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OrderUp Interview with Chief People Office for Riot Hospitality Group

Tommy talks to Taylor Bell of Riot Hospitality Group about the state of the industry today and going forward. How they have managed through the pandemic and more.

Check it out below or subscribe through your favorite podcast app.


Fighting Norovirus with OpsAnalitica

Screenshot 2016-02-09 19.27.40

There is no medical cure for Norovirus; if you contract it you simply have to ride it out. That doesn’t mean that there isn’t anything you can do as a multi-unit restaurant manager to protect your restaurants, brand, and profits.

With Norovirus, the best offense is going to be a good defense. Here are some steps we are suggesting that you take to protect your company.

  1. Train  your team about Norovirus:
    1. Train your current team and add Norovirus training to your new hire on-boarding.
    2. Get our Free Norovirus Training Guide by clicking here.
    3. Make sure you cover the following topics:  symptoms, transmission, recovery period, employees responsibility to alert management if they contract Norovirus or get sick.
  2. Use the OpsAnalitica Inspector to digitallycapture employee signatures after they receive Norovirus training.
    1. Create a simple checklist that you have employees fill out stating that they have received Norovirus training and they understand their responsibility to notify managment.
    2. This documentation will be time and date stamped and provided written proof of your pro-activity on this subject.
  3. You need to start asking employees every shift if they are well enough to work or experienced any Norovirus symptoms in the last 48 hours?
    1. You can do this in pre-shifts or even field time clock questions if your system supports that.
      1. One note, if you put this into the timeclock make sure there is a way for the time clock system to notify management that someone said yes immediately.  The worse thing you could do is identify on your time clock that someone was experiencing symptoms but not take appropriate action before the shift.
    2. You have to be prepared to send people home if they say “Yes”.
  4. Use the OpsAnalitica Inspector to create daily shift logs.
    1. The problem with paper or old school digital shift logs is that they are very difficult to report off of across an organization.
    2. If you convert your antiquated shift log to an OpsAnalitica shift log, you will be able to ask true-false questions with comments.  Ex:  Did you send anyone home today for being ill? (If True, please document in comments)
    3. This allows you to run very detailed reports across your system to help you identify risk and ensure that your unit managers are doing the right things.
  5. If you do send someone home for being ill, you should immediately conduct a deep cleaning of the areas that the person worked and document that cleaning with the OpsAnalitica Inspector.
    1. Use a flexible deep clean checklist to document that you took immediate action and what areas of the restaurant that you cleaned after the employee went home.
    2. You should also track in the inspector and on your waste sheets any food that your team through away because it came into contact with the sick person.

64% of Norovirus outbreaks come from restaurants.  The news media and patrons are becoming more educated about Norovirus and are holding restaurant management responsible.  The key to fighting Norovirus in your operations is to educate your team and document your procedures.  If you get someone sick, and there is an investigation,  you ability to prove through documentation that you did the right things from a management perspective: training, sending sick employees home, deep cleaning and throwing away food is what is going to help you move past the outbreak.

Where OpsAnalitica takes documentation to the next level is that we time-date stamp and geocode every submission.  Because the data goes to the cloud we can build very detailed reports that look at all units in your chain and then email relevant data to the right people on a schedule.  Now corporate management can be made aware of any issues that arise pro-actively and have all of the data they need at their fingertips.  Checklists with effortless follow-up drive compliance and better operations.  To learn more about the inspector, schedule a demo by clicking here.

Norovirus is a fact of life; it can be a death sentence for the very young, old, and infirmed.  It can be a restaurant killer for those operations that don’t take it seriously.  Buffalo Wild Wings stock went down over 6% in a couple of days from a small isolated outbreak in KS.  Chipotle’s stores have seen a double digit drop in sales year over year and Norovirus has played a huge part in the sales decline.  Could your restaurant handle a 30% decline in sales for six months plus?  I don’t know of many that could.

Get a free copy of our Norovirus Training Guide.

Today’s Struggles of Restaurant Management

It is hard to believe that I got my first restaurant job 30 years ago.  I was fourteen years old; I remember because I had to get a work permit, I was a grill cook at a Jerry’s Subs and Pizza in the Columbia Mall.

