With the Supreme Court upholding the Affordable Care Act today the restaurant industry is still looking for some changes to be made as their situation is very different than most businesses. I’ll post a full article from nrn.com on the subject from today.
The provisions in the act that cause concern for the restaurant industry are:
- 30 hours/week or 130 hours/month being the threshold for providing healthcare
- This can make it tougher to take advantage of a flexible work schedule as we have discussed in the past. As a server you tend to pick up shifts and give away shifts as your life dictates and that, for me anyway, was always a huge bonus of that job. But now I can see most management looking to keep everyone under the thresholds.
- Management will have to make the decision on whether it’s worth having more employees that are not considered full time vs. ponying up for insurance.
- The 50 employee limit
- This poses the biggest issue for franchise systems where a franchisee may only have 1 location with less than 50 employees, but since they are part of a larger franchise system with well over 50 employees they are getting lumped into the large business category. At least that is how I understand the situation.
Even if they are able to get some concessions they are still going to be fighting an uphill battle as competition for employees will be problem as well. If in retail people are able to get $15/hr plus healthcare it’s going to be tough to bring in good employees at less money and no healthcare. The Affordable Care Act is here to stay so I think we’re just going to have to work with it. If you can’t beat ’em, join em.
As consumers we’re just going to have to expect to pay more when we go out to eat. That’s a fact. I have copied the nrn.com article below:
Five years after its passage, the U.S. Supreme Court upheld the Affordable Care Act Thursday, in a ruling on a case that challenged the law, but trade groups representing restaurant operators said the legislation needs to be changed.
In statements following the ruling, the National Restaurant Association and the National Council of Chain Restaurants continued to push for reform of the measure designed to expand health care coverage, which they say will increase cost and complexity for restaurant owners.
The statements reveal the groups’ frustration that little has been done to address these concerns amid a sharply divided government.
“While today’s decision by the Supreme Court is one of great importance to the dialogue on health care coverage across the country, there are issues with the current law that need to be addressed,” Dawn Sweeney, president and CEO of the National Restaurant Association, said in a statement.
“We are concerned that the issues impacting restaurants and the employer community at large have yet to move forward in Congress. Certain provisions within the ACA, like the definition of full-time employment at 30 hours, the lack of clarity regarding reporting requirements, auto enrollment, the inconsistency of defining ‘seasonal employment’ and the process of determining which businesses are considered ‘large’ under the law have placed an enormous amount of undue burden on American businesses large and small,” Sweeney said.
Likewise, the National Council of Chain Restaurants, part of the National Retail Federation, said that it wants the law reformed.
“NCCR opposed the ACA when it was passed by Congress, and we still do,” NCCR executive director Rob Green said in a statement. “The ACA’s employer mandate and unique coverage requirements inflicts negative impacts and unworkable costs on chain restaurants and its thousands of small business franchisees.
“Reform to our nation’s health care system is desperately needed, and now that the court has ruled we look forward to Congress revisiting the law to bring about greater health benefit affordability and improved access to affordable health insurance coverage for employees. Several commonsense measures are pending that would help bring down the cost of health insurance, and NCCR stands ready to work with lawmakers on bipartisan reforms to achieve that result,” Green said.
The U.S. Supreme Court ruled 6-3 Thursday in the case of King v. Burwell, which challenged ambiguous terminology in the law regarding tax credits paid to residents in states that refused to set up their own health insurance marketplaces.
The plaintiffs, four Virginia residents, argued that phrasing in the law should have kept residents in states without their own exchanges from getting tax credits that would enable them to buy insurance. Millions of Americans could have lost health insurance coverage if the Supreme Court ruled against the federal government.
Opponents of the ACA, often called Obamacare by critics, hoped the ruling would damage the law, which has been a major source of political tension since it was passed in 2010.
Restaurant owners, as well as the trade groups, have been among the ACA’s most vocal opponents, because restaurants have substantial labor costs and employ many part-time and low-wage employees, who often don’t have health coverage. The law’s coverage mandates could increase their costs considerably.
Still, restaurant companies have been implementing the law for years now, and many are preparing for next year, when companies with 50 or more workers will be required to provide employees coverage.
That has trade groups pushing Congress to make changes to the law. In particular, groups want to see the law’s definition of “full time” changed to employees who work 40 hours per week. The law currently requires businesses with 50 or more workers to provide coverage to “full-time” employees who work 30 hours or more per week, or 130 hours per month or more.
Bills have been introduced in Congress that would change the law’s definition to 40 hours, and the NRA, along with the International Franchise Association and other groups, have joined together to push for the measure.
NRN.com posted an article highlighting early results from a survey currently being conducted by Technomic out of Chicago. The survey focuses on how certain restaurant brands are performing as it relates to using technology to better the consumer experience. The four categories the survey focuses on are; loyalty programs, free WiFi, online ordering, and mobile payments.
