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Over 29k Restaurant Jobs added Across Segments in July

A press release from the National Restaurant Association today reported that the restaurant industry added 29,300 (seasonally adjusted) jobs in July. This is the 17th time in the last 18 months that the industry posted job growth of 20,000 or more. Here are some more stats from the article:

  • The industry is on pace to post job growth in excess of 3.5% for the 4th consecutive year – this hasn’t happened since the mid 80’s
  • Foodservice contractors led the way during the first half of the year, adding jobs at a robust 6.8
  • Snack and nonalcoholic beverage bars added jobs at a healthy 6.6 percent
  • The catering and mobile food service segment has continued its steady expansion in 2015, with employment growing at a strong 6.2 percent
  • Quickservice restaurants added jobs at a solid 3.8 percent
  • The fullservice segment expanded payrolls at a 3.5 percent rate

I have copied the full press release below:

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Restaurant industry employment continued its upward trajectory in July, adding at least 20,000 jobs for the 17th time in the last 18 months.  The industry is on pace to post job growth of at least 3.5 percent for the fourth consecutive year – a streak that hasn’t happened since the mid-1980s, according to the NRA’s chief economist Bruce Grindy.  His Economist’s Notebook commentary and analysis appears regularly onRestaurant.org and Restaurant TrendMapper.

Over 29k Restaurant Jobs added Across Segments in JulyWashington, DC  (Restaurant News Release)  Restaurant industry job growth remained steady and solid in July, according to preliminary figures from theBureau of Labor Statistics (BLS).  Eating and drinking places added a net 29,300 jobs in July on a seasonally-adjusted basis, marking the 17th time in the last 18 months in which the industry added at least 20,000 jobs.

The recent gains put the restaurant industry on track to add jobs at a strong 3.7 percent rate in 2015.  This would represent the fourth consecutive year with restaurant job growth of at least 3.5 percent – a streak that hasn’t happened since the mid-1980s.

Within the restaurant industry, job growth has been broad-based in 2015.  Foodservice contractors led the way during the first half of the year, adding jobs at a robust 6.8 percent rate on a year-to-date basis through June.  In addition, this segment’s solid 2015 growth is following an even stronger 7.7 percent payroll expansion in 2014.

Snack and nonalcoholic beverage bars – including coffee, donut and ice cream shops – added jobs at a healthy 6.6 percent rate during the first half of 2015.  If this pace continues, it would represent the fourth consecutive year in which snack and nonalcoholic beverage bars posted job growth of at least 5 percent.

The catering and mobile food service segment has continued its steady expansion in 2015, with employment growing at a strong 6.2 percent on a year-to-date basis through June.

Quickservice restaurants added jobs at a solid 3.8 percent rate during the first half of 2015, while the fullservice segment expanded payrolls at a 3.5 percent rate.

Over 29k Restaurant Jobs added Across Segments in July

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 1 million restaurant and foodservice outlets and a workforce of 14 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry’s largest trade show (NRA Show May 21-24, 2016, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF’s ProStart); as well as the Kids LiveWell program promoting healthful kids’ menu options. For more information, visit Restaurant.org and find us on Twitter @WeRRestaurantsFacebook and YouTube.

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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. 
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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.
 
 
We hope you enjoy it and that it either reaffirms what you are already doing or gives you some ideas for the future.
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The Hidden Benefit Of A Consumer App

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.

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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.

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Total Number of US Restaurant Units Decline

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:

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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.”

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The Value of Pre-Shift Meetings

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.

 The training program was simple and straight forward:

  1. Intense customer service training before new employees interact with guests.
  2. Wallet card with customer service guidelines on it.
  3. Memorization of customer service guidelines.
  4. Customer service test, must pass before assuming position.
  5. Daily Pre-shift Meeting for all employees including managers.
I want to focus on the pre-shift meeting aspect of the system because it was key to the overall implementation of the program and what maintained our customer service standards after the initial training.
Over my years of managing restaurants I have built upon that foundation and created the OpsAnalitica Pre-shift Methodology that I would like to share with you today.
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Your Pre-shift is broken into the following sections:
  1. Customer Service Tenant
    • This is one of 10 to 15 customer service tenants that you train and hold your team responsible for implementing.
  2. Quick explanation of the service tenant as a story.
    • Make the story relatable and short.
  3. 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?
  4. Important shift Information
    • 86’d items
    • Specials
  5. Quote or Joke of the day
    • Share a quote or joke of the day.
    • Make sure joke is appropriate for your audience.
  6. 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
I’ve seen first hand at a Changs the power of pre-shifts. Taking that couple of minutes before every shift to focus your team on service, give them a goal, and communicate vital information works wonders. I was a part of a management team that increased weekly sales by 50k a week from 125 to over 170k a a week in an 8 month period and pre-shifts were a major part of the strategy.
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CEOs Discuss $15/Hr Minimum Wage

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:

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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

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FOH Readiness is Key

I’m sure you have experienced this a million times….
 
