Improving Dining Room Throughput: It’s Tables, Not Seats!

You will run out of tables before you ever run out of seats…guaranteed!

In the foodservice industry, we focus on seat count as a means of expressing a restaurant’s dining capacity.  Architects do it, the fire department does, designers do it, the plumbing code does.  However, dining room sales capacity is primarily driven by table count.  A host seats a party when a table becomes available.  It doesn’t matter how many seats are unoccupied.  The irony, however, is that it is the guest that spends the money, and they need a seat to sit in.  So, how do we increase the number of seats with guests in them?  Or, put another way, how do we improve the Sales per Seat metric?

The answer…increase the number of tables!

In our consulting business, we study dining room utilization.  We find that seat utilization is always lower than table utilization, often by a wide margin.  Typically, in a dining room at “full” capacity, we will see table utilization average ~90%, while seat utilization averages 50-60%.

Most concepts have a very real opportunity to increase sales capacity by increasing table count.  The trick is to do so while retaining the flexibility to seat a variety of party sizes.  The dining rooms with the highest seat utilization are those that could be described as communal.  (Think cafeterias and coffee shops.)  But, if communal seating is not brand-right, then the next best strategy is to align the table size mix to the party size mix.  Incorporate a flexible seating strategy to accommodate the natural variation in party sizes by day of week and daypart, and you will be on your way to increasing Sales per Seat.  You may also want to consider table management technology to help better match parties to the right table.

The consultants at The Productivity Advantage can help you to quantify the impact potential, determine the ideal mix of table sizes for your concept, and even develop an alternative seating layout.  Through our alliance partners, we can offer a turn-key remodel solution for concepts ranging from one to 1,000 locations.

Of course, the kitchen will need to keep up with all that additional demand.  But that is a good problem to have…and one that can also be solved.

I’ll place a friendly wager with you.  The next time you eat out at a restaurant that is on a wait, survey the dining room.  Do you see any empty tables?  Chances are you might see one or two tables waiting to be bussed or turned; but not for long.   Do you see any empty seats?  If you don’t, please call me because I want to know the name of the concept, and see for myself!  And, I’ll owe you one…  (And, by the way, cruise ships don’t count.)

For more information on how you can improve the dining room capacity at your concept, please contact the experts at The Productivity Advantage.

Why Labor Management is Important

The Situation

We’ve all been there…

A busy restaurant with no servers in sight, a wait list that causes even the most hungry patron to falter, empty tables not bussed, tickets in the window thick like flies, anxious diners reluctantly waiting, contemplating how many hands have touched the ketchup bottle, and left to ponder, once again, why they chose to eat here in the first place???

Well, maybe you’ve never had the compulsion to create a work of condiment graffiti to express your frustration.

There never fails to be an excuse for poor service:

• I can’t get anyone to come in and work for just a couple of hours…
• Perhaps there was a call-in, or two, or several…
• Maybe an unexpected run to the state finals for the local football team brought in a throng of hungry post-game revelers…
• I can’t afford to add labor in this economy…
• We’re usually much slower on (pick the day)…

Certainly, the proprietor did not purposefully understaff the restaurant…or did he? Unfortunately, that is precisely what occurs in restaurants everyday, when managers blindly copy last week’s schedule and post it on the wall. All too often, the excuses are used to hide the fact that the manager actually has no idea how many staff they need. We have often heard that ignorance is no excuse. This is no exception.

Promise of Labor Management

Alas, there is an answer to this dilemma. It is possible to objectively determine the amount of labor needed to service your guests. In fact, smart operators across the industry are doing just that all the time. The methods required to do so are collectively referred to as work measurement, or the science of establishing the amount of time necessary to complete a job, often called a labor standard.

These labor standards then form the basis of an enterprise labor management solution that is activity-based, and finally provides operators with the tools to manage labor costs, while simultaneously delivering great service to their customers. Coupled with a solid sales forecast, the restaurant manager can reliably predict how many employees they will need to schedule for each hour.

With an effective labor management system, the process of scheduling is no longer simply copying last week’s schedule, accommodating employee requests, and then hoping that you can handle what business comes your way. Now, the manager is armed with the knowledge to put the right number of people on the floor, at the right time. The result is better service and better costs!

