Archive for January, 2016

Running a Profitable Food Service by the Numbers

Monday, January 18th, 2016

Most hospitality managers would agree that food service is the most challenging part of their operations, but recognizing that knowledge is power, there are a number of management disciplines that will enhance any operation’s bottom line.

  1. Benchmarking revenues, cover counts, and average check by day of week and meal period.  This will help you schedule staff more efficiently, monitor sales trends, and allow you to track the success of new menus and efforts to upsell.
  2. Benchmarking payroll cost, hours worked, and average hourly wage by pay period.  This essential discipline will allow you to stay within budget, monitor overtime, and control your most significant expense.
  3. Formal forecasting by using historical cover benchmarks and knowledge of upcoming events, external factors, and optimum staffing levels, you can ensure expected service levels in the most cost-effective way.
  4. Timely and accurate inventories and benchmarking of inventories.  This will ensure budgeted cost of goods sold and identify any adverse anomalies or trends for investigation.  A further discipline that will yield significant benefits is to identify and inventory high value items weekly.
  5. Sales mix analysis.  This discipline will help you understand your customers’ dining preferences while protecting profit margins.
  6. Basic dining policies.  Well-thought out and advertised dining policies will give all customers/guests/members an equal opportunity to enjoy the dining services while ensuring the highest service levels for all customers.
  7. Consistent pre-shift meetings with a purpose and continual On the Go Training.  There is no better way to prepare and train your staff for service.
  8. Product knowledge and upselling training for servers.  They can’t sell what they don’t know and servers well-trained in upselling techniques will increase your operation’s average check while enhancing your customers’ dining experiences.
  9. Upselling feedback.  If servers are provided daily sales goals and feedback on their efforts to upsell, they will be far more engaged, enthusiastic, and effective in increasing their average checks.  You just need to provide the numbers to them on a daily basis.
  10. Tools to Beat Budget.  This powerful discipline of tracking revenues and expenses in real time will ensure your bottom line, make you more knowledgeable about your operation, and make preparing future budgets a breeze.

Food service managers must make these disciplines part of their daily and weekly routines.  Once these disciplines are instituted and mastered, a number of them can be delegated to properly-trained and motivated subordinates.  When consistently applied, these basic and commonsense disciplines will ensure both profitability and customer service.  What more could you want for your operation?

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for Hospitality Operators!

 

The Cost of Chaos

Monday, January 11th, 2016

Common wisdom tells us that quality costs more, but according to one of the foremost experts on quality this is not the case.

W. Edwards Deming, statistician, professor, author, consultant, lecturer, a man who made significant contributions to Japan’s reputation for high quality products and its rise to an economic power in the latter half of the 20th Century, wrote extensively about how a focus on quality actually reduces costs while providing a number of other benefits.  Convincingly, his ideas and methods were proven true by numerous success stories – most dramatically the rise of Japanese manufacturing to world class status after World War II.

How does a club measure or quantify the cost of confusion, mishandled or incomplete information and orders, time to investigate and correct errors, and member dissatisfaction?  The bottom line is that poor quality and disorganization is a major driver of costs in club operations.  Conversely, an improvement in quality not only lowers costs but also improves service.  The combination of lower cost and better service attracts more member patronage which improves the club’s bottom line.

Detailed organizational systems and processes allow the operation to function efficiently.  When things happen consistently and routinely in all areas of the operation, employees have the time and the inclination to focus on quality and service.  When everything is messed up all the time, employees will find it difficult to care.

So help yourself and your employees by structuring the routine to happen routinely.  This takes both the will and the organizational discipline to make it happen.  When 80% of the details happen routinely, everyone can focus on the 20% that will wow your members.

So what are some of the things food service managers can do to better organize their operations.  This short list is pure common sense:

  • Prepare written procedures for all routine tasks – opening, closing, and cleaning procedures, conducting inventories, replenishing par stocks, making coffee and ice tea, and on and on.  Since your staff does these things on an ongoing basis, take the time to write them down in detail so they can be used for consistent training and task completion.
  • Prepare and use checklists for both training and accountability.
  • Prepare room diagrams of all dining and event spaces.  These will save time and avoid misunderstandings when it comes to room set ups.  Prepare and save set up diagrams for all types of events – receptions, carving stations, buffets, wedding receptions, etc.
  • Organize a filing system for each of the above so you can find them quickly when you need them.
  • Anytime you hold a training session, organize and save the material.  You’ll certainly be using the same material again . . . and again!
  • Review all activities and events after the fact and record your observations.  You will undoubtedly hold the same or similar events in the future.  Your notes for improvement will help continually improve the quality and execution of all you do.
  • Prepare written standards and guidance for such basic matters as background music selections for differing meals, activities, and times of day.  Make the same effort to define appropriate lighting for differing events and time of day.
  • Prepare and use an ever-updated list of project work that can be used to assign to staff in slow moments when you’re not prepared to send anyone home early.
  • Train yourself in the techniques and disciplines of time management.  Time management is not really about managing time, it’s about managing those task that use up your limited time.  When you waste your time, you can’t help but waste your employees’ time as well.

Bottom Line:  No one wants to work in a chaotic environment.  If your department or section is well-organized, if everyone knows where things are, if employees are well-trained in opening and closing procedures, if everyone knows their responsibilities and is held accountable, the workplace runs almost effortlessly.  Don’t run off good people by putting them through the hell of a disorganized operation.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for Hospitality Operators!