I got my hotel restaurant degree 8 years later, and I remember one of the big themes at school was manager burn-out.  We were still in that time when restaurant managers were expected to work 80 hours a week.

As I look at how the industry has changed over my lifetime, it is amazing to me how much harder it is today to be a restaurant manager than it was back then.

I think in the past restaurant management was a physically tough job.  Over time, I think it has become less physical and more mentally tough.

Our latest eBook:  Restaurant Management The Struggles of Today’s World discusses some of the issues facing restaurant managers today.  I encourage you to get your free copy emailed to you by clicking here.

Even though restaurant management is getting tougher, I think it is ultimately good for manager’s and the industry. As the manager’s of the future are forced to become more well rounded and to wear more operational hats, they will gain valuable skills, and the learning process will be interesting to say the least.

Ultimately all things evolve, and restaurant management is not immune.  So push the Dinosaur Manager’s out of your operations and look for those eager learners who are ready for their next big challenge.  Get them started with a copy of our Free eBook by clicking here.

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.

Same Store Sales Increase in August

Driven by Fast Casual, the restaurant industry posted strong same store sales in August according to the Black Box Intelligence report.  Here are some of the stats from the Nation’s Restaurant News article:

  • 1.7% increase in same store sales in August
  • YTD same store sales up 2.2%
  • The industry can post it’s 5th straight quarter of same store sales growth this quarter
  • Average monthly growth has been 2.2% since last year
  • While traffic growth is still negative, it has been improving over the last few months
  • Top region in August was California with a 3.5% increase in same store sales and only .5% decrease in traffic
  • The NY/NJ region was the worst with a 1.3% decline in sales and 3.1% decline in traffic

We talked about this a few weeks ago, but job growth still remains strong across the board for the restaurant industry, despite some of the increases in minimum wage.

I have copied the full NRN article below:

The restaurant industry posted another relatively strong month in August, as both same-store sales and traffic growth improved over July, according to data reported by TDn2K’s Black Box Intelligence through The Restaurant Industry Snapshot, based on weekly sales from over 22,000 restaurant units and 120 brands representing $55 billion dollars in annual revenue.

Source: Black Box Intelligence, August 2015

Same-store sales rose 1.7 percent in August, a 0.1-percent improvement. With these latest results, the industry is on track to post its fifth consecutive quarter of positive same-store sales growth during the third quarter, the first time this has occurred in the last three years. Meanwhile, year-to-date same-store sales have risen 2.2 percent, consistent with Black Box Intelligence’s prediction for 2015.

“There are three factors that should be encouraging for the restaurant industry”, said Victor Fernandez, executive director of insights and knowledge for TDn2K. “First, we have been experiencing consistent, positive same-store sales growth since August 2014. The last time we had a comparable run in terms of consecutive months of positive sales growth was in the period of 2011 through early 2012. Furthermore, every month since August of last year has posted same-store sales growth above 1 percent; the average for the period has been a significant 2.2-percent growth in sales year-over-year. Second, although same-store traffic growth continues to be negative and remains the top concern for the industry, we have now reported three consecutive months in which traffic results have been improving. This also means that the growth in sales for the industry for the last couple of months has been relying less on increases in average guest checks and more on improving guest retention. Finally, on a two-year sales growth basis, this quarter is surpassing the first two quarters of 2015 with a +2.8-percent for the first two months of Q3 compared to +2.0 percent in Q1 and a +1.8 percent in Q2. This would represent the second-best quarter on a two-year basis since Q1 of 2012.”

Same-store traffic fell 1.1 percent during August, which represents a 0.1-percent improvement compared with July. Per person average guest check grew by 2.7 percent and 2.8 percent during August and July, respectively. This represents a shift from the average 3.4-percent growth in guest checks reported for all months during the first two quarters of the year.

The fundamentals in the economy continue to remain favorable for continued growth in restaurant sales: the labor market, even if showing some signs of slowing down from the growth rates posted in recent months, continues to add jobs. Income and consumer spending rose in July, according to the latest published numbers. Finally, despite short-term fluctuations in consumer sentiment, consumers are more optimistic today than they were a year ago.