There are other methods of labor management, including traditional labor budgeting, sales-per-man-hour ratios, or peer group rankings. These are certainly better than nothing, but they tend to perpetuate suboptimal performance. That is, these methods answer the question, “how much labor CAN I use?” instead of the more fundamental, “how much labor SHOULD I use?”

Why Do We Know It Works?

Work measurement (or time and motion analysis) has been practiced for decades in industries all across the world. It is the science that enabled Henry Ford to revolutionize the way his Model T was made, and usher in the age of industrialism. Since the early 20th Century, businesses keen on improving efficiency have measured how long things take to better balance resources with demand. It is a time-tested technique with proven results.

Although not as widely practiced in the foodservice industry, some of the most successful concepts have embraced work measurement and labor management practices to simultaneously control costs and improve service levels. Clearly, these concepts enjoy a competitive advantage in the marketplace when it comes to providing a predictable service level to its customers, and a healthy profit to its owners.

Labor management works!

How to Implement

Who sets the standards? Usually industrial engineers, who are specially trained and qualified to apply the most appropriate method to measure the task of interest. These experts have the experience to set accurate standards at a reasonable cost. Once labor standards have been established, it is possible to then model the restaurant’s total workload requirement for a variety of sales levels and other business environment factors.

Although straightforward in its overall logic, there are a number of nuances that dictate the ultimate success of a labor management system. Typical pitfalls include the writing of standards, the modeling of labor requirements, and the selection of appropriate software tools. Therefore, it is best to involve experienced, expert resources, so that the system is reliable and can be trusted by the field.

The most effective and scalable systems are deployed via specialized software. However, there are other, less automated means that can deliver similar results.

There are a variety of elements which characterize a best-in-class labor management system:

• engineered labor standards to drive labor requirements
• labor requirements engine that is sensitive to volume, product mix and other business factors
• accurate forecasting algorithm that factors in seasonality, trends and unique events
• user-friendly scheduling interface
• reporting that helps managers reconcile what they should have used versus what they did use
• restaurant level software that effectively integrates labor requirements, scheduling, and reporting
• appropriate integration to other business applications

Final Thoughts

“You’ve heard the platitude, ‘Do the right things, and the money will take care of itself’? Let me tell you this: the money never takes care of itself.

Never.

YOU have to take care of money. Daily.

In a free market system, money is the measure. Money speaks.

Don’t mess with that truth.”

– Michael E. Gerber in the E-Myth Enterprise – “The World’s #1 Small Business Guru” -Inc.

If you are serious about taking “care of the money,” then you must control labor costs, which is typically the largest (and most difficult) controllable line item on the restaurant P&L. And, if you are serious about controlling labor costs, then you must use a labor management system.

For more information on how you can implement a labor management system at your concept, please contact the experts at The Productivity Advantage.

Why In-N-Out Works

 

Memories, laced with nostalgia, transport me back to the midsummer nights of my high school years…

Dusk paints the sky, a lowered pale blue pick-up truck, windows rolled down, the cool desert air pleasantly mingling with the heady scents of grilled onions and french fries…

”Will you be eating that in the car?”

“Yes….yes, I will…”

I have been a fan of In-N-Out Burger for virtually my entire adult life.  Even today, In-N-Out is one of the few places that serve “real” food at a real value.  Sorry, “big three,” but the Double Double is the undisputed champion, the king, the be-all end-all of burgers, at least for this California native. (At this point, I would like to give honorable mention to Five Guys and Habit Burgers for their top-ranked contenders!)

I could go on and on about what makes In-N-Out special in the restaurant kingdom:  the attention to quality, the culinary wonder that is the Double Double, the fries made from real potatoes, the friendly service, the Southern California heritage, the impeccably clean interior, etc.  But, today, I want to discuss what makes In-N-Out special from an engineer’s perspective.

Simple Menu = Two Flows

The menu offering at In-N-Out is comprised of four product categories: burgers, fries, shakes and drinks. Out of the four categories, only two (burgers and fries) require any real processing at the point of purchase.  Practically speaking, this means that there are only two assembly flows to consider for the purposes of facility planning and process optimization.  Compare this to the challenges a kitchen designer faces at concepts with diverse menus like Chili’s, or The Cheesecake Factory!  Even McDonald’s is considerably more complex.  Two flows at In-N-Out…simple.