Here are some of the initial findings, I’ll post the full article below:
- Pizza chains are leading the pack with some offering the ability to order from your watch, TV, or car
- I thought this was really interesting: tracking loyalty points and rewards was the most important tech amenity for consumers across the limited-service and full-service segments
- I feel like fine dining is worried about losing the connection to the customer so I thought this was interesting as well: The Capital Grille, which offers its wine list on an iPad, ranked highest among full-service brands, with 54 percent of respondents deeming its ordering technology very good
- only 13 percent of consumers across all segments said the brand they visited recently excelled at using tech to improve the customer experience
No huge surprises, but the restaurant industry is definitely behind the curve when it comes to implementing tech. The consumers want it so they’ll have to do it and it they’ll be happy they did. Implementing the right technology can pay huge dividends, especially as labor and food costs continue to rise.
I have copied the full article below:
Pizza chains are leading the industry with cutting-edge technology, but American consumers expect more tech features from all restaurant segments, according to a recent report by Technomic Inc.
Chicago-based Technomic surveys consumers regularly as part of its ongoing Consumer Brand Metrics survey. For the first time, at the end of 2014, consumers were asked how different restaurant brands were performing in terms of technology.
While only about a quarter of the data is in, with about 175 respondents per brand, an initial look indicated that tech features are essential and strongly influence the restaurant selection decision, particularly for Millennials, the report found.
“Technology-friendly service in restaurants has become important to consumers broadly, and to Millennials and Generation Z customers, it’s essential,” said Colleen Rothman, manager of consumer insights for Technomic. “Consumers will continue to look to pizza chains and fast-casual brands for the latest and greatest digital platforms, but they also will expect all restaurants to integrate many technologies that have become a fact of daily life everywhere.”
The survey asked consumers about four specific tech-based amenities: loyalty programs, free Wi-Fi, online ordering and mobile payments.
Pizza chains ranked highly on all attributes related to technology, with Domino’s leading the pack. Three-fifths of Domino’s customers praised its integration of technology into the ordering process, according to the report.
Domino’s customers can place orders by text or emoji, by Twitter or on their Samsung Smart TV. The chain also has an ordering app that works on a smartwatch, and some customers can order from their car using the Ford SYNC AppLink.
Papa John’s Pizza also received a top rating, as did quick-service chicken chains Chick-fil-A and Pollo Campero, and frozen treat brands Pinkberry and Ben & Jerry’s.
The survey found that tracking loyalty points and rewards was the most important tech amenity for consumers across the limited-service and full-service segments. But it was more important to Millennials, who also placed heavier emphasis on the availability of online and mobile ordering.
Although mobile payment is currently less common among restaurant chains, more than a third of Millennials ranked it as an important tech amenity.
The survey also asked consumers to rate 134 brands on three tech-related attributes: integration of technology into the ordering process, the ability to pay using technology and whether technology improved the guest experience.
Not enough chains offered payment technologies to merit inclusion in the report this quarter, but Rothman said it will likely be included in future reports.
Considering brands ranked highest for their integration of technology into the ordering process, limited-service chains showed strength.
Once again, the quick-service leader was Domino’s, with 60 percent of respondents saying its integration of technology for ordering is very good.
Among fast-casual chains, The Habit Burger Grill, which offers online ordering, ranked highest, with 58 percent of respondents calling its ordering technology very good.
The Capital Grille, which offers its wine list on an iPad, ranked highest among full-service brands, with 54 percent of respondents deeming its ordering technology very good.
But when asked to rate restaurants on their use of technology to improve the guest experience, only 13 percent of consumers across all segments said the brand they visited recently excelled in that area.
“That’s strikingly low,” Rothman said, but it offers restaurants an opportunity, “especially as consumers, and particularly Millennials, are saying technology is something important to them.”
Ben & Jerry’s was ranked highest among quick-service chains on that attribute, with 25 percent of the vote. The ice cream chain has a mobile loyalty program called Euphoria Rewardia that lets users earn rewards.
Pollo Campero was the highest ranked fast-casual chain, with 26 percent. The chain, whose U.S. division is based in Dallas, offers online ordering, and customers can sign up to receive emailed coupons.
Cheddar’s Casual Cafe, which has an e-club loyalty program called The Cheddar’s List, won for full-service brands, with 22 percent.
Ratings on all of the tech attributes are expected to grow in importance as restaurant operators step up efforts to integrate technology into the guest experience, the report found.
Thank you for following this blog series on restaurant operations, data, and reporting. In Tuesday’s post, we discussed BOH data collection and what items you could be tracking that could help you improve operations and run more profitable businesses. To read Tuesday’s post click here.