“There has been some concern expressed due to the sharp drops and volatility in the stock market in recent days,” Fernandez said. “However, we believe that at least in the next couple of months, the effect of these fluctuations will not affect restaurant spending much. Most consumers perceive these changes as affecting their long-term wealth and not necessarily their disposable income today. However, if the underlying concerns regarding the global economy are real and sustained, then they could become a concern for the industry.”

Source: Black Box Intelligence, August 2015

The best performing region during August was California, with same-store sales growth of 3.5 percent and a traffic decrease of 0.5 percent. Considering the difference in check average for California, it appears the price increases taken to offset minimum wage increases are part of the equation behind this strong same-store sales number. However, the traffic also suggests that the California consumer has a strong appetite to dine out.

For the second consecutive month, the worst performing region in the country was New York-New Jersey, with a 1.3-percent decline in same-store sales and a 3.1-percent drop in traffic growth.

August was also a good month at the market level. One hundred thirty-seven, or 71 percent, of the 193 DMAs currently tracked weekly by Black Box Intelligence posted positive growth in their same-store sales during the month.

Improving economic conditions have boosted sales, but are also tied to a tightening labor market in which recruiting and retention have once again become major challenges for restaurants. Job growth accelerated at restaurant chains during July, according to TDn2K’s People Report. During the month, the restaurant chain industry’s number of jobs grew by 4.4 percent year-over-year, while the past twelve months averaged 3.4 percent.

In addition to the pressures of recruiting enough new employees, restaurant companies also continue to face increasing turnover rates at both the restaurant management and hourly employee levels. Rolling 12-month hourly employee turnover increased again during July. The industry has now experienced 23 consecutive months of rising turnover rates. Restaurant management turnover, which had been increasing steadily during 11 of the last 12 months, stabilized during July and remained at the same rate as in June. Flat turnover notwithstanding, turnover rates at all position levels within restaurants are at very high levels not reported since before the recession.

According to TDn2K’s White Box Social Intelligence, of the three key guest satisfaction attributes tracked (“food”, “service” and “intent to return”) from a sample of 6.6 million social media mentions during August, the conversation tends to center around food when consumers talk about restaurant brands online. Seventy-eight percent of posts mentioned food during this month. The second most commonly mentioned attribute continues to be service, at 16 percent of all social media mentions.

When consumers mentioned restaurant brands online during August, the attribute generating  the highest percentage of positive mentions was “intent to return,” with 39 percent of all of mentions, a significant 7-percent growth in the percentage of mentions that were positive when compared with July. As a comparison, about 31 percent of food mentions and 18 percent of service mentions were positive during August.

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 32,000 restaurant units, over 1 million employees and $55 billion 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.

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.

Staffing Challenges in North Jersey

An article over the weekend in The Record interviews a few folks in the restaurant industry in norther New Jersey about some of the challenges they are facing around finding and keeping employees. It’s not just isolated to one specific function, but all employees in all departments that are becoming increasingly more difficult to staff.

According to the individuals referenced in the article the reasons are spread across the board. Here are some of the points made:

  • Supply and demand – there seems to be more jobs available so there are other options to restaurants
  • It’s hard work – long hours and on your feet the whole time, plus in the front of the house you need to deal with some unpleasant people from time to time. So with other options available potential employees opting for something a little easier
  • The pay isn’t necessarily great. If you are a server or a bartender you can do decent depending on where you work, but it’s still long hours
  • A slow down in immigration since the recession may have contributed as 11% of Hispanics are employed by hotels and restaurants

A natural response to a labor shortage is “pay more”. Not that easy in the restaurant industry as profits are very thin already. 4-6% according to the article. Payroll already accounts for 24% of net profits.

At this point there’s just no wiggle room without a price increase to consumers. It’s coming because soon minimum wage hikes will take care of the pay increase for restaurant owners. There will be no choice other than raise prices.

I have copied the full article below:

Long before the first lunch customer walks through the door, cooks at Grissini in Englewood Cliffs are hard at work.

Angelo Chimbo’s hands are a blur as he flicks at baby carrots with a red peeler. Behind him, Ismael Rodrigues feeds sheets of golden dough into a pasta machine, where it is cut into narrow tagliatelle. And chef Giuseppe Lentini deftly slices bits of fat off deep-pink hunks of filet mignon.

Workers like these are the “backbone” of the restaurant industry, said maitre d’ Michael De Vincenzi.