This exceedingly simple menu has other advantages besides just being easy to read.  Allow me to elaborate on a few of these, from the perspective of someone who appreciates a well-engineered kitchen.

Freedom to Optimize

The kitchen designers and R&D team at In-N-Out know that an improvement in either of these two primary flows will pay big dividends on the overall performance of the system.  Therefore, they have the freedom to focus significant intellectual and financial capital on the optimization of those processes.  That is why you see all manner of slick workstation details at In-N-Out that are found nowhere else.  To wit…the hinged fry dump, the bun toasting “fingers”, the ultra high-efficiency fryer bank, the seriously well-thought-out ingredient locations, etc.

Dynamic Imbalance

The arch nemesis of kitchen designers everywhere is rarely named, but easily recognizable: dynamic imbalance.  This is a situation that arises when various processes with different flows, cycle times and requirements interact with one another in a random pattern.  The problem is more acute when the disparate processes occur on a relatively infrequent basis.  In other words, the more the product mix is evenly spread across unique menu items (with different process flows), the more imbalances you will have.  The results are excessive movement between stations, products waiting on resources, bottlenecks, under-utilized resources, disorder, and lack of coordination between stations.  Completed menu items will often wait several minutes for other items on the same ticket to be prepared, preventing the ticket from being “sold.”  While bottlenecks flare up randomly throughout the kitchen, other resources will sit idle, which will soon also become bottlenecks themselves, as the precocious product mix makes its way through the kitchen.  Higher volumes can mitigate the problem, as velocities become great enough to justify the dedication of resources and staff to specific product flows.  But, for most operations, they simply cannot afford to dedicate resources to specific product flows.  So operators are forced to move from flow to flow in order to execute the menu, in a constant state of imbalance.  First, it’s the salad station “in the weeds”, then it’s the grill, then the fry station, and so on.

In manufacturing, the goal is to “line balance” so that you can increase the utilization of all resources, and therefore the throughput capacity of the assembly line.  This short video is a good example of what an imbalanced line looks like, and how to go about balancing it:

As you can see, when you have one flow, and a predictable production schedule (as in a manufacturing plant), it is fairly easy to balance the line, partly because you can calculate the workload at any station. In a restaurant, however, the production schedule is largely unknown (whatever the customer orders when they walk in the door), and, therefore, it is not possible to know the work content at any one station.  The volume and mix are both unknowns, with mix being the more difficult of the two to forecast and deal with, especially when the mix is spread across a diverse menu.

Utilization

This is where the advantages of the simple, two-flow In-N-Out kitchen become apparent.  The processes are predictable and similar, allowing the operators to get into a rhythm, a “zone” of productivity.  And, although, you still may not be able to accurately forecast the volume, the mix is really not a significant variable, because almost everybody orders a sandwich and fries!  This allows In-N-Out to have a more balanced system that fully utilizes all available resources.  This is why everyone looks so busy at In-N-Out.  No one is waiting on someone or something else to finish before they can do their job.  The system is balanced.

Speed of Service

Granted, the speed of service at In-N-Out is not as fast as some of their competitors, due to the fact that they make everything to order.  However, the speed of service is predictable, and reasonable for a QSR.  You rarely will be surprised by how long it takes to get your order.  For example, you can usually count the number of cars in line and assume no more than 1-minute wait time for each; it’s usually a little faster.  This is because In-N-Out has a very stable average window time of approximately 1 minute or less.   The window time is stable because the system is in balance, and operating within its throughput capacity limits.  Try it next time you go to In-N-Out, and let me know if the simple formula of, cars = wait time in minutes, works for you.

Throughput

The throughput capacity of an In-N-Out platform is very high.  The manager can increase the capacity by simply deploying more grill/assembly stations as demand dictates.  And, the development team has the ability to build even higher capacity buildings simply by incorporating more redundant stations.  In many kitchens, figuring out how to increase capacity is very complicated, and often requires a complete reengineering exercise to figure out how to do it, without destroying productivity and speed.