 

The Book Every Hospitality Manager Should Read

Monday, January 4th, 2016

Once in a great while a book comes along that is so timely, relevant, and important that it should be read by all business leaders.  One such book is Jim Collins’ Good to Great – Why Some Companies Make the Leap . . . and Others Don’t.  This book, first published in 2001, became a massive best-seller (selling over 4 million copies), has been translated in 35 languages, and continues to sell briskly to business leaders around the world.  What makes the book so unique is that its findings are based on solid research, analysis, and empirical findings, not management theory and anecdotal evidence.

The book examines what 11 Fortune 500 companies did that made them so successful on a sustained basis compared to similar competitors (the comparison companies).  The insights gained from this book are just as applicable to enterprises of any size and any industry.  Stressing this point, Collins says, “We believe that almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas we’ve uncovered.”

In the process of the good-to-great research, the author and his research team from Stanford University’s graduate business school, identified seven primary concepts that were identified 100% of the time in the good-to-great companies, but less than 30% of the time in the comparison companies.  These seven concepts are:

1.   Level 5 Leadership.  “Every good-to-great company had Level 5 Leadership during the pivotal transition years.  ‘Level 5’ refers to a five-level hierarchy of executive capabilities, with Level 5 at the top.  Level 5 leaders embody a paradoxical mix of personal humility and professional will.  They are ambitious, to be sure, but ambitious first and foremost for the company, not themselves.  They are fanatically driven, infected with an incurable need to produce sustained results.  They display workmanlike diligence – more plow horse than show horse.”

2.   First Who . . . Then What.  “The good-to-great leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.  The key point is that ‘who’ questions come before ‘what’ decisions – before vision, before strategy, before organization structure, before tactics.  First who, then what – as a rigorous discipline, consistently applied.”

3.   Confront the Brutal Facts (Yet Never Lose Faith).  “All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts or their current reality.  When you start with an honest and diligent effort to determine the truth of your situation, the right decisions often become self-evident.  It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts.  A key psychology for leading from good to great is the Stockdale Paradox:  Retain absolute faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time confront the most brutal facts of your current reality, whatever they might be.”

4.   The Hedgehog Concept (Simplicity with the Three Circles).  “To go from good to great requires a deep understanding of three intersecting circles translated into a simple, crystalline concept (the Hedgehog Concept).  The key is to understand what your organization can be the best in the world at, and equally important what it cannot be the best at – not what it ‘wants’ to be the best at.  The Hedgehog Concept is not a goal, strategy, or intention; it is an understanding.”

5.   A Culture of Discipline.  “Sustained results depend upon building a culture full of self-disciplined people who take disciplined action, fanatically consistent with the three circles.  A culture of discipline involves a duality. On the one hand, it requires people who adhere to a consistent system; yet, on the other hand, it gives people freedom and responsibility within the framework of that system.  A culture of discipline is not just about action.  It is about getting disciplined people who engage in disciplined thought and who then take disciplined action.”

6.   Technology Accelerators.  “Good to great companies avoid technology fads and bandwagons, yet they become pioneers in the application of carefully selected technologies.  The key question about any technology is:  Does the technology fit directly with your Hedgehog Concept?  If yes, then you need to become a pioneer in the application of that technology.  If no, then you can settle for parity or ignore it entirely.  The good-to-great companies used technology as an accelerator of momentum, not a creator of it.”

7.   The Flywheel and the Doom Loop.  “Sustainable transformations follow a predictable pattern of buildup and breakthrough.  Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough.  The comparison companies followed a different pattern, the doom loop.  Rather than accumulating momentum – turn by turn of the flywheel – they tried to skip buildup and jump immediately to breakthrough.  Then, with disappointing results, they’d lurch back and forth, failing to maintain consistent direction.”

Stressing the importance of these primary concepts, Collins says his book is not about the economy, nor is it about the companies identified as good to great, “It is about one thing:  the timeless principles of good to great.  It’s about how you take a good organization and turn it into one that produces sustained great results.”

The research produced insights that run counter to conventional wisdom, but again these are based on empirical evidence.  Examples include:

  • “Level 5 leaders display a compelling modesty, are self-effacing and understated.  In contrast, two thirds of the comparison companies had leaders with gargantuan personal egos that contributed to the demise or continued mediocrity of the company.”
  • “The comparison companies frequently followed the ‘genius with a thousand helpers’ model – a genius leader who sets a vision and then enlists a crew of highly capable ‘helpers’ to make the vision happen.  This model fails when the genius departs.”
  • “Whether someone is the ‘right person’ has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.”
  • “Spending time and energy trying to ‘motivate’ people is a waste of effort.  The real question is not, ‘How do we motivate our people?’  If you have the right people, they will be self-motivated.  They key is to not de-motivate them.  One of the primary ways to de-motivate people is to ignore the brutal facts of reality.”
  • “The good-to-great companies are more like hedgehogs – simple, dowdy creatures that know ‘one big thing’ and stick to it.  The comparison companies are more like foxes – crafty, cunning creatures that know many things yet lack consistency.”
  • “You absolutely do not need to be in a great industry to produce sustained great results.  No matter how bad the industry, every good-to-great company figured out how to produce truly superior results.”
  • “The good-to-great leaders spent essentially no energy trying to ‘create alignment,’ ‘motivate the troops,’ or ‘manage change.’  Under the right conditions, the problems of commitment, alignment, motivation, and change largely take care of themselves.  Alignment principally follows from results and momentum, not the other way around.”

I cannot recommend this book enough!  If you are trying to lead a hospitality organization to quality and service, even greatness, do yourself a favor and read this book.  It’s an interesting, informative, thought-provoking, and enjoyable read.  Get your entire management team to read it, confront the brutal facts of your operation, and then set a course to greatness.

The book is Good to Great – Why Some Companies Make the Leap . . . and Others Don’t, Harper Business, New York, NY, 2001.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for Hospitality Operators!