But chefs, as well as the waiters and waitresses who deliver their creations to the table, are becoming harder to find. According to a recent survey by the National Restaurant Association, more than half of restaurant owners find it a challenge to find and keep good workers.

A lot of it is simply supply and demand.

Americans eat out more these days, spending 43 cents of every food dollar away from home, according to the U.S. Department of Agriculture.

“The economy is good, and people are spending more money than ever in the hospitality industry. We’re living in an area that’s saturated with restaurants,” said Michael Latour of Latour, a 17-year-old French restaurant in Ridgewood. “There aren’t enough workers to support them all.”

Restaurants can be lively, creative and glamorous places to work — for cooks who are passionate about food, and for extroverts who enjoy dealing with the public in the dining room. But the industry is defined by long hours, low pay and high pressure. And an improving job market means that workers have other options.

Even restaurant owners and managers will acknowledge the challenges of the work.

“If you’re a chef at a restaurant like mine, you’ve got to work six days a week, lunch and dinner,” said Tony Del Gatto, who owns the Westmount Country Club in Woodland Park, in addition to the 90-seat Grissini. “What kind of home life can you have?”

“It’s at least a 12-hour day,” said De Vincenzi. “You have to be born to do this work.”

Recently at Latour, waiter Ricardo DaSilva of Union, a 21-year-old student at Seton Hall University, started his day at 11 a.m., before the lunch crowd arrived, and expected to stay until the last dinner customer left — probably around 10 p.m.

During those long shifts, staff members are on their feet, whether they’re chefs or waiters. Inside the kitchen, the pace can be frenetic; the space, hot and crowded.

“It’s 100 degrees sometimes in the kitchen,” Latour said.

In the dining room, the heat sometimes comes from unhappy customers who expect a server to make things right.

And the pay scales are low.

According to the National Restaurant Association, median wages nationwide for restaurant workers range from a low of $8 an hour for dishwashers to a high of $19.35 for bartenders. Chefs are paid a median $12 an hour and waiters and waitresses about $16, with tips.

“People come out of the Culinary Institute of America with a lot of debt, and they’re not paying it off at $12 an hour,” said Christine Nunn, chef and co-owner of Picnic on the Square in Ridgewood. She has kept most of her kitchen staff through her tenure in three restaurants, but she’s looking for servers.

On a recent busy night, short of servers, Nunn had to work in the dining room. “I was hosting, I was bussing tables, I was pouring water,” she said.

Immigration a factor

Other analysts have pointed to a slowdown in immigration to the U.S. since the recession, because immigrants traditionally make up a significant share of restaurant workers. According to the U.S. Bureau of Labor Statistics, 11 percent of Hispanic workers are employed in hotels and restaurants.

Another issue in North Jersey is that workers who live in less affluent areas sometimes struggle to find transportation to restaurant jobs in the suburbs.

According to the National Restaurant Association, 318,800 people in New Jersey, and about 14 million nationwide, work in restaurants. The industry has been adding jobs faster than the economy as a whole, according to the association.

The shortage of workers has forced restaurant operators to spend more time recruiting and training new employees, and to ask current employees to take on extra tasks — for example, a busboy substituting for a line cook when needed.

So, if there’s a shortage of workers, why don’t restaurants just bump up the paychecks?

The answer: They can’t afford to.

Profit margins average 4 percent to 6 percent at restaurants, according to the restaurant association. Payroll amounts to about 24 percent of restaurants’ net profits, a percentage that hasn’t changed much over the years, according to Sageworks, a financial analysis company.

“They work on a very thin profit margin,” said Dave Cohen, coordinator of the hotel-restaurant hospitality program at Bergen Community College. “You’re not putting 50 cents on the dollar into your pocket in the restaurant business.”

You might expect the Food Network’s shows about celebrity chefs would draw more people to the industry, but restaurant owners complain they paint an unrealistic picture.

No fast track

“Everybody thinks they can go to culinary school and immediately be a Food Network star,” said Nunn from Picnic on the Square. “Even with a degree, you take that $12-an-hour job and work 50 or 60 hours a week so you really learn how to be a chef.”

Cohen said that some culinary graduates would rather work in catering or even in supermarkets, which have shorter, more predictable hours.