Other Advantages

Training – The simple menu means it is also much easier to train their employees when it comes to menu mastery.  A higher percentage of training time can, therefore, be devoted to service, attention to detail, and teamwork.

Service Quality – Operators can focus on service and execution, as opposed to jumping around from station to station, waiting on a piece of equipment, or deciphering build cards.

Quality Control – From what I understand, In-N-Out is vertically integrated all the way up to the producers who supply their food ingredients.  They have complete control over the quality of all the important aspects in their business.  This may not be possible with a more complex operation.

Scheduling – Given that there are few positions and everyone can be easily cross-trained, it is much easier to create an effective labor schedule than it might be in an operation with all sorts of different departments, and skill-set requirements.

Waste – As there is only one size of patty used for the sandwiches, it is very easy to consume the product off of the grill without having to waste it.  There is no need to come up with sophisticated holding techniques or forecasting formulas.  (Actually, the correlation between number of customers in line and patties on the grill is very high, which may make it feasible to implement a very simple but effective loading rule for the grill!)

Summary

In-N-Out is one of my favorite restaurants to eat at, and also one of my favorites when it comes to smart kitchen engineering.   The simple menu creates a host of advantages that In-N-Out has successfully leveraged to become one of the most successful restaurant concepts in the business.  In closing, when R&D at your organization comes up with the next big win on the new product news front, you may want to think of In-N-Out and what it means to be truly the best at just a few things…

Improving Productivity: A How-to Primer

In my last article, I posited that the only effective means of maintaining a sustainable competitive advantage is through productivity improvement.  With daily news of the economic recovery on shaky footing, we are reminded that this economy is far from healthy, and disposable income will continue to be closely guarded.  Continuing to differentiate yourself from the competition is critical to your success.  Productivity improvement can help you do that.

So, how can an organization go about such an initiative?  There are four steps necessary for a successful productivity improvement campaign: 1) assess, 2) baseline, 3) re-engineer, and 4) implement.  Granted, this is no magic formula, and this basic engineering method has been practiced for decades.  But, faith in the method and a disciplined approach is necessary for success.  You may have even previously attempted a program similar to this in your organization.  Depending upon your particular theological perspective, either the devil, or God, is in the details.   Either way, it is important to remember that the method, itself, is universal; success is achieved through good execution.  (Note: The approach described in this article is rigorous and suited for chain operations where the fruits of your labor can be leveraged across many units.)

Assess

The first step in tackling any problem is to first assess the situation.  Running headlong into the fray will only result in much wasted effort and inferior results.  This phase is akin to homework, in that you must first understand what makes your operation tick.  Where are the strengths, the weaknesses, the opportunities to improve?

I personally believe in spending many hours in an operation making observations, taking notes, asking questions, looking for things that don’t make sense.  What kind of “brain damage” (aka inefficient processes) can you uncover?  Measure performance in critical areas such as kitchen time, table turns, and labor utilization, in order to quantify your performance in the universal language of numbers and mathematics.

In addition to observing the operation, a careful analysis of the data that describes your operations is also a good source of learning: P&L statements, sales histories, and other metrics.  Look for correlations between overall performance and specific key metrics, to see which are the critically important operational areas that, once fixed, can dramatically improve your performance.

It is important to solicit input from all corners of your organizations, so that you can gain a complete picture of all of the interdependent elements of your operation.  Have them identify the challenges and opportunities that they see everyday from their unique perspective.  If you go about this exercise in a truly open manner, you will elicit many responses.  You will ultimately need to pare down the list of opportunities to a manageable subset, but, initially, you want quantity.  You can deal with the quality later.

All of the information you have gathered to date can then be used to develop an exhaustive list of opportunities to improve your operation.  By constraining this list using the Pareto Principle (or the 80-20 rule), you can develop a strategic plan for your improvement initiative.  This plan should identify the initiatives to be pursued, how you will do so, the expected cost to implement, the success criteria, and the expected return, or ROI.

To summarize:

• Key Steps
  • Understand your concept
  • Analyze strengths and weaknesses
  • Develop a list of opportunities
• Desired results
  • Quantitative assessment of performance
  • Strategic plan

Baseline

Once you have done the necessary homework, it is time to establish a baseline, or a ground floor, from which you can proceed to higher levels of performance.  If this important step is omitted, then it will be impossible to objectively determine the results of your efforts.  Then, you run the real risk of implementing change for the sake of change, with no real compass to tell you if you are on the right path.

