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OrderUp: Recap of Restaurant Operators being Duped by Silicon Valley’s Big Money

In this episode of the OrderUp Show Tommy recaps his blog on the big money that has been funneled into 3rd party delivery companies that has been used to convince restaurant operators that delivery will solve all their problems.

Well the data suggests otherwise. Take a listen below.

https://soundcloud.com/orderupshow/30-silicon-valley-big-money-is-trying-to-trick-restaurant-operators-recap

The Tight Labor Market is Causing Some Restaurant Managers to Make Poor Short-term Decisions

This is one of the most robust labor markets in the last 50 years. Typically low unemployment in the overall economy is bad for the restaurant industry because of our lower base pay and how demanding restaurant jobs are. Restaurant turnover is at 100%.

Look at these restaurant labor stats from the 7 Shifts Blog

I’ve been a manager who was constantly hiring and training, for months on end. We had very high FOH turnover and we were constantly interviewing, hiring, training, every week. It’ was exhausting. Plus it takes so much time that you aren’t able to get anything else done. All those little projects that you want to get done just get pushed aside when people don’t show up to work.

This labor market has been tight for the last couple of years and managers are starting to get worn down. They are so tired of being in this labor rat race that they are doing anything they can to keep employees happy even when their actions could be hurting the long-term viability of their restaurants.

We were recently working with a client of ours that has been on and off our checklist platform a couple of times over the last couple of years. He can’t get his people to use the platform and while we were talking with him he said. “These guys are so busy, I just don’t want to put any extra work on their plates.”

I want to break down that comment and thinking for you because it is super interesting.

  1. This was from an area director responsible for running 9 burger franchise restaurants from a national chain.
  2. By their franchise agreement they, the franchisees, are responsible for executing the chains national food safety and quality standards every day every shift. This isn’t extra Work!
  3. We load a restaurant’s paper checklists exactly as they are on paper into our platform, there is no difference other than using a mobile device vs. a pen.
  4. People view doing checklists on our platform as extra work but don’t view completing those same checklists on paper as extra work. That is because they know that their teams are pencil whipping and not doing their checklists on paper! Because of the limitations of paper they have plausible deniability, meaning they can’t be held responsible for not knowing that checklists didn’t get completed.
  5. The reason his people don’t get their stuff done is because he doesn’t hold them accountable to doing it, he views food safety checklists and ops checklists as extra work not as what they are, job aids that help managers execute safely and effectively.
  6. He doesn’t hold them accountable to using the platform because he realizes that the OpsAnalitica is very good at showing you if people are doing their checklists and that it is very good at ensuring things get done.
  7. Instead he lets them do whatever they want and pretends they are doing what they are supposed to be doing until they get caught by the chains 3rd party inspectors.

Why doesn’t he want his team to do what they are supposed to be doing to run their restaurants the way they were designed to be run. It’s because of turnover. When a manager leaves, this area manager has to replace them. It becomes more work for him and goes back to everything that I opened this blog with. It’s exhausting.

He thinks that if he is easier on these managers that they might stay longer, which there is no proof of, and he makes that trade off at the expense of his customers satisfaction, safety, and sales.

When was the last time you went to super well run and profitable restaurant and heard about them cutting corners on their procedures or not holding their teams accountable to being the best? You haven’t. Because great operators know that systems are what drives repeatable success and they hold their teams accountable to being great.

When you don’t hold people accountable to running your systems your restaurants don’t run as well. Things get missed that directly impact customer experiences and over time it is that degradation of the customer experience that drives customers away from coming to your business.

I understand that this labor market is super tough but we as an industry have to get creative about screening, recruiting, hiring, and retaining employees. What changes has your organizations made to address these issues? Are you offering more money, retention and performance bonuses, golden handcuffs like options or other perks?

I fear that restaurants are in this very expensive endless recruiting and hiring cycle that has the secondary effect of making restaurant operations less consistent. I don’t see the industry as a whole doing anything differently then they were in 1984 when I joined the industry.

Cutting your standards to keep employees is a recipe for going out of business.

Please add a comment about any really cool things your company is doing in regards to hiring or retention or that you have heard about so I can update our readers.

If you would like to learn more about how the OpsAnalitica Platform can help you drive consistently safe and excellent operations across your restaurants and how it can be used to push behavior change in real-time, please check us out at OpsAnalitica.com

Podcast – Ari Weinzweig visits the OrderUp Podcast

Ari Weinzweig fell into the restaurant industry in the early 80’s because he didn’t want to move home after college and wasn’t particularly fond of driving a cab.

His business started out with a deli and has now grown to a community of 15 businesses under the Zingerman’s brand including a mail order service, creamery, a farm, business training, a publishing company, and even an annual bacon camp. All these unique businesses reside in Ann Arbor, MI.

Ari is a very interesting guy with an interesting belief system that affects every aspect of his life, professional and non-professional. Check out his visit to the OrderUp Podcast last week below.

Restaurant Delivery Services

I came across two articles today discussing restaurant delivery services, specifically in Seattle. One on Geek Wire and the other on The Stranger. Both of them were very different in the story they were telling which was interesting.

The Stranger talks about how Postmates is reeking havoc on the restaurant industry. Mainly causing “resentment” between the restaurant staff and the delivery drivers/couriers. The rift is around tips according to the article. The restaurant workers are missing out on any tips from the Postmates takeout orders that they would have normally gotten.

The couriers are getting some tips, but no tips are making it’s way to the restaurant workers. Postmates allows customers to enter a tip for the restaurant, but it’s confusing and not very clear how it works. So this tip doesn’t happen, ever. Apparently the way it works is there’s a $5 delivery fee which gets split 80/20 in favor of the courier. On top of the 20% ($1) of the delivery fee there’s also a 9% service charge on the order that goes to Postmates. The restaurant workers see nothing unless the courier leaves them something, which never happens.

If the numbers in the article are true the couriers aren’t exactly killing it on tips either. They get a $4 delivery fee plus an average tip of $1-$1.75 on average according to the article. So call it $5.50 per order. Seems like it would be tough to get enough orders in an hour to make it worthwhile, but I guess if you’re on a bike and not a car you don’t really have any expenses. Plus you’re exercising.

Click here for The Stranger article. There’s some salty language, but we’re all adults here.

The other article, more interesting in my opinion, was on Geek Wire about Amazon dipping it’s toes into the restaurant delivery market. As part of their new Prime Now service they are testing, with local employees, restaurant delivery.

If there’s any company that can figure this out it would be Amazon. They are already offering alcohol delivery in Seattle. In NYC they apparently offer delivery of prepackaged meals from a few stores, but you have to cook the meal once you get it, it’s not delivered hot. That’s the difference with the Seattle test.

It makes sense for Amazon to try this out, but it’s not like they can have a UPS driver swing by Chipotle and pick up a burrito on the way to your house. They’ll have to implement a delivery arm similar to Postmates. Now if they throw marijuana delivery into the mix they might have a winning combo.

You have to wonder how long these types of services will be affordable with prices inevitably going up across the board with minimum wage increases, increases in food costs etc. At some point I have to think that consumers would just assume go to the restaurant vs. pay the $5 plus 9%, plus tip on top of the meal price. But maybe you can’t put a price on convenience.

Click here for the Geek Wire article about Amazon.