Still, those who choose restaurants say they like the fast pace, the interaction with colleagues and customers and, in the case of chefs, the chance to work creatively with food.

“It’s a very expressive thing; it’s a reflection of your passion for food,” Latour said.

De Vincenzi, the maitre d’, was asked whether he likes his job better when the restaurant is quiet or crowded.

“Packed,” he said. “I want to be busy. I want it to be hectic. I like the stress. It’s all adrenaline.” He once thought of becoming an accountant, but after one day of a summer internship in college, he knew he didn’t want to sit at a desk.

Many restaurant workers are students looking for part-time work and flexible hours. The restaurant industry employs 1.5 million teenagers between 16 and 19 — or one-third of all working teens in the nation, according to the restaurant association’s figures.

Da Silva, the Latour waiter, said he is an extrovert who likes to talk to customers. The philosophy student said every customer “has something to teach you.”

“They’ll say something that catches your attention,” he said.

Other restaurant workers also say the relationship with diners is one of the best parts of the job. Victor Molina of West New York, a waiter who has worked for 10 years at Grissini, said he is gratified that some of the restaurant’s regulars ask for him by name.

“They know you and they trust you,” he said.

Email: lynn@northjersey.comTwitter: @KathleenLynn3

Slower Restaurant Employment Growth in San Fran & Seattle

A preliminary look into employment data by Forbes Contributor Stephen Bronars points to slower employment growth since the minimum wage increases in San Francisco and Seattle.

In the article Higher Minimum Wages in San Francisco and Seattle Mean Fewer Restaurant Jobs takes a look at year over year quarterly changes in employment averages. Here are some of the points he makes regarding his choice of data to use:

  • The minimum wage laws apply to cities but Bureau of Labor Statistics (BLS) employment data are available for Metropolitan Divisions
  • This is more problematic in Seattle where three out of four jobs in the metro division are outside the city limits, while two thirds of restaurant jobs in the San Francisco metro division are in the city
  • In addition, the monthly data are not seasonally adjusted and subject to a substantial margin of error

I have copied the full article with charts below and it’s also linked above, but Stephen concludes the following, acknowledging that more analysis will be needed as more data becomes available:

  • Had restaurant employment in San Francisco grown at the same rate as in the rest of the U.S., there would be 2,520 more restaurant jobs in the San Francisco metro division
  • Had restaurant employment in Seattle grown at the same rate as in the rest of the U.S., there would be 1,175-1,490 more restaurant jobs in the Seattle metro division

Last year Seattle decided to increase its minimum wage to $15 per hour over several years. The first increase to $11 per hour, for large employers, became effective on April 15th. Last fall San Francisco also adopted a plan to increase its minimum wage to $15 over the next few years and the first increase to $12.25 per hour became effective on May 1st. Because many restaurant workers earn less than the new minimum wages, most economists expect restaurant employment to decline in these cities as competition encourages restaurants to economize on labor costs.

Earlier this month Mark Perry, of the American Enterprise Institute, observed that job creation in Seattle’s restaurant industry stalled in 2015, perhaps due to the minimum wage hike. Last week Erik Sherman, a Forbes contributor, took issue with Perry’s interpretation of the data and purported to show that employment in San Francisco’s restaurant industry has grown since its minimum wage increase.

In this post I take a closer look at restaurant industry employment in San Francisco and Seattle. Before turning to the data it is important to understand its limitations. The minimum wage laws apply to cities but Bureau of Labor Statistics (BLS) employment data are available for Metropolitan Divisions.[1] This is more problematic in Seattle where three out of four jobs in the metro division are outside the city limits, while two thirds of restaurant jobs in the San Francisco metro division are in the city.[2] In addition, the monthly data are not seasonally adjusted and subject to a substantial margin of error. For this reason I focus on year-over-year changes in quarterly employment averages. I find that food service job growth slowed in Seattle since the minimum wage increase. In San Francisco, where more detailed data are available, there has been slower job growth in restaurants, but caterers and food trucks are growing more rapidly after the minimum wage increase.