This is where industrial engineering techniques, which have been practiced for decades in the manufacturing industry, really shine.  Using time and motion studies of various types to measure the steps required to complete each process, it is possible to develop a precise accounting of what it takes to execute each task required by your operation.  You can also establish the current productivity of your labor, equipment, and other resources.  All of this should be done quantitatively so that you have a universal language with which to make comparisons.  It is hard to argue with numbers (assuming you don’t torture the data to match preconceived notions, that is.)

This time and motion data can be used to establish optimal labor costs required to run your operation, given the current set of processes and tasks.  If you can get your operators to run to this new optimal cost, you may uncover significant savings before you even implement the process improvement initiatives.  In most operations, by moving from a non-measured to a measured environment, you can expect to save 2-5% of wasted hours.

To summarize:

• Key Steps
  • Time and motion studies
  • Process maps
  • Labor standards
  • Baseline labor costs
• Desired Results
  • Control labor costs in current system
  • Establish base for improvement

Re-Engineer

You have now thoroughly assessed your business and established a baseline for improvement, you are now ready to buckle down and exploit those opportunities that you have thus far identified.  There are many ways to improve processes and this is where right-brain creative thinking is necessary, to be sure that you are not unduly weighed down by current operational dogma.

Process improvement can come in many flavors.  Use the following topics and questions as you seek innovation:

• Equipment – Are you utilizing the best equipment for your requirements? Are there options available that can give you greater throughput capacity, cost less to operate, are easier to operate, or reduce cycle time?  Do you have too much or too little capacity?
• Workstation Design – Have your workstations been designed to support the best process for the tasks completed there?  Are there sufficient workspace, holding capacity, and queuing areas?  Can the workstation support the number of people who typically work at it?
• Work-flow – Are the flows of all products and operators intuitive and free of unnecessary steps?
• Work Methods – For each and every process, have you established and incorporated best practices?  Are smallwares suitable for the task at hand, and enablers of efficient execution?  Have processes been sequenced to take advantage of downtime between hands-on labor tasks?
• Adjacencies – Are workstations and equipment located to support work-flow and slide deployment between operators?  Are typical areas of work easily visible for management purposes?

It is my belief, that you should let the process dictate the rest of the facility design.  In other words, layout the space, select equipment, and design each workstation to support the best set of processes.  Many facilities are, unfortunately, designed the other way around, thus forcing operators into inefficient workarounds and suboptimal methods.

Using the quantitative baseline established in the previous step, it is possible to correlate where you spend your resources to what is important to your operation and your brand.  In other words, do you spend your money on the things that matter?  When you find discrepancies, these are great opportunities to re-engineer.  Can you eliminate or minimize the time spent on tasks that add little or no value to your brand?  Where there is congruence, you will find that an improvement in an important task can be leveraged into a very significant impact to your overall operation and your brand.

As you develop re-engineered processes, it is important to use quantitative techniques to estimate the impact of each innovation.  This will help you focus on those areas that can yield the greatest impact, and provide a clear picture of the outcome if all goes as planned.   Each alternative should be tested both analytically and/or physically to insure feasibility and to correct design flaws before being introduced to the field.

To summarize:

• Key Steps
  • Determine the best equipment for your application
  • Design effective workstations
  • Smooth task work-flow
  • Optimize adjacencies
  • Develop optimal work methods
  • Evaluate and test alternatives
• Desired Results
  • Eliminate waste
  • Improve productivity
  • Increase throughput
  • Reduce delays
  • Correlate tasks to business priorities

Implement

Finally, it is time to put your process improvements to work, so that you can begin to reap the benefits of superior productivity.  It is imperative to remember that your project is not complete once the system is introduced to the field.  Actually, it is just the beginning.  Now, the proverbial rubber meets the road.