One last thought on BOH operations data collection. A lot of the BOH data that we should be collecting has a CYA benefit and potentially a financial benefit associated. You should be looking at everything that would constitute a critical violation on a health inspection every shift. There probably isn’t a huge financial benefit to ensuring that all of your dry-goods are being stored six inches off of the floor, but there are safety and brand protection benefits. Most health departments these days make health inspections available on their websites. In cities like Denver, our local Fox affiliate, dedicates a lot of energy to reporting on Denver restaurant’s bad health inspection scores.
As we continue to explore restaurant operations and data, let’s discuss manager accountability and how that plays into the data collection. Accountability management is engineered into the OpsAnalitica Inspector, and we track additional meta data on the person inspecting. For instance, we track inspection duration, looking for pencil whippers. Manager accountability and ability to identify good and bad managers quickly is one of the best reasons to use an automated inspection platform and to have manager’s conduct inspections. When you collect this data online, and then you can go in and verify what you are being told, that is a powerful tool. It gives you the data to identify your great managers, to elevate them and give them the appropriate praise. It also allows you to identify your bad managers and take corrective actions.
From an accountability perspective you should be collecting the following types of data each shift:
- You should be checking Day Dots and the food on the line each shift.
- Reduce food waste and lower food cost.
- Ensure that customers are being served a fresh and safe product.
- You should be checking that you line cooks have the proper stock levels of items on the line.
- Keep ticket times down and ensure that you can maximize service during the rush.
- Frozen Burger vs. Thawed Burger Example
- If a thawed 1/4lb burger patty takes 3 minutes to cook well and a frozen patty takes 4 1/2 minutes to cook well. A frozen patty takes 50% longer to cook. If you sell a lot of burgers and you run through your thawed patties quickly, and you aren’t stocked to par, you now have to use frozen patties. That one difference is adding 90 seconds per burger to your cook time. That extra 90 seconds of cook time starts to cascade to every order as those frozen patties are taking up grill space, and you can’t get you next orders down until they clear, etc. All of a sudden every ticket in the kitchen with a burger on it starts to come out a little slower. That cascades to the front of the house as people are sitting at tables longer, the line gets longer because through put in the restaurant has slowed. People who are on a time crunch may start leaving because they don’t have time to wait. Tips could go down for servers because the meal service was slow, and you could lose a turn of your tables.
- The frozen burger patty is a simplified example, but it is meant to illustrate how the entire restaurant is connected and if one part of your operation lacks it can affect the entire operation and sales.
- Line Check
- You should be temping and tasting your soups, sauces, and LTO items each shift.
- Value: Quality control
- Server Stations:
- Just like food pars, server stations and service counters should be stocked to par before each shift.
- Value: Better guest experience.
- I worked at Changs that didn’t have enough glass racks in the server station. Every time you went back to get drinks; you invariably were running to the dish pit to grab glass racks. That added a minute or so of time to each initial drink order. These things add up and slow down service, which affects your ability to get that last turn for the meal period.
- Tracking the cleanliness and appearance of your building specifically: bathrooms, entry way, dumpsters, dining room, and parking lot.
- Puts the manager in the guest’s shoes and allows them to see the restaurant from their perspective.
- Allows you to catch and correct things that could potentially stop guests from coming into your location or that could negatively affect their experience.
Restaurant operations are the drivers of sales and customer satisfaction. Collecting operations data consistently across all of your locations can provide you with a treasure trove of insight into how your operations are doing. Ops data coupled with sales, customer satisfaction data can help you identify cost cutting and profit increasing opportunities. Whether it is average walk-in temperature or identifying a bad manager faster so you can take corrective action.
There is also value in making manager’s complete these checklists in addition to the data. The simple act of walking your location and looking at critical success areas of your business is like the pilot performing the pre-flight inspection. Focusing managers on what is important and hopefully will allow them to identify and fix issues before they affect the guest.
One thing that I’ve learned working with automation and data over the last seven years is that once you get a taste for the power of data and how much it can help you in decision making. You will want more of it.
Yesterday we explored the importance of operations data, different ways to capture operations data, and where it could be used to make better decisions. If you didn’t see, yesterday’s blog post clicks here.
A quick summary of yesterday’s post, the restaurant industry needs to be collecting and analyzing operations data with the easily available register and customer service data. Operations are upstream and affect sales, profitability, and customer experience. Until now, it has been incredibly hard to capture operations data as we are a people business with very little automation in the production and distribution of our products.
We also discussed different methods for collecting operations data: pen & paper, spreadsheets, Survey Monkey, and apps like OpsAnalitica. We discussed the pros of each solution.
Today we are going to talk about different types of operations data that you could be capturing and how that data could help you make better decisions and run better operations. We are going to start in the BOH sanitation and temperatures.