Outsourced Meals

About 40 percent of the typical household’s food budget is for meals away from home and this increases to 46 percent for households in the top income quintile (from the Consumer Expenditure Survey). The “Food Services and Drinking Places” industry is prominent in San Francisco and Seattle; it accounts for about 10 percent of private sector jobs in San Francisco and 7 percent in Seattle. This is not surprising because San Francisco and Seattle are among the wealthiest cities in the U.S.[3]

Higher minimum wages will cause restaurants to economize on labor costs and hire fewer employees even in relatively wealthy cities. Competition will encourage food service companies to find less labor intensive methods of delivering prepared meals to their customers. For example, customers placing orders on computer tablets can reduce the demand for food servers.

San Francisco: Slowing Job Growth in Brick and Mortar Restaurants

The following table presents annual percentage changes in second quarter employment in several restaurant categories in the San Francisco metro division as well as the remainder of the U.S., and in San Francisco outside the food services industry. The table shows a slowdown in job growth in brick and mortar restaurants in the past year.[4] The all restaurants industry group, which includes full service and limited service restaurants, snack bars, and cafeterias, saw job growth of only 0.31% in the past year. Restaurant employment grew much less rapidly than in other sectors in San Francisco in the past year. In addition, had restaurant employment grown at the same rate as in the rest of the U.S., there would be 2,520 more restaurant jobs in the San Francisco metro division.

Click here for chart in full article

There has, however, been rapid employment growth (33.5% in the past year or 2,800 jobs) in the Special Food Services industry, which includes caterers and food trucks. This continues a recent trend; employment at caterers and food trucks has more than doubled since 2011. Although caterers and food trucks accounted for less than 10% of food services jobs in San Francisco in 2014, they accounted for more than 60% of job growth in food services over the past year so that overall growth in food service jobs slowed by 1.7% in the past year.

Declining Food Service Employment in Seattle

The most detailed BLS employment data reported for the Seattle metro division is for the “Food Services and Drinking Places” industry group.[5] The following table presents annual changes in second quarter employment for “Food Services and Drinking Places” in the Seattle metro division and the rest of the U.S., and private sector employment in the Seattle metro division outside the food services industry.[6]

Click here for chart in full article 

The table demonstrates that employment in the food services industry in the Seattle metro division grew more slowly than in other regions of the U.S. and more slowly than in other industries in Seattle. Depending on the alternative benchmark used there are 1,175 to 1,490 fewer food service jobs than there would have been had employment grown at the same rate as elsewhere.

Tentative Conclusions

While results based on preliminary and noisy data should be interpreted with caution, and more detailed studies will be required as city minimum wages increase even more, higher minimum wages appear to be disrupting the restaurant industry in San Francisco and Seattle and causing a reduction in jobs. In San Francisco minimum wages might be diverting customers to caterers and food trucks, perhaps because they are better equipped to adjust to higher labor costs. The first wave of minimum wage increases appears to have led to the loss of over 1,100 food service jobs in the Seattle metro division and over 2,500 restaurant jobs in the San Francisco metro division. These estimates are likely to be conservative, especially in Seattle, because many jobs in the metro division are outside the city limits and not subject to the minimum wage increase.

*This is a guest post by Stephen Bronars, Partner at Edgeworth Economics, Ph.D. in Economics from the University of Chicago. His opinions are his own.

[1] The San Francisco metropolitan includes San Francisco and San Mateo Counties but excludes Alameda, Marin and Contra Costa Counties and the city of Oakland. The Seattle metropolitan division includes King County and Snohomish County but excludes Pierce County and the city of Tacoma.

[2] The Seattle calculation is based on the BLS LAUS data and the San Francisco calculation is based on County Business Patterns.

[3] According to the Quarterly Census of Employment and Wages, San Francisco County ranks fifth and King County, Washington ranks sixteenth among the 340 largest counties in the U.S., ranked by median earnings

[4] The San Francisco minimum wage was set at $8.50 in 2004 and indexed to inflation. The increase from 2014 to 2015 was $1.51 compared to $0.32, $0.31 and $0.19 in previous years.

[5] This includes full service restaurants, limited service restaurants, cafeterias, snack and non-alcoholic beverage bars, drinking places, food service contractors, mobile food services and caterers.

[6] The Washington state minimum wage increased by $0.37, $0.15 and $0.13 per hour between 2011 and 2014, and the Seattle minimum wage increase from 2014 to 2015 was $1.68 per hour.

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-