You are now engaged in change management of a magnitude that, in my opinion, is one of the more difficult you’ll encounter in the business world.  If you are in a chain environment, the problem is multiplied by the number of individuals, system-wide, who will have to understand, commit to, and execute your initiatives.  In a chain of even moderate size, this number can easily run into the thousands!  Do not underestimate the amount of work required to insure faithful execution of your initiatives.  I find that some of the concepts (especially mavens and stickiness) discussed in Malcolm Gladwell’s excellent The Tipping Point, to be particularly salient for these efforts.

In order to extract the gains of your productivity improvement initiatives, you should update your labor management targets to reflect the gains in efficiency.  If this is not done, then you may incur the cost to implement, but fail to see any real return in labor costs savings.

Once the initiatives have been trained and implemented in a small pilot test, a second assessment, similar to the one done in the first phase, should be conducted.  Quantitative comparisons should be made to insure that impact expectations have been met.  Further refinements may be necessary in order to fine tune the initiatives for greater success or correct for the realities of imperfect implementation constraints.

Ultimately, you should be looking for significant gains in performance expressed by reduced costs, increased ROI, increased profits, and improved guest experience.  All are necessary ingredients for a sustained competitive advantage, enabled by productivity.

To summarize:

• Key Steps
  • Implement
    • new processes
    • labor management targets
    • technology
    • facility layouts
  • Measure performance
  • Modify initiatives
• Desired Results
  • Reduce costs
  • Increase ROI
  • Increase profits
  • Improve guest experience

The Productivity Paradox

Uncertain Times

These are indeed perilous economic times. The list of indicators is staggeringly broad and deep: real estate, stock markets, consumer confidence, federal and state budgets threatening insolvency, volatile commodity pricing, and the latest sovereign debt fears. With our economy driven largely by consumer spending (at nearly 70% of GDP), it is no revelation that restaurant companies are finding it increasingly difficult to grow and finance their businesses. Clearly, a competitive advantage is needed to gain a foothold in this rocky economy.

Zero-Sum Game?

In the eyes of many proprietors, one can either compete on service or cut costs, in a mutually exclusive showdown of sorts. One of my clients memorably labeled this dichotomy, “high touch vs. high efficiency.” On the one hand, only impeccable service can maintain the customer’s fickle interest when expectations are sky-high for their exceedingly scarcer dining out occasions. However, if service comes at the expense of profits, one can only wonder if a restaurateur is engaged in a battle that will surely drain the coffers all too quickly. Besides, profit is the lifeblood of all business. Perhaps, an aggressive cost-cutting campaign is in order, as a means of riding out the storm until the consumer fully returns, pockets flush with discretionary cash?

New Calculus Of Productivity

The traditional zero-sum game of service vs. profits, as a tradeoff, is outdated once you accept the new math of productivity. Productivity, simply defined, is the measure of output as a ratio of input. So, as you improve productivity, the amount of stuff (food, service, sales) you produce per unit of input (labor hour, inventory, square foot) increases. Only productivity improvement enables a restaurant concept to simultaneously improve service and cut costs, thus shattering the aging paradigm of service or profits. Or, more plainly, you truly are able to do more with less.

Sources of Productivity

Productivity is manifest in many forms: labor, equipment, dining tables, storeroom, food – basically any resource where you can identify a tangible output. A systematic process improvement initiative, enabled by classic process analysis and work design techniques, can and will lead to significant improvements in productivity in any of these areas. By only eliminating the non-value-added components of a resource or process, you are able to reduce the input costs without sacrificing the quality and quantity of output. Alternatively, saved resources can be reinvested to achieve a higher level of service.

Sustained Competitive Advantage

“In business, I look for economic castles protected by unbreachable ‘moats’.”
– Warren Buffett, investor and CEO of Berkshire Hathaway

In Buffett’s analogy, the wider a business’ moat, the more likely it is to stand the test of time. Given a successful combination of service, food and environment (the castle), only productivity can maintain an enduring competitive advantage (the moat.) Furthermore, a continuous process improvement culture is a necessary component of a long-term competitive strategy. It is important to continuously build upon productivity improvements in order to continually widen the moat. The productivity paradox, or doing more with less, is a viable alternative to choosing profits over service (or vice versa.) Restaurant concepts that embrace the productivity paradox are well suited to grow and prosper in any economic climate, but especially when times are tough.