I’m going to share a story from my days bartending in a very busy mountain town.
 
Spring break was one of the busiest times of the year.  Two-hour waits for dinner and up to an hour wait for lunch. No real break between the shifts because we got the apres ski crowd after a busy day on the mountain. 
 
During March, there would be a lot of cash just burning a hole in our pockets, like most ski town residents we would need to unwind at the end of the night. It could sometimes turn into a 4 or 5-hour process and would inevitably make the next lunch shift pretty rough. 
 
It was always a bad idea when all of us would go out together because now instead of 1 or 2 of the staff operating at 75%, we would have 90% of the staff operating at 50%. 
 
Never failed, every time that happened we’d get an early lunch rush. Side work was half-assed, tables weren’t set, outside heaters weren’t on, umbrellas were down, snow on the front patio. You get the picture. If you are a restaurant manager (or have been one in the past) your blood is boiling now because you know that this shift is your worst nightmare.  
 
We’d ingest as much coffee as we could stand and GO TO WAR!
 
The service was horrible because you are trying to complete side work while serving guests. Drinks took forever because there weren’t enough glasses at the soft drink stations, not enough lemons cut, it was a disaster. It hurt our tips and certainly hurt lunch sales.  
 
Anyone who has ever managed a restaurant has worked a shift like this.  You walk in the door and your staff looks like the slept in their uniforms and don’t get me started about the smell, like a damp cellar.   
 
Instead of proactively managing your shift, you start your day putting out FIRES.  
 
Instead of walking your dining room and checking it for readiness you are herding CATS.  
 
It’s impossible to grow sales in this kind of environment, you are just doing everything you can to get through the shift without a customer screaming and firing the whole wait staff. 
 
In the spirit of this story, we’d like to share our FOH Readiness Checklist. Click here to download it for free!
 
Even if you have a FOH Checklist, you should take a minute and check out ours and compare it to what you are doing as you may find something useful. On the flip side if you notice that we are missing something we’d love to hear from you so that we can add it to ours. 

Using Data to Make Hiring Decisions

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:

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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 Restaurant Industry Warned You – Look at What is Happening in Seattle

Fox news just published an article about some of the unintended consequences that are showing up in Seattle because of their new minimum wage law.  To read the full article click here.

Here are the points that I found most interesting:

  • People are asking their bosses for fewer hours so they can make less and stay on public assistance.
  • “If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
  • The fifteen dollar minimum wage has not really moved the needle very much on moving people off of welfare:  In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.
  • Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut.

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Seattle’s $15 minimum wage law is supposed to lift workers out of poverty and move them off public assistance. But there may be a hitch in the plan.

Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.

Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.

“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.

The twist is just one apparent side effect of the controversial — yet trendsetting — minimum wage law in Seattle, which is being copied in several other cities despite concerns over prices rising and businesses struggling to keep up.

The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.

Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.

At the same time, prices appear to be going up on just about everything.

Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut.

Some long-time Seattle restaurants have closed altogether, though none of the owners publicly blamed the minimum wage law.

“It’s what happens when the government imposes a restriction on the labor market that normally wouldn’t be there, and marginal businesses get hit the hardest, and usually those are small, neighborhood businesses,” said Paul Guppy, of the Washington Policy Center.

Seattle was followed by San Francisco and Los Angeles in passing a $15 minimum wage law. The wage is being phased in over several years to give businesses time to adjust. The current minimum wage in Seattle is $11. In San Francisco, it’s $12.25.

And it is spreading. Beyond the city of Los Angeles, the Los Angeles County Board of Supervisors this week also approved a $15 minimum wage.

New York state could be next, with the state Wage Board on Wednesday backing a $15 wage for fast-food workers, something Gov. Andrew Cuomo has supported.

Already, though, there are unintended consequences in other cities.

Comix Experience, a small book store in downtown San Francisco, has begun selling graphic novel club subscriptions in order to meet payroll. The owner, Brian Hibbs, admits members are not getting all that much for their $25 per month dues, but their “donation” is keeping him in business.

“I was looking at potentially having to close the store down and then how would I make my living?” Hibbs asked.

To date, he’s sold 228 subscriptions. He says he needs 334 to reach his goal of the $80,000 income required to cover higher labor costs. He doesn’t blame San Francisco voters for approving the $15 minimum wage, but he doesn’t think they had all the information needed to make a good decision.

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Operations Data Use Cases Finale

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.

Line Pars

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.

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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.

Conclusions

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.

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