions defined “fast food” restaurants as those where customers order and pay before dining, that offer limited service and are part of chain or franchise with 30 or more outlets nationally.
- In a call with Wall Street analysts following Dunkin’ Brands’ report of earnings for the second quarter ended June 27, Travis said franchise operators were “denied the chance to fairly express their concerns so the state could make an informed decision on this topic.”
- The wage board, appointed in May by New York Gov. Andrew M. Cuomo, “didn’t even include a representative from our industry,” Travis said.
- “Most concerning to us was that the fast-food industry was singled out for this increase,” Travis said. “The regulation also targeted franchise businesses and it does not acknowledge that, just because our franchisees share a common brand, they themselves are small business people to whom every increase in business expenses can have an impact.”
- “We would have been happy to have been part of working with the governor and the legislature on finding a solution to address this concern of low-wage earners, while simultaneously protecting small business, but we were not given that chance,” he said.
- Franchisees will likely raise menu prices as a result, Travis said, but the company will work with its operators to help them improve profitability and efficiency.
For the most part Travis is saying that they are disappointed that the restaurant industry wasn’t represented during the planning/negotiation process. It’s a big jolt to the industry, but destined to happen sooner than later anyway.
In yesterday’s post, Operations Data Use Cases. We discussed two Ops Data use cases and how Ops Data could be used to make better decisions, drive better operations, and run more profitable restaurants. In Today’s blog post, we are going to discuss one more use case and draw some conclusions.
Do you check that your different kitchen stations are stocked and that there is enough thawed product to meet your pars every shift? More importantly do you track that metric so you refer can back to it when looking at sales. Have you ever considered how much longer it takes to cook a frozen burger patty than a thawed patty? I’ve heard that it can take up 50% longer to cook a frozen patty vs. thawed patty. That is the difference between 4 minutes and 6 minutes per patty. If you were to cook a case of burgers one after the other, the frozen patties would take 80 minutes longer to cook than the thawed patties.
Ensuring that your line is stocked every shift with thawed product is massively important. A 50% increase in cook times on a key item like burgers can be the difference between getting a third turn at lunch and having a second turn just sort of fade out.
When you are looking at lunch sales for weeks or months at a time, and you can’t understand why on certain days your sales dip; what else do you look at today? If you track operations data, you can merge your sales data with other data to try and uncover what may be the cause.
We had a client that determined that on Wednesday’s they always had a dip in sales, they served a ton of burgers at this bar, and they got their food deliveries on Tuesdays. A lot of the time they coasted into Wednesday lunch with 1/2 their burger par for the shift still frozen which killed their ticket times and their 3rd turn. It wasn’t until they merged their checklists with their sales and looked at them by days of the week that this reality showed up.
The amazing thing was how easy it was to fix. They worked with their suppliers to increase the number of thawed burger cases they received and instructed their cooks to ensure that they had enough frozen patties thawing to cover Wednesday dinner and Thursday. They got their sales on Wednesdays to match or exceed their Tuesday sales, and it didn’t cost them anything but a few minutes of looking at their Ops Data.
Using digital checklists to track your operations data can provide context for your sales numbers. Remeber, Operations Drive Sales – Sales don’t drive Operations. Plus well-written checklists guide your managers to look at the most important items of your operations every day. Digital checklists aren’t going to solve the world’s problems but they are going to help you run better operations. If you would like to learn more about our SMART Inspection philosophy and what kinds of questions you should be asking you should sign up for our weekly webinar here.