- Sanitizer Buckets:
- You should be tracking the temperature and ppm of your sanitizer buckets every meal period.
- Value: CYA purposes – it’s an insurance policy if you are the source of foodborne illness.
- Temperature Logs:
- Following HACCP principles you should be taking temperatures multiple times a day. Here is a HACCP resource
- CYA purposes – it’s an insurance policy if you are the source of foodborne illness.
- Financial: temperature is directly correlated with food spoilage, which can lead to increased waste and higher food costs.
- Every walk-in and cooler has a sweet spot temperature based on the food that is being stored in it.
- If you don’t catch a broken refrigerator quick enough you could have to throw away every piece of food in it.
- At the NRA show this year I was able to see temperature data from a temp logger that is in a commissary. The guys were able to show me the data right before this walk-in’s compressor failed and how they were able to notify the owner that his walk-in was having trouble before there was a problem. It was awesome.
- Imagine this scenario: You are a chain of 100 restaurants, and you have temperature data from every cooler and walk-in in you chain for six months. You start to run some analysis, and you determine that restaurants with a 36-degree walk-in temperature on average have a 25 basis point higher food cost than the units with a 35-degree walk-in temperature. If you correlation analysis is correct, and you can simply have those restaurants turn down their walk-in’s a degree, and that could save you 25 basis points of cost, how cool is that?
- Dishwasher Rinse Temperature:
- Making sure that your dishwasher rinse temperature meets the specifications for your local health department and your machine.
- CYA purposes – it’s an insurance policy if you are the source of foodborne illness.
- Financial: In this case you may be concerned with having rinse water that is too hot. Temperature is directly correlated with energy costs and having your rinse water set at the minimum safe standard could save you money.
With the above areas of data collection, the primary value is CYA protection. Health department’s like to see good management practices in place and more importantly that the restaurant management team is consistently following their policies. Doing this work and taking the time to follow HACCP Principle # 7 in regards to record keeping will always pay off in a crisis.
I think it is also important to note that there is a financial component to a lot of this measurement. The example about walk-in temperature is real. Like any cost saving program, you have to weight the cost to implement and manage the program against the potential savings. A lot of the money saving opportunities require some amount of analysis cost to research them, and they might not make sense for a single unit restaurant. You will have to determine if it makes sense for you to spend the time to look at the data.
We talk about this in our eBooks and other blogs. There is a reason pilots always do pre-flight inspections, no matter how experienced they are, it is because there is a name for pilots who don’t do them, dead pilots. I believe that restaurant manager’s, confuse restaurant experience with restaurant management. If you don’t ever collect the data on sanitizer buckets or rinse temperatures you won’t know that they are right, or they are wrong. You won’t be able to take corrective action, or you won’t know until it’s too late that something was wrong, and it is going to cost you a lot of money.
In tomorrow’s blog, we are going to continue with management accountability data.
If you didn’t see, yesterday’s blog post clicks here.
- December recorded the best same store sales in three years at 3.1%
- The fourth quarter registered the best same-store sales results reported in six years of Black Box Intelligence tracking at 2.5%
- Aggregate growth of 0.8 percent for 2014 vs. -0.1 percent posted in 2013 by the industry
- Excluding this first quarter, same-store sales grew at an average 1.3 percent during the rest of the year
- Traffic grew by 0.6 percent during December, the best month for the industry since February 2012
- The increases in same-store traffic mirror the jumps in same-store sales, meaning that it was a true improvement in sales fueled by attracting more guests into restaurants, and not just the effect of rising prices
- The improvement in sales has been widespread across the country with all 11 regions posting positive same-store sales during the fourth quarter, which has not happened in any other quarter over the last three years
Read the full article here. Hopefully this is a sign of good things to come in 2015. Only time will tell for sure.
Please take a look at the National Restaurant Association’s Official Response to the State of the Union Address. I would like to add two personal notes to this story.
I started my working life at age 14 at a Jerry’s Subs and Pizza in Columbia MD. I think it is fair to say that at the time I wasn’t the most productive or highly skilled employee, I was uncoordinated and goofy. I would never have made that first paycheck or been able to get that first job at Jerry’s if they couldn’t afford to hire and train me.
In 2008, I managed the Franchise Assistance Program at a large sandwich chain. My job was to offer business coaching and assistance to franchisees who were struggling. Remember how franchise chains work. When you see the Subway in your local strip center, it isn’t owned by the Subway corporation with it’s billions of dollars in revenues and resources; it is owned by one of your neighbors.
Please click here to read the NRA’s Official Response to the State of the Union Address.
My name is Tommy Yionoulis and I’m a restaurant and software guy. If you like what you read, please follow OpsAnalitica on LinkedIn and follow our blog.